Cartier and Louis Vuitton, those global symbols of opulence, suddenly look like bargains in one of the world’s economic trouble spots: Brazil.
Because of a plunge in the value of Brazil’s currency, the real, many marquee-name luxury products are now cheaper in São Paulo than they are in New York.
Not that many ordinary Brazilians can afford the bobbles. At Cidade Jardim, an open-air mall with views of São Paulo’s business districts, a Cartier Tank Anglaise watch, in gold and steel, costs 32,700 reais, the equivalent of $9,326. On Fifth Avenue in
Manhattan, the same watch costs $580 more, taking various sales taxes into account. Similar deals were found at Prada, Tiffany &
Co., Salvatore Ferragamo and Christian Louboutin.
The disparity provides another example—albeit a rarefied one—of how the collapse in the real is rippling through the nation’s economy. Prices of many imports, from mobile phones to wine, have surged because of the weak real, adding to economic angst as Brazil heads for its worst recession in a quarter century.
But many high-end items have actually gotten cheaper in dollar terms because of a quirk of the luxury-goods industry. Louis Vuitton, Prada and many others don’t adjust prices very often, and many tolerate narrower profit margins in Brazil to partially offset high import levies and sales taxes.
“It’s truly a momentary phenomenon,” said Nadya Hamad, the manager of a Louboutin shoe store at the JK Iguatemi mall in São Paulo. “We used to get complaints about how much more expensive things were here. Now our customers are coming in saying how much cheaper it is.”
$1,000 off
How much cheaper? A tour of a few malls found that among almost two dozen high-end items, 19 are cheaper here than in New York, with the savings ranging from a few dollars to about $1,000 on a pair of Louboutin crystal-encrusted New Very Riche Strass stilettos. Other bargains included Ferragamo ties, Tiffany watches, Prada wallets and Louis
Vuitton purses.
The only outlier was Rolex, which has been adjusting prices in Brazil monthly, according to Nelson Semeoni Junior, owner of the Monte Cristo jewelry store at the JK mall.
The real has fallen 24 percent against the dollar this year, making it the world’s worst-performing major currency, as prominent business
and political figures have been swept up in the graft scandal that began with the nation’s state-run oil company. The real, which reached 1.54 per dollar in 2011, now trades around 3.5 per dollar.
Brazil’s jet set
It’s a remarkable turnabout from early this decade, when a strong real turned affluent Brazilians into globe-trotting consumers. Back then, many would fly to New York or Miami to shop. Even including the cost of airfare, Brazilians could get deals by avoiding import levies and sales taxes that can double prices at home.
Today in São Paulo, the deals are hit or miss. Bargains are concentrated in ultra-high-end shops—and they aren’t likely to last. Representatives for the various companies declined to comment.
Sales clerks at Cartier, Louboutin, Louis Vuitton and Prada are warning customers that prices probably will rise soon.
“We’ve been trying to keep prices as is for as long as possible,” Louboutin’s Hamad said. “But| we’re very likely to raise them, sooner rather than later.”
Sunday, August 23, 2015
Friday, August 21, 2015
Gucci spars with Hong Kong landlords
Hong Kong - Landlords on Hong Kong’s Russell Street a year ago could boast the highest retail rents in the world. Now they are adjusting to a new reality.
Burberry Group, Kering and jewellry retailer Chow Tai Fook Jewellery Group are pushing landlords to lower rents on existing properties as luxury brands are scaling back amid plummeting sales. TAG Heuer closed its Russell Street store last week, citing high rents and declining traffic.
Luxury retail sales have plunged amid China’s economic slowdown and President Xi Jinping’s austerity and anti- corruption campaigns, causing Hong Kong to relinquish the top spot to New York’s Fifth Avenue in November and spurring the biggest drop in retail rents this year since 2009. Also contributing to slack demand are a weaker yen and euro, prompting Chinese tourists to favour Japan and France over Hong Kong, said Helen Mak, senior director of research at Colliers International.
“Unavoidably rents will trend down,” says Marcos Chan, head of research for Hong Kong, Macau and Taiwan at CBRE Group.“We don’t see any reason why retail will quickly see a rebound any time soon.”
jewellry, watches, clocks and valuable gifts sales fell 15.9 percent in the year ending June, according to Hong Kong Retail Management Association statistics.
In a July research report, Jones Lange LaSalle predicted high-street rents will drop 15 percent to 20 percent this year. That’s a far more bearish scenario than the 5 percent drop the company was forecasting at the end of last year.
Ground zero
Ground zero of the downturn is Russell Street, a mere block and a half long in the heart of the Causeway Bay retail district, lined with shops selling Montblanc pens, Omega watches and Swarovsky jewellry. Average monthly rents in the area fell 10.4 percent in the first half, according to Colliers.
Kering, the owner of the Gucci brand, has warned that it may close some of its shops in Hong Kong if rental costs don’t come down.
“Many landlords have not necessarily understood that the markets have changed,” Kering CFO Jean-Marc Duplaix said on a conference call with analysts in July.
Russell Street’s two largest landlords are Emperor International Holdings and Soundwill Holdings. A spokeswoman for Soundwill, whose tenants include Burberry and a Rado shop which is moving into the spot vacated by TAG Heuer, declined to provide rental figures.
Kowloon landlords
While luxury retailers are slowing down their pace of expansion, some mid-market shops are looking to expand and may be able to find more affordable options, CBRE’s Chan said in a Bloomberg Television interview on Tuesday.
“We see landlords are willing to negotiate with the retailers, a trend which did not happen in the past few years,” he said.
Street-level landlords in Central on Hong Kong Island, and across the harbour in Kowloon neighbourhoods that cater heavily to mainland shoppers, are also feeling the pinch. Average rents fell 15 percent in Tsim Sha Tsui in the first half, Colliers said.
Chow Tai Fook renewed its monthly lease at its Bank Center location on Nathan Road for HK$800 000 ($103 203), an almost 39 percent reduction, the Ming Pao newspaper reported. A Chow Tai Fook spokesperson declined to comment on the specific deal, saying “tenancy rental reduction varies in different districts and locations.”
Jewellry and watch chain Chow Sang Sang has closed two of its stores in the past nine months and has obtained rental reductions on a couple more of its 54 outlets.
Mall owners have weathered the downturn better, thanks to a more diversified tenant mix including restaurants, health and beauty centres and cosmetics shops as well as luxury brands.
“Our rental conversion is very much positive,” said Ronnie Chan, chairman of Hang Lung Group, which owns Fashion Walk in Causeway Bay. “But we have to keep refreshing our properties and keep changing tenants.”
Wednesday, August 19, 2015
Tuesday, August 18, 2015
Chanel muse Kristen Stewart uses clothes to ''tap'' into her unexplored depths.
Kristen Stewart uses fashion to ''tap'' into herself.
The 'American Ultra' star regularly attends catwalk shows which led to her becoming the muse of luxury fashion house Chanel in 2013 and has revealed that she wears clothes that help her to discover her ''unexplored'' depths.
She said: ''I really like tapping into unexplored aspects of myself; obviously, that's what I do. Clothes can seriously do that, but you don't want your clothes to wear you. So often I'm like, 'Oh man, that is going to own my ass.'''
Though the 25-year-old actress is most relaxed when dressed in faded jeans, a white T-shirt and a pair of Vans and confessed she is ''a skater'' at heart.
She said: ''I'm a skater. I'm not a hard-core skater chick - I can skate on the street, but I don't like to trick s**t out. Skating around down town might be my happy place.''
Meanwhile, Kristen finds many perks to being Chanel boss Karl Lagerfeld's inspiration and told how she is allowed to ''chop'' up the gowns.
She told the September issue of Nylon magazine: ''He lets me chop dresses, he lets me steal a belt from that dress and wrap it around another ... I'm really into the performance aspect of it, but I still have to make it my own. I don't want to feel like I'm wearing a costume.''
Friday, August 14, 2015
Gucci spars with Hong Kong landlords
Hong Kong - Landlords on Hong Kong’s Russell Street a year ago could boast the highest retail rents in the world. Now they are adjusting to a new reality.
Burberry Group, Kering and jewellry retailer Chow Tai Fook Jewellery Group are pushing landlords to lower rents on existing properties as luxury brands are scaling back amid plummeting sales. TAG Heuer closed its Russell Street store last week, citing high rents and declining traffic.
Luxury retail sales have plunged amid China’s economic slowdown and President Xi Jinping’s austerity and anti- corruption campaigns, causing Hong Kong to relinquish the top spot to New York’s Fifth Avenue in November and spurring the biggest drop in retail rents this year since 2009. Also contributing to slack demand are a weaker yen and euro, prompting Chinese tourists to favour Japan and France over Hong Kong, said Helen Mak, senior director of research at Colliers International.
“Unavoidably rents will trend down,” says Marcos Chan, head of research for Hong Kong, Macau and Taiwan at CBRE Group.“We don’t see any reason why retail will quickly see a rebound any time soon.”
jewellry, watches, clocks and valuable gifts sales fell 15.9 percent in the year ending June, according to Hong Kong Retail Management Association statistics.
In a July research report, Jones Lange LaSalle predicted high-street rents will drop 15 percent to 20 percent this year. That’s a far more bearish scenario than the 5 percent drop the company was forecasting at the end of last year.
Ground zero
Ground zero of the downturn is Russell Street, a mere block and a half long in the heart of the Causeway Bay retail district, lined with shops selling Montblanc pens, Omega watches and Swarovsky jewellry. Average monthly rents in the area fell 10.4 percent in the first half, according to Colliers.
Kering, the owner of the Gucci brand, has warned that it may close some of its shops in Hong Kong if rental costs don’t come down.
“Many landlords have not necessarily understood that the markets have changed,” Kering CFO Jean-Marc Duplaix said on a conference call with analysts in July.
Russell Street’s two largest landlords are Emperor International Holdings and Soundwill Holdings. A spokeswoman for Soundwill, whose tenants include Burberry and a Rado shop which is moving into the spot vacated by TAG Heuer, declined to provide rental figures.
Kowloon landlords
While luxury retailers are slowing down their pace of expansion, some mid-market shops are looking to expand and may be able to find more affordable options, CBRE’s Chan said in a Bloomberg Television interview on Tuesday.
“We see landlords are willing to negotiate with the retailers, a trend which did not happen in the past few years,” he said.
Street-level landlords in Central on Hong Kong Island, and across the harbour in Kowloon neighbourhoods that cater heavily to mainland shoppers, are also feeling the pinch. Average rents fell 15 percent in Tsim Sha Tsui in the first half, Colliers said.
Chow Tai Fook renewed its monthly lease at its Bank Center location on Nathan Road for HK$800 000 ($103 203), an almost 39 percent reduction, the Ming Pao newspaper reported. A Chow Tai Fook spokesperson declined to comment on the specific deal, saying “tenancy rental reduction varies in different districts and locations.”
Jewellry and watch chain Chow Sang Sang has closed two of its stores in the past nine months and has obtained rental reductions on a couple more of its 54 outlets.
Mall owners have weathered the downturn better, thanks to a more diversified tenant mix including restaurants, health and beauty centres and cosmetics shops as well as luxury brands.
“Our rental conversion is very much positive,” said Ronnie Chan, chairman of Hang Lung Group, which owns Fashion Walk in Causeway Bay. “But we have to keep refreshing our properties and keep changing tenants.”
Burberry Group, Kering and jewellry retailer Chow Tai Fook Jewellery Group are pushing landlords to lower rents on existing properties as luxury brands are scaling back amid plummeting sales. TAG Heuer closed its Russell Street store last week, citing high rents and declining traffic.
Luxury retail sales have plunged amid China’s economic slowdown and President Xi Jinping’s austerity and anti- corruption campaigns, causing Hong Kong to relinquish the top spot to New York’s Fifth Avenue in November and spurring the biggest drop in retail rents this year since 2009. Also contributing to slack demand are a weaker yen and euro, prompting Chinese tourists to favour Japan and France over Hong Kong, said Helen Mak, senior director of research at Colliers International.
“Unavoidably rents will trend down,” says Marcos Chan, head of research for Hong Kong, Macau and Taiwan at CBRE Group.“We don’t see any reason why retail will quickly see a rebound any time soon.”
jewellry, watches, clocks and valuable gifts sales fell 15.9 percent in the year ending June, according to Hong Kong Retail Management Association statistics.
In a July research report, Jones Lange LaSalle predicted high-street rents will drop 15 percent to 20 percent this year. That’s a far more bearish scenario than the 5 percent drop the company was forecasting at the end of last year.
Ground zero
Ground zero of the downturn is Russell Street, a mere block and a half long in the heart of the Causeway Bay retail district, lined with shops selling Montblanc pens, Omega watches and Swarovsky jewellry. Average monthly rents in the area fell 10.4 percent in the first half, according to Colliers.
Kering, the owner of the Gucci brand, has warned that it may close some of its shops in Hong Kong if rental costs don’t come down.
“Many landlords have not necessarily understood that the markets have changed,” Kering CFO Jean-Marc Duplaix said on a conference call with analysts in July.
Russell Street’s two largest landlords are Emperor International Holdings and Soundwill Holdings. A spokeswoman for Soundwill, whose tenants include Burberry and a Rado shop which is moving into the spot vacated by TAG Heuer, declined to provide rental figures.
Kowloon landlords
While luxury retailers are slowing down their pace of expansion, some mid-market shops are looking to expand and may be able to find more affordable options, CBRE’s Chan said in a Bloomberg Television interview on Tuesday.
“We see landlords are willing to negotiate with the retailers, a trend which did not happen in the past few years,” he said.
Street-level landlords in Central on Hong Kong Island, and across the harbour in Kowloon neighbourhoods that cater heavily to mainland shoppers, are also feeling the pinch. Average rents fell 15 percent in Tsim Sha Tsui in the first half, Colliers said.
Chow Tai Fook renewed its monthly lease at its Bank Center location on Nathan Road for HK$800 000 ($103 203), an almost 39 percent reduction, the Ming Pao newspaper reported. A Chow Tai Fook spokesperson declined to comment on the specific deal, saying “tenancy rental reduction varies in different districts and locations.”
Jewellry and watch chain Chow Sang Sang has closed two of its stores in the past nine months and has obtained rental reductions on a couple more of its 54 outlets.
Mall owners have weathered the downturn better, thanks to a more diversified tenant mix including restaurants, health and beauty centres and cosmetics shops as well as luxury brands.
“Our rental conversion is very much positive,” said Ronnie Chan, chairman of Hang Lung Group, which owns Fashion Walk in Causeway Bay. “But we have to keep refreshing our properties and keep changing tenants.”
Wednesday, August 12, 2015
Christopher Bailey Reveals His Plan for Burberry
After a quietly cheerful first six months on the job, Christopher Bailey, the Burberry chief executive, revealed his first five-point plan for the brand on Wednesday during its presentation of its first-half results.
Here’s what he has cooking.
While most of the reports after the presentation on Thursday focused onthe company’s mixed results — sales in the six months ended Sept. 30 were up 14 percent, but pretax profit fell 12 percent, largely because of foreign currency values — and a continued slowdown in China, Mr. Bailey has some bullet points that seem to me really worth noting.
They may be unfortunately couched in the ridiculous language of management-speak (Mr. Bailey can talk chief executive like the best of them), but translate the verbiage — see my efforts below — and the result is revealing. To wit:
“1) The strategy we’ve been calling Leverage the Franchise becomes Inspire With the Brand, to express more clearly our determination that Burberry speaks to the consumer with one equally inspiring and authentic brand voice, wherever they encounter us. To achieve this, we intend to focus amongst other things on more extensive utilization of data and insight, greater emphasis on brand consistency and continued innovation at the intersection of our physical and digital worlds.”
Translation: Burberry is going large on all that big data it has from its online initiatives, and unlike many luxury brands, it is able to share those numbers across platforms, from virtual to brick and mortar.
“2) The strategy we’ve called Intensify Accessories is being broadened out and renamed Realize Product Potential. Our focused attention on accessories in recent years has taken this category to 36 percent of retail/wholesale sales from 29 percent in 2006, and we now have great balance in our product mix and growth drivers across all categories. Accessories will remain an important future growth driver as we reinforce our dominant position in soft accessories such as scarves and further develop our bags and small leather goods. Other areas of focus will include underdeveloped product categories such as shoes, alongside continued opportunity in all areas of men’s and, of course, the development of beauty. “
Translation: Burberry is entering the shoe wars! And bags are not nearly as over as we all may think.
“3) Accelerate Retail-Led Growth becomes Optimize Channels. We have successfully shifted the shape of our operating model towards the retail channel, which represented 70 percent of sales last year from 43 percent in 2006. Now, with our retail/wholesale mix broadly where we would like it, it is time to broaden out this strategy to focus on improving and optimizing all routes to market, both physical and digital. This will include significant opportunities in elevated wholesale and third-party digital relationships, as well as exciting initiatives to enhance retail productivity, some of which Donald will touch on in his presentation.” (Donald is Donald Kohler, the chief merchandising operations officer.)
Translation: Mobile, mobile, mobile; Facebook; Twitter.
“4) Invest in Under-Penetrated Markets becomes Unlock Market Opportunity, to articulate more clearly the rich potential to further evolve Burberry’s footprint and positioning in both developed and younger markets. Future opportunities for the brand in China and Japan are, of course, an important part of this, and I was pleased to see firsthand the excellent preparations our teams are making for the Japan transition on a visit to the market a few weeks ago. Other areas of geographic focus will include the ambitious development of our travel strategy and the continued elevation of our business in the U.S. – where the recent openings of our Rodeo Drive and Post Street flagships in L.A. and San Francisco are great examples of our vision for the brand.”
Translation: The United States is the market of the moment for luxury, and we are not giving up on China just yet, especially not Chinese tourists shopping elsewhere.
“5) The final core strategy, Pursue Operational Excellence remains unchanged, but its scope is expanded to encompass our efforts to drive greater efficiency and productivity throughout the business, in addition to its historic emphasis on improving our back-of-house operations. What we call “the productivity agenda” – spanning opportunities in retail, product and processes – is an area in which we have further significant opportunities and will be the subject of intense focus for this next phase, as we leverage the investments we have made in recent years.”
Translation: It’s time to enter the wired production era.
Now, if only he could redesign the wordiness to have the same clarity as his clothes….
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