7 January 2020
The luxury industry never stands still and it has seen another year of innovation. GAM Investments’ Swetha Ramachandran takes a look back at luxury brands in 2019, highlighting some of the most successful products and the trends she feels are driving the winners.
As investors, we spend most of our time trying to identify the sector’s winning stocks. Sometimes, but not always, this goes in hand with the sector’s winning products. For this year-end piece, we thought we would take a look at some of the sector’s ‘hits’ and the wider trends that have driven their success.
It is no secret that “collabs” have fuelled the luxury sector’s success in recent years, with younger consumers’ thirst for newness in turn sparking unexpected meetings of creative minds within the industry, to varying degrees of popular reception. Moncler, we find, is an example of a company that has adopted this collaboration culture at its core. In February 2018, the company launched the Moncler Genius project, a new creative and business model where well-known designers create distinct collections interpreting the brand’s identity which are released on a monthly basis. Now in its second year, the nine Genius collections unveiled to date have spanned a wide breadth from streetwear to haute couture to dog couture. We found the below interpretation of the brand’s iconic puffer jacket, by Valentino designer Pierpaolo Piccioli and Ethiopian social entrepreneur Liya Kebede to be…well, especially, “genius”.
Another collaboration that turned heads more recently was that between Virgil Abloh, the highly acclaimed artistic director at Louis Vuitton Menswear, and Ikea, on a limited edition 15 piece range fusing “functionality with street cred and high cultural references” – with a sold out “receipt rug” in the style of an Ikea receipt now only available on resale sites.
Earlier this year, American rapper Travis Scott collaborated with Nike to reinterpret the iconic Air Jordan 1, reversing the brand’s iconic swoosh. Following the streetwear “drop” model – where merchandise is released on strictly limited supply in order to maximise the buzz around the launch and maximise uptake by consumers, the shoes – which originally retailed for USD 175 a pair, now fetch many multiples of that on resale sites GOAT and Stadium Goods. Below is the queue outside London-based department store Selfridges on the day of release of the sneaker – with all those queuing having pre-won an Instagram raffle which allowed them to just be in the queue to get in with a chance to buy.
Diageo capitalised on peak Game of Thrones (“GoT” for the uninitiated) fever ahead of the show’s eighth and final season, releasing its limited edition White Walker by Johnnie Walker blend and the Single Malt Scotch Whisky Collection in March, to significant commercial success. White Walker by Johnnie Walker, named after the iconic White Walker characters in the show, is intended to be served directly from the freezer; with the classic words “Winter is here” revealed on the bottle when frozen. In addition, Diageo also launched the GoT Single Malt Scotch Whisky Collection, featuring eight Scotch whiskies paired with each of the Houses of Westeros, as well as the “Night’s Watch”.
Ferrari announced five new models this year, in a significantly stepped up pace of innovation relative to the past. It also started to deliver the very first of its special edition “Icona” series – the Monza SP1 / SP2 car, starting late September. Every one of the 499 units of this model that will ever be produced was pre-sold at its launch a year ago.
When brands experience a change of designer, there is, depending on the brand, typically a cocktail of nervousness, excitement, despair or relief among the brand’s fans at what the new designer might do. The most recent example of a designer who arrived to little fanfare and proceeded to take both his brand as well as the industry by storm is, of course, Alessandro Michele of Gucci. It appears that an early contender for this year’s “golden child” would be the new designer of Bottega Veneta – Daniel Lee – who took over from Tomas Maier, who had been at the brand’s helm for 17 years. Early reception to the designer change has been strongly positive with the formerly ailing brand benefiting from Daniel’s fresh perspective – with the cult pouch and sandals below helping the brand to be named the “Breakout Brand of 2019” by global fashion search engine Lyst.
Even Cartier caught the innovation bug this year; in a departure from its conventional elegance and glamour it adopted a more punk rock ethos with the launch of its “Clash de Cartier Collection” – including necklaces, bracelets and rings, all featuring a mash-up of architectural design elements, as well as studs, beads and clous carrés taken from some of Cartier’s most signature creations. Feedback from millennial customers, particularly, to the bold and inclusive design of the Collection has been highly positive.
Lastly, we could not write about what resonated with consumers this year without mentioning sustainability. From the days of it being merely a buzzword, the industry started to take sustainability much more seriously in 2019, with consumers voting with their wallet in favour of products and business models which capture the changing consumer zeitgeist. In the US, The RealReal – a luxury resale platform that listed this year, announced a partnership with Burberry to further a sustainable circular economy in luxury fashion – customers who choose to sell a Burberry product on The RealReal’s platform will be invited for a personal shopping session and tea at one of Burberry’s retail locations. Hurry, the offer lasts until 30 January, 2020.
The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is no indicator for the current or future development. The companies included were selected from the universe of companies covered by the portfolio manager to assist the reader in better understanding the themes presented. The companies included are not necessarily held by any portfolio or represent any recommendations by the portfolio manager. Reference to a security is not a recommendation to buy or sell that security.