Couture and high end designer labels are all suffering due to the recession. Even the wealthy have stopped buying. But affordable luxury brands are doing quite well during the downturn. As wealthy consumers scale down, affordable luxury brands such as Tommy Hilfiger, Tory Burch and Marni are expanding and increasing profits. It's all about quality, value -- and price, of course.
Tommy Hilfiger just opened a 22,000-square-foot store on Fifth Avenue in Manhattan, a move that, in this economy, some might call insane.
But the Hilfiger line, like many midrange designer brands, is growing, while other labels, notably at the high end, are struggling to hang on to market share.
"We are positioned very well with accessible, affordable luxury and this is something we have been doing for 25 years," the designer said last month during New York Fashion Week.
Very well indeed. Sales of the Tommy Hilfiger Group, a unit of Apax Partners, a private equity investment group, rose 21 percent, to $1.6 billion, for the financial year that ended March 31, according to Fred Ghering, Hilfiger's chief executive officer. Hilfiger sales for this financial year are expected to rise in the single digits, much less than in previous years, but they will still grow in a stagnant market. For the record, a Hilfiger cocktail dress sells for $450 and a camel hair coat goes for about $750.
Brands like Tommy Hilfiger, D&G from Dolce & Gabbana, or Tory Burch, all selling below the luxury designer category, are growing now because they expanded or reorganized, repositioned collections or introduced new lucrative lines before the first signs of the recession.
"There is this white space between major designer collections and contemporary lines," said Robert Burke of Robert Burke Associates, the New York luxury consulting company. "Designers like Tory Burch, Phillip Lim and Alexander Wang are filling that gap. These collections provide their own great creativity at a great value."
The era of insanely high handbag and shoe prices had to end sometime. The market was fundamentally out of whack and now it's just snapped back to something more realistic. Most women are being careful with wardrobe purchases; they like brands that have excellent quality that are priced so they can buy pieces that will last and that they can mix and match.
