Off-White and the plight of sold-for-parts brands

Authentic has said its plans with Saks will begin with the revamp of beloved Barneys, but it seems not for the authentic luxury clients who used it to discover new designers and locate genuine fashion-forward merchandise. Instead, Authentic has opened Barneys New York residences in Tulum, Mexico. One of those four-bedroom, but not-beachfront, condos (the website says they’re five minutes from the beach), can be rented for $282 per night in December — a bargain for a unit that sleeps 10. The plans include more Barneys residences elsewhere, as well as a private label Barneys line that will sell sportswear, home and other categories at Saks Fifth Avenue, turning former competitors into collaborators.

The luxury fashion industry is in a sticky spot right now. Sales are under pressure, as LVMH’s disappointing 4.4 per cent revenue drop in its third quarter, announced 15 October, isn’t the only worrying news. Kering’s first-half results revealed a shocking 50 per cent drop in operating profits and an 11 per cent fall in revenues.

That’s two industry bellwethers, encompassing dozens of brands, suffering setbacks as consumers pull back.

It’s necessary to be sceptical of brand-proliferation companies in general, and particularly at the beginning of what appears to be a luxury downturn — a time when nervous consumers retreat from unnecessary spending and get picky about where their dollars go. Many luxury consumers are becoming wary of brands for brands’ sake, and many others seek labels that produce smaller quantities with higher quality and traceable supply chains.

Marketing celebrity capsule collections with figures like Joe Jonas or Ciara, as Bluestar is doing with Scotch & Soda and Bebe, can give little more than a temporary boost to sales for a fashion label. Churning out luxury for the masses too often turns out to be not very luxurious at all.

The trick for these companies might be to see themselves less as investors and more as makers, focused on building brand value through design and manufacturing. This is how the big luxury conglomerates in Europe have built the industry there, creating billions in market value and turning family-owned luggage makers and haute couture houses into global juggernauts.

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