Management of Fashion and
Luxury Companies

What is Fashion?

Everyone has their own
definition for Fashion
“Fashion for me is Creativity”

“we live not according to reason, but according to fashion”
- Seneca, Philosopher
“Fashion is a form of ugliness so intolerable that we have to alter it every six
months” - Oscar Wilde, Poet
“Fashions fade, style is eternal” - Yves saint Laurent , French Fashion Designer
“ I don’t design clothes. I design Dreams” Ralph Lauren, American Fashion
Designer
Some famous people stated fashion as:-

Fashion is about Dream Factor
Companies only sell products, they sell a way of expressing
themselves through their products.Customers buy emotional
associations with the world that fashion companies create
● Wasp lifestyle for Ralph Lauren
● Sicilianity for Dolce & Gabbana
● Art of Journey for Louis Vuitton

What is Luxury?

Luxury comes from lux, that is a Latin word. Lux is Latin meaning something like light,
or brilliant. We have an Italian, word that is “lussato” that means when your shoulder
comes out of the original place, and something wrong. So, luxes means something
excessive, something, that is not on the right track. And we will see how, the
combination of these two meanings, so lux as light, brilliance, splendor, together with
the second meaning of something wrong, something extravagant, something excessive,
is the true nature of luxury.

“Luxury goes beyond basic necessity and is there to indulge our
personal happiness and pleasure”
“Luxury is Quality and Exclusivity”
“Luxury is Prestige”
“Luxury is a comfort in our life, it's time saving, but money spending”
“Luxury is expensive”
“Luxury means something more than necessities”

Luxury Segments
Beauty: Cosmetics, Hair,
Perfumes
Fashion:
Accessories
Apparel
Eyewear & Jewelry
Sunglasses
Prescription glasses
Costume
Watches

The Fashion Segmentation Pyramid
+Quality
+Creativity
+Price

Luxury Brands
Price: Most expensive, it could be 10 times higher than the average market price
Creativity: Maximum level, always made-to-measure
Quality: great attention to details, maximum level of craftsmanship, pieces of art
Use: Mainly special occasions especially in the evening
Target: Very few people, celebrities international clients
Idea: Build the image of brand and sell the dream

Ready-To-Wear
Price: high price,5 to 3 times higher than the average market price
Creativity: high level of creativity, designer’s expression through the fashion show
Quality: attention to details
Use: wider occasions of use,from daily to important events
Target: wider selection of people, celebrities international clients
Idea: Develop the image of the brand

Diffusion
Diffusion or second young lines
Price: Priced 3 to 2 times higher than the average market price
Creativity: inspired from ready-to-wear
Quality: wider volumes of production, production outsourced,country of origin is not a
key success factor
Use: casual, “sportier”
Target: younger audience,wider than RTW,mix of retail and wholesale distribution
Idea: Expand the target audience

Bridge
born in the USA with department stores
Price: right value for money, 2 to 1.5 times higher than the average market price
Creativity: trendy not too radical
Quality: production outsourced, right delivery in stores
Use: mainly daily occasions
Target: usually a mix of wholesale and retail distribution, both international and local
brands with local customers
Idea: Connecting the high end to mass market,Right marketing mix (product,
communication, service)

Mass Market
Price: below the average market price
Creativity: basics or fashionable items depending on business model
Quality: importance of costs control
Use: different occasions
Target: different targets, from teenager to sophisticated women
Idea: Supply chain management is key Segmentation is the new trend Masstige
communication

Four Business Models
Luxury brands
Fashion designer brands
Premium brands
Vertical retailers in the mass markets
These are organised by : Who, What, How, Revenue Model

The Four Pillars
Who(Customers)
T
he value proposition (exclusivity, value
for money, fashionability, status) that is
also identifying the segment of clients
targeted by that value proposition
(affluent, fashion victims,
connoisseurs)
What(Product Offer)
The product offer that is delivering a
certain value proposition (timeless/
iconic leather goods, fast fashion
apparel, designer shoes)
How(Infrastructure)
The way the value chain is organized
(degree of vertical integration, role of
key suppliers, international scope)
Revenue Model
How a company will earn income and generate profits (margins versus volumes, licensing fees)

Business Models Framework

Market Segments and Business Models Market segments and business models from bottom to top
> Mass Market: Mass Basic Retailers and Mass Vertical Retailers
> Premium: Premium Brands and Fast Premium Brands
> High-end: Luxury and Fashion Designer Brands
Value Proposition defined by:
Price
Creativity
Exclusivity
Image
Responsiveness of supply chain to fashion trends and seasonality
Classic > Less Responsive, Fashion > More Responsive

Luxury Brands
Luxury Brands are probably the oldest kind of business model in the world of
fashion , because the were the first to be established and originates from france.
Value Proposition/ Customer Expectation :
1. Timelessness
2. Heritage of the brand
3. Uniqueness
4. Exclusivity
5. Craftsmanship

Value Chain
1. Design
2. Manufacturing
3. Retail
French brands:
Vertically integrated in production and distribution.
> Louis Vuitton,Hermès
Italian brands:
Focused on design and manufacturing, not totally integrated in distribution,
mix of retail and wholesale channels.
> Tod’s, Ermenegildo Zegna, Salvatore Ferragamo
American brands:
Referring to accessible luxury, Focused on design
and retail Not integrated in manufacturing.
> Coach, Michael Kors

Premium Brands
Premium Brands also called Contemporary Brands. Most of them born with a fantasy
name, also some designer brands with a more affordable concept, but not too extreme in
terms of fashion with a right value for money, a good customer service and a strong
communication strategy,extensive use of digital media.
They mainly occupy the Bridge segment and represent a very fast
growing cluster today because:
1. Offer the right mix and match products ,
2. Are perceived less as a commodity compare to the Mass
Market ,
3. Are more affordable than designer brands.

Fashion designer brands are anticipating and creating new trends in the market,
their core business is clothing .
Role of the designer :
1. Assure the brand a consistent positioning in the market place.
2. Creates new collections.
3. Usually is the final decision maker for every single aspect of the brand.
Designer Brands

Fashion Designer Brands usually Include :
> RTW line, which is highest in term of price positioning and seasonal creativity .
> Diffusion line, that’s the second line which is more affordable and more casual.
With the increasing competition of fast fashion retailers, in the last years some of the
designer brands decided for one of the two choices:
> Shut down the second line despite the big success
> Transform the second line in a RTW brand with a strong and autonomous personality as
the master brand .

Vertical Retailers
The vertical retailer is a called vertical because actually they are not limited to the distribution and retailing
activities. But integrate also design process, brand image and communication .
The value chain can be more or less responsive to the market trends, that means incorporate different levels of
fashionability Example:
1. Mass basic retailers : offer a wide products range with many iconic styles and carry overs in large and welcoming
stores at convenient price. They control only some activities and do not own factories, but have production offices
next to the main suppliers in local countries,
2. Fast fashion retailers : offer a flow delivery of new fashionable merchandise in large and welcoming stores at
convenient price with new fashion products every two weeks. They have a high degree of vertical integration as in
manufacturing, design, distribution and retailing.

Complexity in Fashion Products Development
Fashion has some peculiar characteristics that make it unique and complex:
1. Seasonality
2. Variety of styles, occasions of use, sizes
3. A short product cycle and a long industrial pipeline
4. High number of activities and people involved
Trends in Fashion do influence everyone. Trends might last just a season, or even less
named as fad, or last for many years becoming a classic.

Stylistic Identity
All companies follow in fashion trends. But at the same time, they need to maintain a
certain individual character, and maintain their positioning, preserving their individual
style. Here comes the concept of stylistic identity. The individual style that each company
has on the market and makes it recognizable.
Stylistic identity is made up of some aesthetic elements including the brand logo, colors,
fabrics, patterns, details, lines and the shape of a piece that make a brand unique.

Some examples of Stylistic Identity
>The Sicilian baroque for Dolce & Gabbana
> the Milanese fog for the “greige” shades of Giorgio Armani
> The bold style recalling the Italian “Calabria” region for Versace
> the American East Coast style and native Americans for Ralph Lauren
> Canada for Dsquared2
> Bottega Veneta’s intrecciato woven leather and the knot,
> Missoni’s zigzag pattern on colorful knitwear,
> Céline contemporary minimalism with couture-like finishing.

The Product Development Process
Roles and Activities :
1.Collection Planning : It's usually based on past season performance analysis, Where the
Brand Manager, Merchandiser, Commercial Network is involved in Collection briefing,
presentation and discussion.
2.Collection Creation : It consists of Developing collection theme and product where the
Design Director and Product designer are involved to define the overall inspiration of the
brand.
3.Sampling : The product manager and supplier work hand in hand to collect sample of
production, Purchasing material, deciding the color card and pricing and lastly creating a
prototype.

4. Collection Presentation : the main work is done by the sales force.
Best case for the stylistic identity of a fashion designer brand : Dsquared2
Best case for the stylistic identity of a luxury brand : Bottega Veneta

Fashion Communication
Communication is what transforms the product into a brand. Fashion communication
mainly focuses on the so called dream factor.
There are different levels of communication:
1. The product, that in fashion is the seasonal collection
2. The brand, that is the personality, the essence that goes beyond the single collection and
makes the company recognizable and identifiable
3. The company, the corporate level.

Key Characteristics of Fashion Communication
> The importance of images, fashion communication is very visual.
> For designer brands images show only the seasonal products, the models and the logo,
they don’t have the pay-off.
> Thanks to the use of images fashion is a very direct and also universal language.
> The fashion product is a communication code in and of itself. Through the product the
designer represents the evolution of brand style.

> Images let the customers interpret the communication and in turn give them the freedom
to give their own personal interpretation.
> Fashion companies do not only want to be informative, they also want to be emotional
and inspirational.
> Non-verbal communication is much more effective and memorable than verbal
communication.
“Communication in fashion is a very powerful language”.

Objectives & Tools of Communication
Brand Awareness :
Sell-in (wholesale) & Sell-out (retail)
>Advertising & Editorials
> Fashion show & events
> Videos about seasonal products.
> Catalogues
> Web site and social media

Objectives & Tools of Communication
Brand Image : Image Identity
> Logo
> Heritage
> Designer/Entrepreneur Spokesperson
> Celebrity marketing
> Videos about craftsmanship, heritage, iconic products
> Website and social media

Objectives & Tools of Communication
Reputation:
> Internal Communication
> Investor Relations
> Charity and foundations
> Exhibitions
> Website and social media

Communication Identity
Brand Image depends on the message and the media.
The message is based on two factors :
> Concept, what is the one thing we want to communicate?
> Tone of voice, how does the brand convey the message?
Media is key to “position” the message. Fashion KPIs are focused on checking brand
perception, target affinity, and qualitative features, such as special positions.

Fashion companies want to reach both the target of opinion leaders and the final
customers. In order to do so they use a mix of following tools:
1. Fashion shows and events 9. User generated content
2. Glossy magazines and editorials 10. Videos
3. Billboards
4. Celebrities
5. Windows installations
6. In-store events
7. Social media, Bloggers
8. E-magazines

Global Retail Trend
1. Online and offline
retail are coming
together.

2. Sustainability is more important than ever.
For fashion retailer Timberland, sustainability is key to its purpose as a brand, and its
overall identity.
3. Social media is a key part of the purchase journey.
Over 40% of internet users in the U.S. and UK use Instagram to engage with influencers –
making it the most popular platform to do this. As Instagram is currently experimenting
with in-app purchases, influencer partnerships are set to earn retailers some serious
rewards.

4. Efficiency is changing retail from the inside out.

Retail Distribution channel
The key issue in managing distribution is how to build or maintain your brand identity and
image through a variety of channels and formats.
Following are three main channels:
1. Retail Channel
2. Wholesale Channel
3. Transnational Channel

Distribution channel formats
Formats within the channel
Retail Channel Wholesale Channel Transnational Channel
Flagship Store Corner Travel retail, Duty free
Self Standing Store Wall Unit E- Commerce
Shop- in-Shop Store Open Scale
Factory Outlet Outlet

Retail Channel
Flagship Store, usually a huge space, in a top global fashion capital, street level only, really the theater of the brand,
owned and managed directly by the company. Offers the brand’s global image and lifestyle concept(s) through the
offer of all brand products categories. Maybe there’s even a coffee shop and/or leisure areas.
Self Standing Store, a boutique of the brand in the main street, smaller than the flagship store, with a large selection
of the brand’s assortment
Shop-in-Shop Store, the store is inside an independent retail entity, shopping mall, or department store. The brand
offers the main product categories and has dedicated sales people
Factory Outlet, directly owned and managed by the brand

Wholesale Channel
Corner, an area in department stores or multi- brand stores where the
assortment and the brand image is recognizable, but the management is
in the hands of the wholesaler
Wall Unit, a space where you can usually find shoes, leather goods,
and/or accessories
Open Sale, a retail space at the lower level of department stores with a
multi-brand offer focused on one product category such as accessories,
jewels, interior design, etc.
Outlet, managed by the retailer

Transnational Channel
Travel retail, Duty Free Stores represents a booming business, becoming the new shopping destination. Fashion
and luxury companies are investing a lot here.
E-Commerce, company website managed by them or a third party

Conclusion:- Major learnings from the course are
how management of fashion and luxury companies
are evolving,What is Fashion?, What is Luxury?,
Luxury Segments in Retail, Fashion market
segmentation, Business models, Business model
framework, communication of brands, Global
Retail Trends, Retail Distribution channel and its
types.

THANK YOU