TOP 10 KEY LESSONS FROM THE BOOK

1. Brand Heritage as Strategic Asset

Fashion brands with strong historical heritage can leverage this as a competitive advantage in global markets. Salvatore Ferragamo demonstrates how founder stories, craftsmanship traditions, and historical connections (like the 1919 “Official Supplier to Italian Royal Household” warrant) create powerful brand narratives. Heritage becomes tangible through corporate museums, archived collections, and storytelling that transforms products into cultural artifacts. The key is maintaining authenticity while innovating—preserving artisanal production methods while embracing technology and international expansion.

2. Artification as De-Commoditization Strategy

When luxury brands face mass production and widespread availability that threaten their exclusivity, collaborating with the art world creates “virtual rarity.” Louis Vuitton’s partnerships with Takashi Murakami and Yayoi Kusama demonstrate how limited edition collections with renowned artists, combined with museum sponsorships and art foundation creation, elevate products from commerce to cultural significance. This strategy maintains prestige perceptions despite industrial-scale production, with art auction houses later selling these products as collectible pieces.

3. Multi-Channel Distribution Control

Successful luxury brands maintain tight control over their distribution networks, with directly operated stores (DOS) representing 58-86% of sales for brands studied. This control ensures consistent brand image, direct customer relationships, and prevents brand dilution. The Tod’s Group exemplifies this with 63.8% of revenue from DOS, while Prada reaches 86%. Direct control allows immediate feedback, coordinated collection launches, and preservation of the luxury retail experience across global markets.

4. Experiential Retail as Brand Building

Physical retail spaces have evolved from product display to immersive brand experiences. Prada’s Epicenters (New York, Tokyo, Los Angeles) merge architecture, technology, and art into multi-functional spaces hosting fashion shows, exhibitions, and cultural events. These “themed flagship brand stores” sell corporate image more than products, creating laboratories for brand dialogue with consumers. Features like interactive dressing rooms, kiosks displaying behind-the-scenes content, and RFID technology enable personalized experiences that traditional retail cannot match.

5. Strategic Brand Portfolio Management

The choice between “branded house” (all sub-brands carry parent name, like Armani) versus “house of brands” (independent brands, like LVMH) profoundly impacts brand equity and operational efficiency. The Tod’s Group demonstrates hybrid strategy: corporate dominant for flagship Tod’s brand (emphasizing Made-in-Italy craftsmanship), brand dominant for others (Roger Vivier highlighting French heritage). This allows different positioning while achieving operational synergies in production, supply chain, and knowledge sharing.

6. Balancing Tradition with Innovation

European luxury brands successfully navigate tension between preserving heritage and embracing modernity. Ferragamo maintains Neapolitan craftsmanship traditions while implementing industrial production; Harmont & Blaine combines 93% outsourced production with stringent quality control; Prada challenges “Made in Italy” mythology with “Made in Worlds” campaign acknowledging global production. The key is ensuring quality stems from brand standards rather than manufacturing location, with craftsmanship remaining visible in finished products.

7. Corporate Social Responsibility as Brand Differentiation

CSR initiatives strengthen brand identity when authentically connected to company values. The Tod’s Group allocates 1% net profit to charity, invests €25 million in Colosseum restoration, and operates among Italy’s most advanced employee welfare systems. Harmont & Blaine’s “From Naples it’s possible” slogan demonstrates ethical business in challenging environments. These activities aren’t mere philanthropy but strategic positioning as responsible luxury brands, addressing growing consumer concern about sustainability and social impact.

8. Family Business Advantages in Luxury

Family ownership preserves brand philosophy across generations while enabling long-term strategic vision unencumbered by quarterly earnings pressure. All five case studies remain family-controlled or influenced: Prada (Miuccia Prada & Patrizio Bertelli), Ferragamo (Wanda Ferragamo’s descendants), Tod’s (Della Valle family), Harmont & Blaine (Menniti and Montefusco brothers). Family leadership maintains cultural continuity, artisanal values, and commitment to quality that publicly traded companies struggle to sustain.

9. Vertical Brand Extension Risks

Extending brands downward to reach mass markets risks diluting luxury image, as Pierre Cardin’s cautionary tale demonstrates (900+ licensed products destroyed luxury perception). Successful strategies include: creating sub-brands with price differentiation (Armani Exchange vs. Giorgio Armani), limited edition collaborations maintaining exclusivity (H&M with Karl Lagerfeld), or brand dominant portfolio strategies (Tod’s managing Roger Vivier separately from core brand). The key is preserving core brand exclusivity while reaching broader markets through strategic separations.

10. Digital and Social Media Integration

Luxury brands initially resisted e-commerce fearing overexposure would undermine exclusivity, but digital sales for women’s luxury fashion are projected to reach 17% by 2018 and potentially 40% by 2020. Burberry pioneered online sales in 2006 (now 10% of sales), while brands like Net-A-Porter and Yoox created online luxury specialty stores. Successful integration requires: exceptional website design, omnichannel consistency, RFID technology connecting online and offline experiences, and social media strategies (Instagram for visual storytelling, YouTube for brand narratives) that maintain luxury positioning while expanding reach.

PREFACE & INTRODUCTION

This book examines the branding and communication strategies of five European luxury and premium fashion brands: Harmont & Blaine (Italy), Salvatore Ferragamo (Italy), Tod’s (Italy), Prada (Italy), and Louis Vuitton (France). The editors, Byoungho Jin and Elena Cedrola, present case studies that reveal how these companies have built global brands while maintaining their heritage and identity.

The book focuses on how family workshops from small towns grew into global luxury brands within relatively short timeframes. These success stories demonstrate that branding is most effective when rooted in a commitment to quality, combined with strategic marketing and communication efforts. The cases share common characteristics: tight quality control through various measures, early international expansion, family ownership that preserves brand philosophy, long-term partnerships with subcontractors, and innovative de-commodization strategies through corporate museums, storytelling, cutting-edge retail spaces, and art collaborations.

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CHAPTER 1: Brands as Core Assets – Trends and Challenges of Branding in Fashion Business

Key Concepts and Framework

• Brand Equity and Value Creation

• Brand equity is defined as “a set of brand assets and liabilities linked to a brand name and symbol, which add to or subtract from the value provided by a product or service”
• The fashion industry has the highest Q ratio (share of company value from non-tangibles) among all sectors, with Hermès holding the highest value
• Top fashion brands like Louis Vuitton ($22,250 million) and H&M ($22,222 million) have brand values approaching the GDP of small countries
• Brand equity consists of four dimensions: brand loyalty, brand awareness, brand associations, and perceived quality

• Fashion Brand Classifications

• Griffe (Designer Brand): Pure handcrafted creations in ateliers, unique and irreproducible (e.g., Yves Saint Laurent haute couture)
• Luxury Brand: Characterized by excellent quality, high price, scarcity, aesthetics, ancestral heritage, and superfluousness. Originates from designer brands or craftsmanship
• Premium Brand (New Luxury): Three sub-categories exist – super-premiums (Emporio Armani), old luxury brand extensions (Valentino Prêt-à-Porter), and masstige (Victoria’s Secret)
• Mass-Market Brand: Mass-produced, widely distributed, acceptable quality at low prices (Old Navy, Zara)

• Brand Extension Strategies

• Horizontal extension: New product categories at same price/quality level (Prada introducing fragrances and eyewear)
• Vertical extension: Same product category but different price points – upward (more expensive) or downward (more affordable)
• Ralph Lauren exemplifies extensive vertical extension with 16 brand levels from Ralph Lauren Collection to Chaps
• Risk of brand dilution increases with excessive extension, as demonstrated by Pierre Cardin’s cautionary tale

• Brand Portfolio Management

• Branded house approach: All sub-brands carry the parent name (Armani Casa, Armani Jeans, Armani Junior, Armani Caffé)
• House of brands approach: Independent brands with minimal corporate visibility (VF Corporation with North Face, Wrangler, Timberland)
• LVMH exemplifies house of brands with 50+ luxury brands across multiple sectors

Fashion Brand Communication

• Traditional Media Strategies

• Print advertising constitutes approximately 75% of fashion magazine content
• Innovations include gatefolds (Salvatore Ferragamo, 1993) and product samples attached to magazines
• Billboard advertising, despite high costs (€40,000/month for Venice’s Ducal Palace), effectively creates brand associations
• Celebrity endorsements create positive associations but carry risks if celebrities face scandals (Kate Moss example)

• Public Relations and Events

• Fashion shows serve multiple purposes: informing press and buyers, communicating brand values, recovering brand image (Burberry 1997)
• Store openings strategically position brands (Burberry on New Bond Street alongside Gucci, Versace, Prada)
• Sponsorships link brands to events (Grand Prix Hermès equestrian competition)
• Exclusive ceremonies at awards shows (Oscars, Cannes Film Festival) increase visibility

• Digital and Social Media Revolution

• Facebook used for product launches, relationship building, and exclusive digital catwalks
• Twitter enables real-time customer engagement and satisfaction monitoring
• YouTube facilitates storytelling through short films and behind-the-scenes content
• Instagram emerged as ideal platform for visual luxury brands to communicate brand identity
• Smartphone applications by Chanel, Gucci, Ralph Lauren enable direct customer relationships

• Fashion Blogs and Influencers

• Independent fashion bloggers gained influence comparable to traditional fashion media
• Dolce & Gabbana pioneered seating bloggers in front rows, receiving immediate feedback
• Chiara Ferragni’s “The Blonde Salad” exemplifies blog success with 5.6 million Instagram followers
• Brands collaborate with bloggers for immediate publicity and reaching younger audiences

Major Challenges in Luxury Fashion Branding

• Counterfeiting Crisis

• Technology enables rapid identification, simulation, and distribution of fake products
• International organizations (WTO, WIPO) established agreements to protect intellectual property
• Four anti-counterfeiting strategies: protection (through track-and-trace technologies), collaboration (with governments and institutions), prosecution (legal actions), and education (awareness campaigns)
• Rolex, Coach, Ralph Lauren use websites to educate consumers on distinguishing authentic products
• Harmont & Blaine spent 10 years in legal disputes in China before winning trademark rights

• Commoditization Threats

• Occurs through deterioration (reaching mass market from upscale position), proliferation (new price-benefit combinations), and escalation (competitors offering similar products at lower prices)
• Threatens core luxury tenets of rarity and exclusiveness
• Luxury brands mitigate through “artification” – binding brands with art world through sponsorships and artist collaborations
• Examples include Louis Vuitton collaborating with Takashi Murakami and Yayoi Kusama
• Corporate museums preserve heritage (Ferragamo Museum in Florence)

• Brand Dilution Dangers

• Occurs when favorable brand attributes are diminished through excessive availability
• Pierre Cardin case study: 900+ licensed products diluted initial luxury image, making business difficult to sell
• High-end brands risk exclusivity when extending downward to increase market share
• Gucci and Burberry bought back licenses to regain luxury positioning
• Limited edition strategies help maintain exclusivity while expanding reach

• Brand Avoidance Phenomenon

• Consumers deliberately reject brands despite financial ability to purchase
• Three causes: unmet expectations, symbolic incongruity, ideological incompatibility
• Animal rights campaigns targeted Gucci (for animal skins) and Hermès (for alligator handbags)
• Internet and social media amplify brand rejection movements
• Corporate Social Responsibility (CSR) becomes crucial: Gucci donated $10 million for women’s education, Hugo Boss joined Fur-Free Alliance

Emerging Trends in Fashion Branding

• Luxury Brands Embrace E-Commerce

• Digital sales for women’s luxury fashion expected to grow from 3% to 17% by 2018
• Online sales could reach 40% of total luxury sales by 2020
• Leading brands (Burberry, Michael Kors, Prada, Hermès, Gucci) now sell directly online
• Burberry pioneered in 2006, with e-commerce representing 10% of sales
• Net-A-Porter and Yoox emerged as premier online luxury specialty stores
• Challenge: maintaining exclusivity while increasing online accessibility

• Limited Edition Collaborations

• H&M pioneered with Karl Lagerfeld (2004), followed by Stella McCartney, Jimmy Choo, Versace
• Benefits: exposes brands to mass markets, increases sales, protects brand image from dilution
• Target’s “Missoni at Target” crashed website due to overwhelming demand
• Louis Vuitton collaborated with Japanese artists for limited collections
• Department stores (Macy’s, Kohl’s) adopted limited edition strategies

• Guerrilla Marketing Tactics

• Nike celebrated Tony Parker’s victory by covering Paris Statue of Liberty with his jersey
• Diesel’s “Heidies” campaign kidnapped young man, streamed live, requiring public interaction
• Uniqlo’s “Lucky Line” online waiting contest reached 1.3 million participants in China
• Relies on surprise elements to trigger buzz and maintain brand recall
• Lower budget alternative to traditional advertising

• Pop-Up Store Revolution

• Temporary stores open from one week to one year in various locations
• Advantages: affordability, flexibility, creates urgency, generates buzz, tests new markets
• Comme des Garçons opened first pop-up in Berlin bookshop (2004)
• Chanel Nail Bar pop-up in London for 2012 Olympics
• Puma created nomad pop-up with 24 shipping containers
• Strategic timing: fashion weeks, special occasions (Christmas, Cannes Film Festival)

• Experiential Retail Spaces

• “Experience economy” positions experiences as products (Pine & Gilmore, 1998)
• Build-A-Bear Workshop charges for birthday party hosting
• REI offers rock climbing pinnacle in Seattle flagship store
• Prada Epicenters combine retail with art, technology, and architecture
• Luxury hotels by brands: Bulgari (Milan, Bali), Palazzo Versace (Gold Coast, Dubai), Armani Hotel (Milan, Dubai)
• Restaurants and cafés: Nobu in Emporio Armani, Ralph Lauren restaurant in Chicago, L’Occitane Café in Taipei

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CHAPTER 2: Harmont & Blaine – A Successful Dachshund to Build Values and Brand Identity

Company Evolution and Overview

• From Family Business to International Brand

• Founded in 1986 as PDM for glove manufacturing by four brothers (Domenico and Enzo Menniti, Paolo and Massimo Montefusco)
• Registered Harmont & Blaine brand in 1993, shifting focus to shirt production
• Headquarters in Caivano, small city in Naples province, employs 500+ workers
• Achieved €74.8 million revenue in 2015, with 81.3% from exports
• Operates in 50 countries with approximately 100 mono-brand stores
• “From Naples it’s possible” slogan demonstrates ethical business in challenging environment

• Brand Identity and Visual Elements

• Logo features dachshund dog symbolizing keen instincts and intelligence compensating for small size
• Original blue color represents dependability, trustworthiness, and high quality
• Grey, yellow, and red-purple differentiate economical product lines (Jeans and Sport)
• Brand name inspired by legendary Duke of Harmont who traveled with dog Blaine searching for fine fabrics
• Dachshund represents company philosophy: small size overcome by intelligence and adaptability

• Product Portfolio Strategy

• Four brand names target different market segments:
  • Harmont & Blaine: High quality, high price, benchmarked against Ralph Lauren
  • Harmont & Blaine Jeans: Basic collection, lower price, online sales focus
  • Harmont & Blaine Sport: Outlet collections without dachshund logo
  • Harmont & Blaine Junior: Kids’ collection (4% of business)
• Men’s shirts constitute 28% of business, followed by t-shirts (25%), slacks (15%), women’s clothing (18%)
• 100% Made in Italy production: 93% outsourced to Italian artisanal workshops, 7% in-house

Marketing Strategy Four Pillars

• Extension of Range and Business Lines

• Step-by-step diversification from original shirt production
• Product categories added: shoes and accessories for new targets (women and 0-16 year-old children)
• Timeline of brand extensions:
  • 1993: Harmont & Blaine men’s shirts
  • 2005: Harmont & Blaine Junior
  • 2008: Harmont & Blaine shoes
  • 2009: Harmont & Blaine Cafés (Porto Rotondo and Eboli)
  • 2010: Harmont & Blaine Sport
  • 2011: Honda CR-V Harmont & Blaine (co-branding with Honda)
  • 2012: Harmont & Blaine Jeans

• Penetration of New Markets

• Internationalization began in 2001
• “Global Cities” project targets world tourism and shopping capitals
• Presence across continents: Europe, Africa, Asia, Americas, Oceania
• Major markets: Italy (primary), China, Middle East, Europe, Americas
• Strategic locations selected for visibility and brand positioning
• International stores mirror Mediterranean design essence while incorporating local context

• Distribution Channel Development

• Direct retail: 55.2% of net sales through exclusive boutiques, flagship stores, shops-in-shops, factory outlets
• Mono-brand stores (42 Italy, 58 worldwide): Located in city centers or prominent airports, designed as experiential spaces
• Flagship stores (4 total): Milan, Madrid, Prague, Moscow – 530-1000+ square meters
• Shops-in-shops (24 total): Agreements with department stores for independent retail space
• Factory outlets (22 stores): Products discounted 35%, following industry trend
• E-commerce: “Shop.harmontblaine.it” yielded €972,000 revenue in 2014
• Indirect channels: Multi-brand stores (600+ Italy, 200+ worldwide) and “corners” in prestigious department stores

• Direct Customer Dialogue

• “Magical triad”: products, branding, and stores create tacit dialogue with customers
• Social media presence enables interaction and needs assessment
• Personal pages allow customers to provide suggestions
• Quality excellence through collaborative relationships with Neapolitan subcontractors
• Subcontractors selected, trained, assessed every 2 years, awarded based on performance

Brand Promise and Personality

• Functional Features

• Fine fabrics: pure silk, cotton, linen, cashmere
• Special attention to detail: embroidered dachshund logo on all products
• Quality stitching and finishing techniques from Neapolitan sartorial tradition
• Innovative products: active sweater with patented yarn releasing lavender scent
• Shirt production uses Neapolitan school techniques: high number of stitches, handmade embroideries
• Tailored jackets feature typical shoulder fold for superior softness and comfort

• Emotional Benefits and Lifestyle

• Mediterranean style combining creativity with sartorial tradition
• “Total look” strategy offering coordinated wardrobe elements
• Vivid colors (blue, yellow, red) with creative patterns (stripes, flowers, butterflies)
• Breakthrough approach introduced color to male fashion when industry focused on black and white
• Mix of innovative materials (silk, cotton, wool, leather) with traditional craftsmanship
• Brand promise: daring creativity, trendiness, smart elegance, Italian lifestyle

• Brand Personality Dimensions

• Sincerity: Honesty and morality of founders, cheerful products celebrating Mediterranean colors
• Competence: Strong textile tradition, collaboration philosophy, specialized workforce
• Excitement: Daring founders coping with market changes, dynamic brand capturing trends (10,000+ polo models, 750+ shirt models)
• Sophistication: Exclusivity, elegance, Italian style through fine fabrics and quality finishing

Communication Strategy

• Organizational Communication

• Public relations targeting media, celebrities, stakeholders
• Approximately 30 celebrities involved with formal and informal agreements
• Fabio Cannavaro (World Champion, Golden Ball, FIFA World Player 2006) as official testimonial
• Fashion nights at exclusive boutiques celebrating Mediterranean lifestyle
• Social media platforms (Facebook, Twitter, LinkedIn, YouTube, Instagram) for real-time engagement
• Corporate website and social networks as storytelling tools

• Management Communication

• Family leadership style maintaining employee affection despite large size
• Strong group identity: employees participate in events, openings, new launches regardless of rewards
• “Cooperation is in the DNA of Harmont & Blaine”
• Dialogue through formal and informal meetings
• Incentives reward commitment to company and departmental goals
• During 1980s crisis, founders avoided dismissing employees, building lasting loyalty

• Marketing Communication

• Advertising stresses specific moments: new collections, boutique inaugurations, fashion events
• Worldwide print media presence (newspapers and magazines)
• Product placement in TV and cinema productions
• Outdoor advertising used effectively in China during market expansion
• Awards received: Premio Guggenheim Impresa e Cultura, Dun & Bradstreet Rating 1

Challenges and Strategic Responses

• Counterfeiting Crisis in China

• 10-year legal battle (2004-2014) for trademark rights
• Since 2008: involved in 800+ criminal acts following counterfeit seizures
• Chinese company filed “Harmont & Blaine” trademark first under “first to file” principle
• Closed 12 boutiques during dispute
• January 2016: unauthorized boutique confiscated in Lebanon
• Response strategies: strengthened police collaboration, enhanced monitoring systems, improved product recognizability
• Victory: Chinese Patent Office recognized Italian company’s exclusive rights

• Quality Control and Production Excellence

• Collaborative relationships with subcontractors ensure quality
• Production director engaged in periodic assessment and worker training
• Subcontractors trained on fabrics and techniques for specific markets/targets
• Checklist system for all products
• Confidentiality required for new collections (colors, patterns, items, fabrics, yarns)
• Suppliers often source innovation through new solutions for yarn and fabric

• Strategic Planning Lessons

• Need for systematic planning of international expansion
• Initially underestimated negative effects of counterfeits
• Communication not part of strategic long-term planning (reliance on annual wardrobe gifts to celebrities)
• Question of sustainability without strategic communication plan
• Need for digital and smart technology investment for brand management

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CHAPTER 3: Salvatore Ferragamo – Brand Heritage as Main Vector of Brand Extension and Internationalization

Historical Foundation and Evolution

• The Shoemaker’s Journey (1898-1960)

• Salvatore Ferragamo born 1898 in Bonito, small village near Naples
• Eleventh of fourteen children in modest farming family
• Age 11: Apprenticeship with Naples shoemaker Luigi Festa
• Age 13: Opened own shop in Bonito, made first pair of shoes for sister’s communion (age 9)
• 1914: Moved to United States at age 16 to learn new technologies
• United States epicenter of footwear sector in production technology and innovation
• Italy lagged technologically: tanning in pits (8 months) vs. tanning drum (48 hours)

• Hollywood Era and Innovation

• Boston: Worked at “Queen Quality” factory producing shoes
• California: Opened shoe repair shop in Santa Barbara
• Worked for America Film Co. and motion picture industry (cowboy boots, Roman sandals)
• Studied anatomy at University of Southern California, focused on foot arches
• 1923: Opened “Hollywood Boot Shop” in Hollywood
• Famous clients: Mary Pickford, Rodolfo Valentino, John Barrymore Jr., Douglas Fairbanks, Gloria Swanson
• Press dubbed him “shoemaker to the stars”
• Introduced sandals for women, modifying fashion rules

• Return to Italy and Renaissance (1927-1960)

• Late 1920s: Returned to Italy seeking traditional craftsmanship
• Chose Florence for long tradition of craftsmanship
• Combined American technology with Italian artisanal techniques (embroidery, lace)
• 1929 Wall Street Crash: Export flows to U.S. declined, business failure 1933
• 1936: Rented laboratories and shop in Spini Feroni Palace, Florence
• 1938: Purchased Spini Feroni Palace (still company headquarters today)
• WWII: Used raffia, cellophane, cloth, wire, wood, synthetic resins for shoe uppers
• Invented famous wedge heel using Sardinian cork (patented)
• 1947: Received Neiman Marcus Award (first footwear designer, first Italian recipient)
• 1950: Company employed 750 people, producing 350 handmade pairs daily

• Family Inheritance Period (1960-Present)

• 1960: Salvatore died at age 62
• Wife Wanda took helm with six children (ages 3-19)
• Eldest daughter Fiamma (1941-1998) headed footwear sector
• Daily production increased from 350 to 2,000 pairs
• Outsourced to small factories in Campania and Tuscany
• Transition from mono-product to multi-category brand under Wanda’s direction
• Preserved artisanal aspects while industrializing production
• Global retail network developed while maintaining brand heritage

Brand Heritage as Strategic Asset

• Functional and Symbolic Brand Assets

• Salvatore’s passion for materials expressed in heel and upper design
• Heel variations: cage, “F”, wedge, stiletto, covered with various materials
• Caged heel (patented 1955): Different textile covers coordinate with dresses
• Upper as personal palette: colors and geometric patterns in endless combinations
• Patchwork became leitmotif from late 1920s: combining leathers and textiles
• Distinctive chromatic composition contrasted neutral colors prevalent at time

• Artistic Connections and Innovation

• Fascinated by contemporary art movements where motion and color central
• Relationship with Italian art movement “Second Futurism”
• Collaboration with artist Giuseppe Landsmann (Lucio Venna): four sketches and manifesto
• Internal label “Ferragamo’s Creations Florence Italy” still used today
• Focus on shoe functionality and human anatomy
• First artisan in footwear to study body weight distribution over foot joints
• Multiple structural innovations patented over years

• Mythical Dimension and Communication

• Pietro Annigoni portrait of Spini Feroni Palace used on packaging, advertising, letterhead, scarves (1961)
• Same stylized palace portrait used in 2011 “Inspiration and Vision” exhibition
• First perfume launch incorporated mythological characters (Vulcan and Venus)
• Photographs portrayed Salvatore kneeling at feet of “stars” and women, testing shoe fit
• Myth reinforced: Vulcan (Salvatore) creating shoes for Venus (screen stars)

Corporate Museum and Cultural Preservation

• Museum Foundation and Evolution

• Opened May 1995 to commemorate founder’s story and role in contemporary footwear
• Collection: 10,000 shoes, documents, photographs, shoemaker tools documenting 1927-1960
• Connected study center with library and document archives focused on footwear
• Items reveal relationships with futurist artists, quest for perfect fit, material innovations
• 2000: Discovery of 368 patents and trademarks registered 1929-1964 (largest number for single trademark in footwear)
• Currently researching pre-1927 activity in United States

• Cultural Impact and Recognition

• 1985: First retrospective exhibition with Costume Gallery of Pitti Palace and Municipality of Florence
• One of first Italian exhibitions considering fashion as cultural and contemporary art phenomenon
• 1999: Received Premio Guggenheim Impresa e Cultura for cultural investments
• 2000: Building restoration showcasing 17th-18th century Florentine art, Bernardino Poccetti frescoes
• 2006: Museum expanded to seven rooms (two for rotating displays, five for 6-month exhibitions)
• Goals: Reinterpret bond between art, design, costume, and firm; foster connections with leading cultural institutions

• Exhibition Program and Global Reach

• 2010-2015 exhibitions: Greta Garbo, A Regola d’arte, Inspiration and Vision, Secret Archives, Marilyn, The Amazing Shoemaker, Equilibrium
• Traveling exhibitions bring work worldwide: Japan (1998 centennial), Sydney, Tokyo, Frankfurt
• “Audrey Hepburn. A woman, the style” toured 1999-2001
• Guides available in multiple languages
• Regular activities with local institutions, hotels, tour operators, schools, universities, blogs
• One of 48 associates of Museimpresa (Italian association of corporate museums and archives)

Brand Extension Strategy

• Product Category Development

• Initially addressed women only
• Mid-1960s: Apparel category and leather goods (handbags, luggage, belts, wallets, small accessories)
• Early 1970s: Silk goods and accessories
• Mid-1970s: Men’s products (shoes, ready-to-wear)
• Late 1990s-present: Complementary categories (perfumes, glasses, watches, jewelry)
• All extensions leverage established brand image, target same market position
• Original brand concept: balance between eccentricity and elegance

• Financial Performance

• 2014 total revenue: €736.1 million (5.0% increase from 2013)
• Export share: 81.3% of revenue
• Geographic distribution (2014):
  • Asia Pacific and Japan: 36.7% combined
  • Europe (including Italy): 36%
  • North America: 22.4%
  • Central and South America: 4.6%
• Product portfolio (2014): Footwear 45%, Leather goods 39.3%, Apparel 8.9%, Accessories 6.8%

Internationalization Timeline

• Market Entry Strategy

• Mid-1980s onward: Focus on Asia Pacific
  • 1986: Hong Kong
  • 1991: Japan
  • 1994: China
  • 1995: South Korea
• Late 1990s-early 2000s: Latin America and South Asia
  • 1999: Mexico City
  • 2006: India
• Recent: Middle Eastern countries
  • 2008: Dubai (UAE)
  • 2010: Qatar
• 33 local subsidiaries manage international markets (14 Far East, 9 Europe, 10 Americas)

• Distribution Network

• Operates in 90+ countries
• 373 directly operated Ferragamo stores
• 270 mono-brand stores and stores-in-stores managed by third parties
• Multi-brand retail channels (department stores, luxury specialist retailers, travel retail/duty free, franchises)
• Direct retail channel: Primary focus ensuring strict standardization
• Store selection based on coherence with brand positioning (location, visibility)
• Standardized store format reduces management complexity, enhances brand awareness

Strategic Implications

• Made in Italy as Global Concept

• Pioneered export of Italian fashion products
• Shaped identity of “Made in Italy” label as known today
• Blended craftsmanship and industrial production
• Used evocative Italian images in communication
• “Made in Italy” communicates taste and style tracing to Renaissance Florence
• In fashion: associated with creativity and craftsmanship

• From Workshop to Global Player

• Maintained familial entrepreneurship in organizational structure and identity
• Three key transitions:
  1. Single-product to multi-category company
  2. Product-oriented brand to retail-oriented brand
  3. Family business to publicly traded company
• Brand heritage as intrinsic value proposition and positioning asset
• Functional and symbolic assets constitute “fil rouge” of brand value proposition
• Centralized decision process and shared organizational model enable brand extension

• Innovation and Tradition Balance

• Salvatore Ferragamo assumes mythical narrative dimension
• Family serves as brand guardian over time
• Founder’s signature became brand lettering
• Tension between tradition and innovation ongoing
• Founder and brand heritage serve as compass
• Challenge: translating strong heritage assets into dynamic communicative approaches

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CHAPTER 4: Tod’s – A Global Multi-Brand Company with a Taste of Tradition

Company Structure and Overview

• Corporate Organization

• Tod’s S.p.A. is parent company managing group’s organizational structure and entire value chain
• 46 subsidiaries total (9 direct, 37 indirect)
• Subsidiary network includes:
  • Companies managing directly operated stores (DOS)
  • Companies in strategic geographic markets (USA, Germany, France, UK, Spain, Hong Kong, Korea, Far East)
  • One services company
  • Two production companies in Eastern Europe
• 2014 workforce: 4,297 employees (50 executives, 2,981 white-collar, 1,266 blue-collar)
• 34.5% workforce increase over five years (2010-2014)
• Active in 37 countries with strong presence in Europe and Greater China

• Financial Performance

• 2014 total sales: €3,513.4 million
• Export share growth: 46% (2010) to 67.8% (2014)
• DOS sales: €616 million (63.8% of total revenue)
• Brand distribution: Tod’s 58.9%, Hogan 22.0%, Roger Vivier 13.1%, Fay 5.9%
• Product category: Shoes 77%, Leather goods 16.1%, Apparel 6.8%
• Geographic revenue (2014): Italy 32.2%, Rest of Europe 22.9%, Greater China 23.4%, Americas 9%, Others 12.5%

• Production and Distribution Philosophy

• Six proprietary manufacturing plants in Italy (four Marche region, two Tuscany)
• Two indirectly controlled production companies (Albany, Hungary)
• Long-term relationships with small workshops for outsourcing
• Manufacturing differs by product and brand
• Most production in central Italy: shoes in Marche and Abruzzo, leather goods in Tuscany
• Certain Hogan and Fay phases offshored to Eastern Europe
• Distribution: 325 mono-brand stores (232 DOS, 93 franchised)
• Franchising primary entry channel for new markets, rarely used domestically
• Multi-brand stores used for market entry depending on situations

Historical Development

• Four Phases of Growth

1. Boutique Era (1913-1977): Single focus on exclusive baggage and accessories in Milan
   • Founded 1913 as “Fratelli Prada” (Prada Brothers) by Mario and Martino Prada
   • Supplier of exclusive baggage and leather items to upscale clientele
   • Focus on nobility consumers’ travel needs
   • Mario Prada: first designer and manager
   • 1919: Granted “Official Supplier of the Italian Royal Household” warrant
2. Expansion Phase (1977-1990s): Marriage of creativity with international strategy
   • 1977: Miuccia Prada and Patrizio Bertelli partnership began
   • Two strategic phases: search for differentiation, establish growth platform
   • Strategy: simplicity and utilitarianism in product design, logo, communication
   • 1984: Black nylon backpack launched, became fashion icon
   • 1979: First women’s footwear collection
   • 1988: First women’s ready-to-wear clothing collection
   • 1993: First menswear, footwear, and accessories; Miu Miu brand launched
   • 1983: First “Green Store” in Milan (Via della Spiga)
   • International store expansion: New York, Madrid, Paris, London
3. Epicenters Phase (2000s-2010s): Enhancing brand through anti-commercial projects
   • Late 1990s-early 2000s: Acquisition attempts (Gucci, Fendi, Helmut Lang, Jil Sander – mostly unsuccessful)
   • Successful acquisitions: Church’s (1999), Car Shoe (2001)
   • 2001: First Prada Epicenter (Broadway, New York) by Rem Koolhaas
   • 2003: Tokyo Epicenter by Herzog & de Meuron
   • 2004: Los Angeles Epicenter by Rem Koolhaas
   • Epicenters merged technology, architecture, design into experiential spaces
   • Licensed products: Eyewear (Luxottica 2000, 2003), Fragrances (PUIG 2003), LG Prada smartphone (2007)
   • “Made in Worlds” campaign (2010)
4. Consolidation Phase (2010s-Present): Leadership in business, fashion, arts patronage
   • June 24, 2011: Listed 20% shares on Hong Kong Stock Exchange (valued €9.2 billion)
   • 2014: Acquired Marchesi 1824 (historic Milan pastry shop)
   • Fondazione Prada strengthened as CSR and cultural activities hub
   • 2014: Pradasphere exhibition in Hong Kong
   • 2014: Prada Transformer (Seoul) – temporary exhibition space by Rem Koolhaas
   • 2015: New Milan venue of Fondazione Prada opened
   • 605 stores in 70 countries (2015)

Brand Portfolio Strategy

• Tod’s Brand (Flagship)

• Launched early 1980s, first footwear line
• Late 1990s: Added leather goods
• Recent years: Ready-to-wear collection
• Positioned medium-high-level, “aspirational” brand
• Emphasizes tradition, high quality, modernity
• Leverages Made-in-Italy craftsmanship and Italian lifestyle
• Footwear remains core business
• Gommino moccasin (1978): Iconic product with 133 rubber pebbles on sole
• Partnership with Ferrari S.p.A. since early 2000s for limited editions
• 70% of group’s stores worldwide
• Represents approximately 60% of overall sales (2014)

• Hogan Brand

• Launched 1986
• Positioned at base of pyramid with lower pricing
• 22% of overall revenue
• Wide product range: footwear, leather goods, accessories, apparel
• Broad consumer base: women, men, children (ages 20-55)
• Brand proposition: innovation, trendiness, “new luxury” lifestyle
• Partial manufacturing in Eastern Europe for cost reduction
• Initial internationalization phase, mostly domestic market
• 40 mono-brand stores (23 Italy, 17 international)
• Iconic products: “Traditional” and “Interactive” casual shoes
• Challenge: Interactive model’s strong association limiting total look perception
• Double-digit sales growth in China (2015)

• Fay Brand

• Entered portfolio late 1980s
• Group’s first brand expansion for complementary product-line
• Base of pyramid positioning with affordable pricing
• Casual wear: men’s, women’s, junior collections
• Classic styles for daily life
• €57.3 million revenue (5.9% of group total)
• Predominantly domestic market operation
• 20 mono-brand stores (19 Italy, 1 Madrid)
• Distribution primarily through wholesalers

• Roger Vivier Brand

• Acquired 2001, fully acquired 2015 for €415 million
• Named after French designer credited with inventing stiletto heel (1950s)
• Nickname: “the Fabergé of footwear”
• Most exclusive and luxurious brand in portfolio
• Product offering: shoes, handbags, small leather goods, sunglasses, jewelry
• Timeless Parisian elegance, sophistication, extravagance
• Exclusive distribution network in key luxury cities
• 31 DOS and 4 franchised stores (September 2015)
• Stores combine modern and vintage elements
• Weak domestic market influence, strong Asia-Pacific presence
• Higher EBITDA margin than group average
• Iconic product: Pilgrim pumps

• Marchesi 1824

• March 2014: Prada acquired 80% of historic Milanese pastry shop (founded 1824)
• Goal: Transform into “institution” in Milan for locals and tourists
• Enhance communication, strengthen consumer contact, increase mono-brand shops
• September 2015: Second shop in Via Monte Napoleone
• Preserves 190+ year tradition of excellence
• Signature pale green color in interior design

Brand Communication and Storytelling

• Tod’s Storytelling Approach

• Alternative to traditional fashion magazine marketing
• Four internationally published books using image power:
  1. “Italian Touch” (2009): Italian testimonials celebrating aesthetic and “la dolce vita”
  2. “Italian Portraits” (2012): Italians in everyday lives with historic palaces and countryside
  3. “Timeless Icons” (2013): Princess Diana wearing Tod’s (Gommino shoes, D-bag)
  4. “Un mito nel mito” (2013): Jacqueline Kennedy vacation in Capri (early 1970s)
• Books emphasize timeless, classic Tod’s style remaining fashionable
• Communication transcends manufacturing locations
• “Made in Italy? Who cares!” – Miuccia Prada quote

• Retail Network as Communication Channel

• Physical stores: huge investment, key role in brand identity
• Ideal channels for engaging customers with lifestyle experiences
• DEV boutiques: All brands (except Roger Vivier) in single store
• Since mid-2000s: 19 DEV boutiques, mostly northern and central Italy
• J.P. Tod’s Sartorial collection (2014): Men’s clothing at selected luxury boutiques (Paris, Tokyo, Shanghai, Beverly Hills, Milan)
• “The Gommino Club”: Customizable Gommino shoes (leather, laces, colors)
• Live demonstrations: Italian artisans showing Gommino manufacturing in boutiques

Corporate Social Responsibility

• Stakeholder Dimension – Human Capital Investment

• Among most modern welfare systems in Italy
• Health insurance extending to family members for serious illness
• Full cost coverage of textbooks for employees’ children through university
• Exceptional facilities: kindergarten, fitness center, free canteen, library, video library
• Low turnover rate (unusual in high-turnover industry)
• Many employees from two or three generations of same family
• “Fabbrica del Talento” (Talent Factory, 2014): Six-month training for 20 young people, 70% hired afterward
• Preserves manual craftsmanship knowledge transfer to new generations
• 2014 project: Store manager touring of Milan office, headquarters, production sites
• Employee exchange program with China (2014): Chinese managers live in Italy three months for training

• Social Dimension – Community Service

• Preserves Della Valle family values
• 1% of net profit allocated to charity projects involving local communities
• Italian artistic heritage preservation investments
• Two large projects:
  1. Teatro alla Scala (Milan opera house): Cultural promotion
  2. Colosseum (Rome): €25 million investment for restoration (agreement 2011, started 2014)
• “An Italian Dream” video campaign (2010): Preservation of Italian heritage through opera and ballet
• Leverages Made-in-Italy concept, Italian lifestyle, traditional crafts
• Sponsored restorations in Bologna, Padua, Bari, Florence
• Strategy: Connecting/lifting brand image to luxury art piece status

• Environmental Dimension – Energy Efficiency

• Energy consumption analysis at headquarters
• Energy-saving program implemented 2014
• Alternative energy sources: geothermal and solar for partial needs
• Improved air conditioning efficiency
• New 10,500 square-meter building near headquarters meeting “passive house” requirements
• Low energy consumption through insulation, rainwater recovery, LED lighting
• Solar and geothermal plants for heating/cooling
• Insulation method applied to two Marche manufacturing plants
• Retail stores: LED technology for lighting, recycled furnishings

Strategic Implications

• Hybrid Branding Solution

• Corporate dominant strategy for core Tod’s brand
• Brand dominant strategy for other brands (Fay, Hogan, Roger Vivier)
• Allows different positioning for brands in portfolio
• Tod’s embodies group values: craftsmanship, Made-in-Italy, handmade, heritage
• Different brands operate in different markets with distinct marketing strategies
• Tod’s emphasizes Italian lifestyle through Made-in-Italy or artisanal features
• Roger Vivier associates with French style and values distinct from Tod’s

• Organizational Structure

• Vertical decision-making process upstream (strategic, centralized)
• Horizontal operating process downstream (design, marketing, retail management separate by brand)
• Centralized approach ensures:
  • Consistency in group vision
  • Cost and operational efficiency
  • Synergy among brands
• Downstream approach ensures:
  • Diversified brand identity
  • Differentiation in operations
  • Unique brand image within portfolio

• Preservation of Tradition

• Main value proposition: preservation of tradition
• Della Valle family prominent role in operations
• Commitment to local community ties to family business and heritage
• Tension between tradition and innovation
• Founder and brand heritage serve as compass
• Strength: Strategic assets for worldwide brand awareness and consistency
• Challenge: Translating strong assets into dynamic communicative approaches

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CHAPTER 5: The Prada Trend – Brand Building at Intersection of Design, Art, Technology, and Retail Experience

Independence Strategy

• Refusal of Conglomerate Mergers

• One of few luxury groups remaining independent
• LVMH, Richemont, Kering dominate through acquisitions
• Independence as cornerstone of strategy
• Direct control ensures continuous dialogue with end customers
• Independence allows own strategy development
• Maintains managerial coherence
• Five distinct brands: Prada, Miu Miu, Church’s, Car Shoe, Marchesi 1824

• Global Presence and Performance

• €3.5 billion turnover (2014)
• Publicly listed Hong Kong Stock Exchange since 2011
• Two CEOs: Miuccia Prada (creative) and Patrizio Bertelli (strategic)
• Operates in 70 countries
• 605 directly operated stores (2015)
• 86% of net revenues from DOS (2015)
• Geography: 372 Prada stores, 174 Miu Miu, 54 Church’s, 5 Car Shoe
• Franchising: 27 Prada, 10 Miu Miu stores

Production and Quality Control

• Manufacturing Network

• 13 company-owned production facilities:
  • 11 Italy (Arezzo, Civitanova Marche, Dolo, Fucecchio, Incisa, Levane, Montegranaro, Montone, Piancastagnaio, Scandicci, Torgiano)
  • 1 Great Britain (Northampton)
  • 1 France (Tannerie Mégisserie Hervy, acquired October 2014)
• Coordination from Terranuova Bracciolini industrial headquarters (Arezzo, Tuscany)
• Mix of innovative technologies with craftsmanship traditions
• Made-for-Prada materials often unique

• Global Production Strategy

• Production delocalization trend
• Large share produced globally: China, Turkey, Vietnam, Romania
• Cost-reducing reasons for delocalization
• Quality linked to brand rather than exclusively Made-in-Italy
• Brand replaces country-of-origin associations in global marketplace

Historical Evolution

• Boutique Era (1913-1977)

• Founded 1913 as “Fratelli Prada” by Mario and Martino Prada
• Exclusive baggage and leather items for upscale clientele
• Single-minded focus: satisfy nobility consumers’ travel needs
• Strategic location: Galleria Vittorio Emanuele II, Milan
• 1919: “Official Supplier of the Italian Royal Household” warrant
• Royal Savoy coat of arms and figure-of-eight knots in logo
• 1952: Mario’s death, daughter Luisa took over (son uninterested)
• Brand not well known outside Italy at time

• Creative Partnership Era (1977-1990s)

• 1977: Miuccia Prada joined family business (PhD in political science, mime artist training, feminist)
• Partnership with Patrizio Bertelli (leather business owner in Tuscany)
• Challenging situation: limited distribution, generic design, difficult finances
• Strategy: simplicity and utilitarianism contrasting other luxury brands
• 1984: Black nylon backpack launched, became fashion icon
• Clean-line design, sophisticated sobriety
• Product launches: 1979 women’s footwear, 1988 women’s ready-to-wear, 1993 menswear
• 1993: Miu Miu brand launched (youthful, avant-garde)
• 1983: First “Green Store” (Milan) – pale green color scheme
• International expansion: wholesale agreements (Saks, Macy’s, Neiman Marcus, Barneys)

• Acquisition and Epicenter Era (2000s-2010s)

• Acquisition attempts: Gucci, Fendi (sold to LVMH), Helmut Lang (sold), Jil Sander (sold)
• Successful: Church’s (1999), Car Shoe (2001)
• Alternative non-commercial route: art-based brand enhancement
• Epicenters concept: super-sized, unique shopping spaces
  • 2001: Broadway, New York (Rem Koolhaas)
  • 2003: Aoyama, Tokyo (Herzog & de Meuron)
  • 2004: Beverly Hills, Los Angeles (Rem Koolhaas)
• Epicenters merge commerce with creative architecture, technology, art
• Product democratization: eyewear licensing (Luxottica), fragrances (PUIG), LG Prada smartphone (2007)
• Balance: mainstream products with ground-breaking retail innovations

• Global Leadership Era (2010s-Present)

• 2010: “Prada Made in…” collection celebrating global manufacturing excellence
• “Made in Italy? Who cares!” – Miuccia Prada quote
• June 24, 2011: Listed 20% shares Hong Kong Stock Exchange (€9.2 billion valuation)
• 2014: Acquired Marchesi 1824 (historic Milan pastry shop)
• Fondazione Prada strengthened: cultural activities, CSR
• Maintains Milan “magic circle” connection
• Traveling exhibitions worldwide
• 2014: Prada Transformer (Seoul) temporary exhibition space
• 2015: New Milan Fondazione Prada venue
• Leadership: creative, ambitious, trendsetting global business

Brand Portfolio

• Prada (Flagship Brand)

• 81.2% of total sales revenue (€1.46 billion, Jan-July 2015)
• Avant-garde creativity through merchandise: leather goods to ready-to-wear
• Supported by art-related strategies, technological innovation
• Retail locations embody brand essence
• Maximum expression in Prada Epicenters

• Miu Miu

• Created 1993 as space for Miuccia’s provocative creativity
• 16.3% of revenues (€293.92 million, end July 2015)
• “Couture savoir-faire and refined experimentalism”
• Dichotomous to Prada’s sober minimalism
• Targets younger clientele, more affordable materials
• Prices not necessarily lower than Prada
• “In line with quality of product”
• Strategy: “friendly competitor” with unique standout identity

• Church’s

• Historical English brand (founded 1873, Northampton)
• Know-how based on 1675 family shoemaking experience
• Acquired by Prada Group 1999
• 2.1% of revenues (€38.38 million)
• High-quality craftsmanship shoes with classic elegant design
• Recently introduced women’s line

• Car Shoe

• Founded Italy 1963 by Gianni Mostile
• Acquired Prada Group 2001
• 0.3% of revenues (€5.52 million, end July 2015)
• Originally designed for driving sports cars
• High-quality materials, handmade craftsmanship
• Target: elegant clientele needing classic leisure shoes

• Marchesi 1824

• March 2014: Prada acquired 80%
• Pastry shop opened by Angelo Marchesi 1824
• Eighteenth century building location
• Goal: Transform into Milan “institution”
• Enhance communication, consumer contact
• September 2015: Second shop Via Monte Napoleone
• Preserves long-standing tradition of excellence

Art, Technology, and Experience

• Artful Brand Building

• Miuccia Prada and Patrizio Bertelli’s genuine interest in visual art
• Prada Foundation (inaugurated 1993): 20+ years promoting contemporary art
• May 2015: New exhibition area in Milan (restored by Rem Koolhaas)
• Partnership with leading international architects
• Creates constantly evolving brand experience space
• Allows first-hand brand essence narration to customers
• Support for contemporary art market
• International artists gain recognition through Prada support (e.g., Francesco Vezzoli)

• Technology-Enhanced Experience

• Wearable computer, shoe phone, Prada laptop (conceptual only)
• LG Prada smartphone (2007): Among first touchscreen devices
  • Same year as iPhone
  • 2008, 2011: Successor versions
  • Initially luxury premium pricing
  • Later competitively priced against other Android phones
  • “Luxury-fication” of technology evolved to functionality competition
• Radio-frequency identification (RFID): Electronic tags for evolved CRM
  • Replaces bar codes permanently
  • Interface between brand and customer
  • Search information about products
  • Interact with staff or from home via website
  • Prada Customer Cards for loyal customers
  • Immediately recognizable by sales staff
  • Highly customized shopping experience
  • Personal virtual closet accessible online

• Innovative Retail Technology

• Dressing rooms: Active customer participation
  • Consult inventory
  • Control lighting
  • Place orders, ask questions
  • Adjust wall transparency
• Kiosks and Peep Shows: Interactive spaces
  • Seek Prada website
  • Choose between channels: special videos, backstage fashion shows, security cameras, TV, home videos, old movies
• Implementation: Primarily in Prada Epicenters

Prada Epicenters

• Concept and Purpose

• Dramatically different from common flagship stores
• Three-year research into shopping trends worldwide
• Unique flagship transcending pure commerce
• Multi-functional “wave” features (New York):
  • Undulates from street to floor below
  • Motorized hanging display cages on ceiling tracks
  • Flip-out stage for special events
  • Hosts concerts, film screenings, exhibitions
• “The wall” covering entire block length
  • Canvas for contemporary graphics
  • Changed repeatedly to modify store atmosphere
• Experimental laboratory for brand
• Entertainment spaces selling corporate brand image
• Themed flagship brand store concept

• New York Epicenter (2001)

• Broadway location
• Designed by Rem Koolhaas
• Wood wave multi-functional feature
• Wall for contemporary graphics
• Ultimate expression of technology, art, architecture
• Immediately successful
• One of greatest flagship store exemplars worldwide

• Tokyo Epicenter (2003)

• Aoyama district location
• Designed by Herzog & de Meuron
• Six-floor structure
• Transparent glass surface reflecting city
• Prada Plaza: public space at heart of city
• “Snorkels”: interfaces transmitting sounds, lights, images
• Recognized as 10th best Tokyo architecture work

• Los Angeles Epicenter (2004)

• Rodeo Drive, Beverly Hills location
• Designed by Rem Koolhaas
• Inverse of New York: wave starts at street, rises to second floor
• No door, widely opened to street
• Special resin sponge material
• Main stairs: special material creates effect of reducing/enlarging store size based on customer number
• Wallpaper allows internal atmosphere renewal

• Strategic Value

• Immeasurable success for brand reputation
• Costly endeavor financially
• Business shrewdness supplemented artistic creativity
• Merged fashion with visual arts, technology, contemporary architecture
• Created real laboratory for brand interaction with physical and cultural landscapes
• Experience open to consumers and observers (concerts, shows)
• Exclusive experience for core customers (RFID, smart dressing rooms, kiosks, peep rooms)
• Helps formulate reflection about contemporary society
• Reflection feeds brand vision and creativity
• Embodiment and extension of Prada brand myth
• Synergy of core brand values

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CHAPTER 6: Louis Vuitton’s Art-Based Strategy to Communicate Exclusivity and Prestige

Artification as De-Commoditization Strategy

• Concept and Purpose

• Artification: Process of treating non-art objects as art
• In management: Luxury firms binding brands/products to art world
• Multiple activities: arts sponsorships, philanthropy, museum funding, artist collaborations, advertising
• Goal: Ensure exclusivity perceptions, stimulate sales
• Fundamental strategy for luxury brands facing commoditization
• Commoditization problem: Growth through global markets, low-cost collections, mass production
• Counter luxury core tenet of rarity and exclusiveness
• Art-based strategy creates “virtual rarity”

• Louis Vuitton as Case Study

• Number one luxury brand worldwide (Interbrand 2016)
• Established 1854
• Fifth generation of high-quality, creative production
• International reputation: quality products, manual

leather goods techniques

• Ready-to-wear collection introduced 1997 by Marc Jacobs
• Serial, industrialized production with maintained prestige perception
• “Virtual rarity tactics, constructing themselves as art” (Kapferer, 2012)
• Long-standing art-based de-commoditization strategy

LVMH Group Overview

• Corporate Structure

• French multinational luxury goods company founded 1987
• Mission: “Representing the most refined qualities of Western way of life”
• €35.7 billion revenue (2015), 19% operated margin
• 70 prestigious brands across five operating groups:
  1. Fashion & Leather Goods (35% revenue)
  2. Selective Retailing Houses (31% revenue)
  3. Wines & Spirits
  4. Perfumes & Cosmetics
  5. Watches & Jewelry
• 46.6% shares owned by Arnault family group since 1989
• Bernard Arnault: CEO
• 120,000+ employees
• 3,860 directly managed stores worldwide
• Established presence on every continent

• Decentralized Organization

• Brand autonomy enhances performance
• Each brand maintains unique identity, heritage, expertise
• Group helps embrace new ideas and initiatives
• Strategic vector: controlling product distribution
• Benefits: distribution margins, strict brand image control, closer customer contact
• 1,566 exclusive boutiques for Fashion and Leather Goods brands (December 31, 2015)
• Fashion and leather goods: €12.3 billion (2015), 34% of turnover
• Primary markets: France 9%, Rest of Europe 22%, United States 22%, Japan 11%, Rest of Asia 28%, Other markets 8%

Louis Vuitton Brand History

• Founder’s Journey

• Louis Vuitton: 19th-century Frenchman, trunk-maker apprentice
• Served prominent households including Napoleon III
• Age 16: Arrived Paris to work for Monsieur Maréchal
• 17 years experience learning specialized product fabrication
• 1854: Opened workshop at 4 Rue Neuve-des-Capucines, Paris
• 1855: Established London store, first Asnières atelier
• Asnières: Still makes exclusive products, 170 craftsmen, special orders worldwide

• Innovation and Expansion

• 1888: First classic damier signature pattern (checkerboard print)
• 1892: Louis Vuitton died, son Georges took over
• First “designer label” on product
• 1914: Building opened on Champs-Elysées, Paris
• International expansion pioneer: satisfying worldwide clientele needs

• Global Market Penetration

• 1978: First official stores Tokyo and Osaka, Japan
• 1981: Louis Vuitton Japan created, freestanding Ginza store
• 1984: Seoul, South Korea store
• 1992: First Beijing, China store (first European luxury company in Chinese market)

• 1980s-1990s Growth

• 1983: Sponsored America’s Cup preliminaries
• 1986: Louis Vuitton Foundation for opera and music created
• 1986: Central Paris store moved Avenue Marceau to Avenue Montaigne
• 1984: Sold stock to Paris and New York exchanges
• June 1987: $4 billion merger with Moët-Hennessy
• Respected autonomy regarding management and subsidiaries
• 1997: Marc Jacobs became Artistic Director, entered ready-to-wear

• Current Product Portfolio

• Articles for men and women
• Luggage and leather goods
• Ready-to-wear clothing and accessories
• Shoes, watches, jewelry, sunglasses
• Travel books, writing materials
• Most popular: handbags and briefcases range
• Services: special orders, customization, product care repairs

Art-Based Strategy Implementation

• Commitment to Arts and Culture

• Bernard Arnault: “Support for arts and culture at very heart of business model”
• Strategic priority for development
• Embodies values: savoir-faire, excellence, creativity
• Anchors brands in artistic, cultural, social environment
• Global sponsorships and philanthropic activities
• Historical monument restoration to major museum collection support
• Young contemporary artist exhibitions

• Timeline of Artist Collaborations (1980s-2010s)

• 1987: James Rosenquist
• 1988-1989: Arman, César, Sandro Chia, Olivier Debré, Sol Lewitt, Razzia
• 1992: Jean-Pierre Raynaud
• 1998-2002: Ruben Toledo, Alberto Sorbelli, Julie Verhoeven, Robert Wilson
• 2000-2002: Hans Hemmert, Miss Tic, Stephen Sprouse
• 2003-2008: Takashi Murakami, Ugo Rondinone, Vanessa Beecroft, Olafur Eliasson, Tim White-Sobieski, Sylvie Fleury, Michael Lin, Bruno Peinado, Kirill Chelushkin, Alexey Kallima, Nicolas Moulin, Richard Prince, Claude Closky, Vincent Dubourg, Teresita Fernández, Malekeh Nayiny, Fabrizio Plessi
• 2010-2015: Zahn Wang, Yayoi Kusama, James Turrell, Ange Leccia, Cindy Sherman

• Key Figures in Art Strategy

• Bernard Arnault: Collector of contemporary art, initiated brand rebirth
• Marc Jacobs: Lover of contemporary and Pop art, invited artists
• Yves Carcelle: CEO supporting artist collaborations, opening Cultural Spaces, LV Foundation (died August 31, 2014)
• Hervé Mikaeloff: Art expert and curator of LVMH and LV Foundation
• Marie-Ange Moulonguet: Director of LV Cultural Spaces in Paris

Art Exhibition and Cultural Spaces

• Arts Exhibitions in Retail Spaces

• 2006: Olafur Eliasson “Eye See You” in windows during Christmas shopping period (risky limiting product visibility)
• Various artists displayed in flagship store windows worldwide
• Vanessa Beecroft live performance at Paris flagship store inauguration (2005)
• Library sections: Art books exhibited and sold with LV city guides
• Books about ongoing exhibitions at Cultural Spaces
• Located in areas adjacent to commercial showrooms (Paris, Tokyo, Munich)

• Louis Vuitton Cultural Spaces

• Sites dedicated to art exhibitions
• Located atop LV flagship stores (Paris, Tokyo, Monaco)
• Connected to retail areas, visitors can shop while viewing art
• Similar to art galleries: point of encounter between artists and buyers
• Communicate with primary target: international cultural élite
• Brand presents as cultural agent rather than luxury goods producer
• Strengthens position in international artistic scene/market
• Direct contact with artistic experts
• Functions as cultural institution

• Louis Vuitton Foundation for Contemporary Art

• Opened 2014 at Bois de Boulogne, Paris
• Contemporary art museum directly managed by brand
• Award-winning architecture by Frank Gehry
• Preserves French and international contemporary artworks
• Permanent collection and cultural events
• Increases public awareness about LV’s art and culture support
• First CEO: Yves Carcelle

Collaborations with Takashi Murakami and Yayoi Kusama

• Takashi Murakami Partnership

• Marc Jacobs saw Murakami’s work at Foundation Cartier (2002)
• 2003: First collection, reworked traditional LV logo in Murakami variations
• Entire collection: scarves, shoes, accessories, bags
• Modified visual brand elements (could have been detrimental but wasn’t)
• 2008: Collaboration reached higher level
  • Retrospective at Museum of Contemporary Art (MOCA), Los Angeles
  • Pop-up store installed at exhibition heart as artwork
  • Temporary store exhibited collection, visitors could buy
  • Scandal in American art community (transgression of artistic values)
  • Symbiosis between Art and Business within museum
• Products combining Vuitton & Murakami became best sellers
• Rejuvenated brand and target audience

• Yayoi Kusama Partnership

• Marc Jacobs met Kusama during 2006 Japan trip
• 89-year-old visionary artist philosophy: “Earth is only small polka dot in universe”
• Dot patterns represent convergence between artist and LV (repeated monogram)
• 2011: Kusama requested sponsorship for retrospective
• Collaboration materialized 2011 for 2012 capsule collection
• Simultaneous sponsorships:
  • Tate Gallery, London retrospective (186,551 visitors)
  • Whitney Museum, New York retrospective
  • Support for events and parallel programs
• Probably largest artistic collaboration by luxury/fashion company
• Two contracts:
  1. Design of nearly 1,500 showcase windows worldwide
  2. Collections with Marc Jacobs (July and October 2012)
• Targeted younger consumers with colorful, fresh design
• Prices “on target”: €225 slip-swimsuit, €215 infinity dots scarf

• Artification Strategy Components

• Product design: Highly recognizable, different from classical LV, colorful witty design (Murakami), bright polka dots (Kusama)
• Advertising: Unconventional – “Superflat first love” cartoon-animated video (Murakami)
• Sponsorship: Museum retrospectives with collection sale inside major artistic institutions
• Pop-up stores and window displays: Special designs worldwide, dedicated collections, windows-exhibitions

Recent Developments

• Post-Marc Jacobs Era

• 2013: Marc Jacobs left after 16 years to focus on namesake brand
• 2014: Yves Carcelle passed away after 20+ years
• 2015: Nicolas Ghesquière (new creative designer), Michael Burke (new CEO)
• Challenge: Increase ready-to-wear sales percentage (currently 5% of total)
• Ghesquière not as known in art sphere as Jacobs

• Continued Art Strategy

• 2014: Six artists/architects/designers tribute to LV monogram
  • Cindy Sherman, Rei Kawakubo, Frank Gehry, Karl Lagerfeld, Christian Louboutin, Marc Newson
• Frank Gehry created windows during Foundation opening
• Centre Pompidou retrospective of Gehry’s works
• “London Series 3” fashion shows merging runway with exhibition
• 2016 collection re-elaborates classic LV logo (by designer, not external artist)
• Fresh, colored design appealing to younger, higher cross-section
• New Department of Art & Culture
• Director of Cultural Spaces Tokyo: Christine Vendredi-Auzanneau
• More Cultural Spaces planned worldwide
• Art and culture integral to strategic activity

Strategic Implications

• Management Recognition

• Art constitutes positive value for entrepreneurial activity
• Investing in art viable strategy for building cultural infrastructure
• Strengthens brand image
• Other luxury brands (Chanel, Hermès, Prada) follow similar strategies
• Louis Vuitton exemplary: reached level others haven’t yet achieved
• Creates artist capsule-collections unlike others

• LVMH Group Arts Activities

• “Monumenta”: Annual exhibition Grand Palais since 2007 (recognized contemporary international artists)
• Patronage activities: stimulate curiosity and passion for art/culture among young students
• LVMH Prize for Young Fashion Designers
• Institut des Métiers d’Excellence: developing careers in traditional craftsmanship
• Hyeres International Festival of Fashion and Photography: promoting young creative talent
• “Artistic” aura infused into all 70 luxury brands
• Maximum expression in flagship brand LV

• Art-Based Strategy Evolution

• Past 20 years: expanded support through philanthropy, sponsorship, artistic collaborations
• Ready-to-wear capsule collections with artists allow sales increase while avoiding commoditization
• Limited collection products become cult products
• Sold via art auction houses as limited pieces
• Art experts inside company enable smoother museum collaboration
• Communication synergy with art world
• Foundation activities organized by experts sustaining artists

• Consumer Experience

• Possibility of buying luxury product and enjoying art exhibition in retail spaces
• Appreciating renowned artists at LV Foundation
• French Luxury house becoming most prominent in contemporary art and luxury meta market
• Consumers simultaneously consumers and art observers
• Creates exclusive experience for core customers
• Broader audience engagement (concerts, shows) beyond shopping

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CONCLUSION

This comprehensive examination of five European luxury fashion brands reveals that successful global brand building requires far more than quality products and clever marketing. It demands a sophisticated integration of heritage preservation with innovation, artistic collaboration with commercial pragmatism, and family values with professional management. These brands demonstrate that in the luxury sector, profitability stems from maintaining the delicate balance between exclusivity and accessibility, tradition and modernity, art and commerce.

The cases collectively illustrate that luxury brand equity is constructed through multiple reinforcing elements: compelling founder stories and heritage (Ferragamo, Louis Vuitton), distinctive visual identity and personality (Harmont & Blaine’s dachshund), strategic art world connections (Prada’s Epicenters, Louis Vuitton’s artist collaborations), innovative retail experiences (Tod’s storytelling through books and boutiques), and unwavering commitment to quality through supply chain control and craftsmanship preservation.

As the luxury industry continues consolidating through conglomerate acquisitions, these case studies provide roadmaps for both independent brands seeking to maintain autonomy and portfolio managers within larger groups aiming to preserve distinct brand identities. Whether family-owned businesses transitioning to professional management or established players facing commoditization pressures, the strategic principles illustrated—artification, experiential retail, heritage leveraging, CSR integration, and controlled distribution—offer proven pathways to sustained competitive advantage in the increasingly competitive global luxury marketplace.