Review by Lesley Lawson Botez

BOOK REVIEW

THE CURIOUS ECONOMICS OF LUXURY FASHION: MILLENNIALS, INFLUENCERS AND A PANDEMIC

Book by Don Thompson

DNT, 3rd Ed. (2021): ISBN-10: 1777563208 ISBN-13: 978-1777563202

Review by Lesley Lawson Botez

Dr Don Thompson is the author of 12 books, including the international bestseller The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art. He is an economist and emeritus Nabisco Brands Professor of marketing and strategy at the Schulich School of Business at York University in Toronto. He has a PhD from the University of California, Berkeley, and has taught at Harvard Business School and the London School of Economics.

The bout of luxury goods revenge buying after the first lockdown in 2020 shook a world reeling from the pandemic. While the retail industry was hit hard, queues were forming outside luxury shops, anxious consumers waiting to enter the hallowed halls. At an Hermès flagship store in China, a record-breaking $2.7 million was spent in one single day. Clearly the economics of luxury fashion were unusual. A book was waiting to be written.

Don Thompson is the author to write such a book. A distinguished economics professor, with an entertaining writing style, he is fascinated by the world of luxury fashion and its anti-marketing business model. A world which includes the European Union’s second most valuable company, luxury fashion conglomerate Louis Vuitton Moet Hennessy (LVMH), after Royal Dutch Shell.

As a marketer, he is intrigued by an industry that puts up its prices when sales are not going well, produces less to retain exclusivity and generally demonstrates that what the customer wants he - or more often she - can’t have. Indeed, luxury products and experiences are “aimed at the emotional, motivated not by need but by aspiration” (Thompson).

Recent years have brought radical change. For generations, luxury was distinguished by artisanship and exclusivity, attributes that millennials and Generation Z – the new luxury buyers - find less enticing. Although it is worth noting that those two characteristics make it look more sustainable, which does catch their eye (Laroche & Lawson Botez, 2021).

Agreeing which brands are luxury is in itself challenging. No two people asked by the author list the same labels. Frederico Bonelli, a partner in Milan fashion consultancy EY gives him a definition:

“A luxury brand can be identified by the size of the markup it commands. Does the brand ask a substantially higher price – say twice what you would pay for a premium brand? Do most or all of its sales come through exclusive (usually company owned) boutiques, or though high-end fashion department stores? Is their marketing and advertising in line with their exclusive image?” The author settles for ten names: Hermès, Chanel, Dior, Balenciaga, Georgio Armani, Louis Vuitton, Bottega Veneta, Gucci, Salvatore Ferragamo and Prada. He admits that an Asian list would look different.

Once the brands are established, Thompson divides the fashion world into luxury and premium, accessible and fast fashion. Although he strays off the topic of luxury, these latter categories give a broader view of the fashion industry and are helpful to the novice reader.

The book has been thoroughly researched and is a work of breadth if not of depth. It answers many a burning question for example on product placement and the role of the influencer, citing the publicity given to Manolo Blahnik by the 90s television serial Sex and the City. Carrie Bradshaw, played by Sarah Jessica Parker, famously lamented spending $40,000 on Manolos, equivalent to a down payment on a New York condo at the time. Great publicity, but apparently not for free. It seems Blahnik did pay a product placement fee in season three of the show. Also under heels an anecdote on Laboutin’s red soles, points out the “the curved sole of the five-inch stiletto mimics the way a woman holds her feet during sexual orgasm”. Who could possess such information puzzles author and reader alike.

Chapters are given over to handbags and sneakers as well as heels. Luxury is personified by Mademoiselle Chanel in her little black dress and pearls, although it is not apparel that is the biggest seller. Accessories keep the luxury industry in profit, accounting for more than a quarter of sales of high fashion firms in 2019. Leather goods, in particular handbags, are the most profitable single product category for Louis Vuitton, Hermès, Prada and Gucci as well as for Chanel and Céline. For LV, handbags comprise 75 percent of revenue. For Hermès with a wider range of fashion goods, handbags make up a third of sales.

Luxury brands like Saint Laurent have been quick to spot trends like the omnipresent sneaker. Theirs lists at $495 compared to $3,000 for their black varsity jacket. Thus a budget-constrained shopper could shop at Zara and add Saint Laurent sneakers to complete her look. Thompson at his most perspicacious, points out that an elegant woman can dress at Zara and carry a Chanel bag, but it is unlikely that she would wear a Chanel suit and carry a Zara bag.

The chapter on the evolving role of the creative designer, or Taste maker as Thompson calls them focuses on Lagerfeld at Chanel, Alessandro Michele at Gucci and Raf Simons at Prada.

Thompson explains how in 1983, Lagerfeld began managing the Chanel brand, considered as boring and past its innovative early 20th century reputation. He turned Chanel into a centrally managed, global brand while exploiting the Chanel legend and iconography with every new product launch.

No discussion of taste makers is complete without Anna Wintour. Vogue editor since 1988, model for the wildly successful 2003 novel and movie, The Devil wears Prada, Wintour is recognised by her iconic bob and permanent dark glasses. She hosts the annual Metropolitan Museum of Art Costume Institute Benefit Ball (Met Gala) in New York on the first Monday in May. The book’s cover photo features Rihanna arriving at the Met. The Gala raises valuable funds, however the Met board had originally decided that a fashion section was too frivolous. The 2019 Gala raised $14.5 million for the Institute.

Turning to the evolution of luxury, Thompson dedicates a chapter to China – number two and gaining. He sites consumer research from Bomoda whereby 80 percent of Chinese luxury shoppers are between the ages of 24 and 44. These buyers reject the American concept of “affordable luxury”, they want one or the other.

Looking at the social impact of luxury fashion, Thompson refers to Cambridge Analytica’s discredited research influencing the 2016 US elections. A user who “liked” Facebook pages of US fashion brands like Ralph Lauren was more likely to have low levels of mistrust and be more responsive to pro-Trump ads.

Space does not allow exploration of chapters on the future of luxury. This entertaining book contains much for readers intrigued by the luxury field. It is only limited by its publication date. This third edition is dated March 2022 and much has happened since.

BIBLIOGRAPHY

1. Laroche, M. & Lawson Botez, L. (2021) Luxury and Sustainability: how to Connect with the New Generation of Luxury Shoppers, ONResearch Insights, https://research.euruni.edu/Htdocs/ Files/v/9950.pdf/ONResearch/luxury-and-sustainability-Laroche-and-Lawson.pdf [Accessed:10 September, 2022].

Lesley Lawson Botez, MSc, PGCert, is a lecturer of Communications and Design at EU Business School, Geneva campus.