How easy is it to sell a handbag for thousands of dirhams in the middle of a global recession? Pretty easy if the figures are to be believed.
All over the world, as retail figures plummet, the top brands are actually going up. Hermès, for example, ended 2008 with an increase in profit. Burberry reported a three per cent increase in trading for the first three months of 2009; Mulberry's sales were up 25 per cent in the first 10 weeks of this financial year. In the recent summer sales in Dubai and Abu Dhabi, many stores were offering up to 70 per cent off. The noticeable exceptions were Hermès, Louis Vuitton and Chanel.
It seems that the credit crunch has yet to affect brands that have succeeded in going truly global - those that somehow retain that elusive element of exclusivity. So how does a brand go about achieving this? The brands themselves were not keen to tell us. According to Olivier Auroy, the general manager of Landor Associates branding agency in Dubai, success is dependent on maintaining a balance between reinvention and an adherence to its core values.
"If you look at a brand such as Pierre Cardin, you see how it has lost its substance by going off track, whereas Chanel has retained its top spot by constantly innovating and reinventing itself," he says. For example, Chanel launched Coco Mademoiselle for younger buyers in 2003, and its first unisex watch in 2000. Another example Auroy cites is Madonna. More than just a singer, she is a brand, and the queen of reinvention. The fact that Louis Vuitton has chosen Madonna for its latest advertising campaign is a spectacular demonstration of brand reinvention to maintain financial success.
so what else should a brand do to stay exclusive, apart from aligning itself with stars and reinventing itself? "Keep it rare and keep it expensive," says Ghada Maamari, a Paris-based personal shopping consultant. "Create consumer needs that you can't meet." The Hermès Birkin bag is a case in point. There is always a long waiting list for them, possibly because Victoria Beckham owns most of them (the former Spice Girl reportedly has more than 100, worth - depending on the source - up to Dh14 million).
"It can take three to four crocodiles to make one of our bags," Patrick Thomas, Hermès's chief executive, told the UK newspaper The Guardian recently. "So we are now breeding our own crocodiles in our own farms. We have a massive over-demand." The reason for the over-demand is, of course, that there is more demand than supply. It is basic economics. The importance of exclusivity is a point echoed by Kerry Bonnell, who runs a vintage clothing shop in Texas. She says that big "mainstream" labels such as Donna Karan, Ralph Lauren and Armani are no longer in big demand.
"I think people feel like they are too accessible and maybe too mainstream. Over the past eight years I've seen certain labels stay at pretty much at the same value - like Chanel, Yves Saint Laurent, Alaia and Pucci. I think that maybe because of the history behind them, these brands have always been popular and have an air about them. They were expensive then to purchase new and are still fairly expensive today to buy as vintage."
k aren White (not her real name), who lives in Dubai, has become a vintage expert since the credit crunch. She didn't even know how to sell anything on eBay until two months ago, and now her family depends on it. Just over two months ago, her husband's business went bust and the couple have had to sell their five-bedroom house to pay off debts. They have gone from living a life of luxury to worrying about how they will afford the next trip to the supermarket.
"All I can say is thank goodness I had the good sense to buy designer goods when I could afford them," she tells me. "It's amazing how they retain their value." Karen has found that some designer clothes and accessories are particularly easy to sell. "Anything with Chanel on it goes within 24 hours," she says. "I am down to my last item." According to the shopping consultant Maamari, one of the reasons that Chanel has managed to retain its exclusivity is that there are only a few products that really are accessible to most people.
"Chanel has exclusive ready-to-wear and couture collections," she says. "They never create any products that could and would be seen on the streets. The only 'affordable' products are their make-up, perfumes and glasses, which cannot ruin a reputation." By expanding and reaching more of the mass market, a company risks devaluing their brand. As Auroy sums up: "Like the Roman Empire, you become too big and you lose consistency."
"Porsche went from being a sports car manufacturer with only the 911, Boxster and Cayman models to a company that builds 4x4 vehicles for the family, and now they've introduced a saloon car called the Panamera," says Khaled al Dajani, managing partner of the luxury lifestyle group Quintessentially. "I don't think it has harmed their image per se, but it has definitely become a mass brand rather than an exclusive brand. People who would have never fit the profile of owning a Porsche have become the main target market for them."
It appears that the same continued profitability of luxury brands is mirrored in the luxury car market: Rolls-Royce reported a 20 per cent increase in sales for 2008. This overexposure can be a bad thing for the brand in the long term. When the market became swamped with fake Louis Vuitton bags, it threatened to damage the value of the brand by making them too accessible, at least to the untrained eye that could not spot a fake. That is until Marc Jacobs was appointed creative director and made LV the hippest accessory brand to own.
so is the lesson for fashion brands to stick to what they are good at? "Yes," says Maamari. "Dior, for instance, made a big mistake when it got into streetwear," she says. "I heard that Bernard Arnauld [chairman of Christian Dior SA] has put it back on track by asking one question before making decisions: would Monsieur Dior have done that? It is now changing in a good way, but it will be some time before consumers forget its vulgar period.
"Gucci is also seen too much on the streets. When you buy an expensive bag, you don't want to see it on a cheaper product just anyone can buy. You want to be able to relate to the person who is wearing the same brand as you are. You want to belong to an exclusive club." A club which Karen White is grateful eBay shoppers are keen to join and one she hopes to belong to again.