It’s refreshing to see intelligent business strategies vindicated by positive results.H&M, the Swedish Wunderstore, has annouced new store openings all over the globe, higher than projected earnings, and - believe it or not - more hiring! It seems that by helping people be fashionable without breaking the bank, they’ve managed to keep themselves afloat in a sea of doom and gloom.
Of course, the strategy needs to be backed up by an intelligent management and operations team, otherwise why would Target - arguably a competitor to H&M - be tanking while Walmart profits soar?
In a previous post I blogged about the state of the luxury business, and how it sought to expand into “non-traditional markets” (i.e. sell luxury items to people who have no business buying luxury items in the first place) and even declared itself resistant to economic downturns since rich people are presumably above such mundane, pedestrian things as worrying about where their next dividend payout will come from.
As Louis Vuitton, Dior, et al. have learned the hard way, it doesn’t do to base a long-term strategy on shaky assumptions, such as, everyone will want to emulate celebrities’ free-spending ways until the end of time, so let’s invest a whole lot of money, energy, and a big chunk of our “brand” that we’ve spent decades honing into this strategy.
It might have been okay if they had gone for the easy profits of mass-luxury in a lucid manner: knowing they could only ride the wave for so long, and figuring out an exit strategy for when things turned sour. It might have also helped if they hadn’t eaten into their brand image by moving jobs to China so they could fatten up their margins (without, mind you, passing the savings onto the customer).
It’s funny how everything in life follows the same old cycle. Things move forward, but in widening circles as opposed to an upwards-moving line.
Take jeans.
Go ahead and google Brooke Shields and Calvin Klein to see what “normal” jeans looked like 20 years ago.
Here’s a picture in case you’re lazy:
All together now, what do we call these jeans, nowadays?
That’s right - Mom jeans!
We all remember how Britney Spears took an extreme runway trend (by Alexander McQueen) and brought it into the mainstream:
Luckily, that fad has died a merciful death, but our view of how high “normal” jeans should rise has been changed forever.
Luxury will not die. People will get sick of cheap, ill-fitting H&M clothes. I am addicted to designer jeans and will continue to buy them so long as I can afford to. But luxury will be humbled, and it’s about time.
