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Extending the brand:
Designers take it to the limit
Suzy Menkes IHT
Tuesday, June 29, 2004
MILAN Nike will announce next week its collaboration with one of the coolest designers on the planet: Marc Newson, who is also designing jeans for G-Star. The Australian-born designer, who has made the Lever House restaurant in Manhattan an epicenter of cool and whose design of the interior of a Dassault Falcon private jet has already become an iconic exhibit world-wide, is a dramatic example of the mode of the moment: brand extension.
Lateral thinking is the growth engine for development, from Donatella Versace's Barbie doll to Giorgio Armani parlaying his Armani/Privé club into a high-end, limited-edition fragrance to D&G customizing a Citroën. Bulgari's modernist new hotel with its spreading central Milan garden, in collaboration with Ritz Carlton, is an example of a designer hotel concept. Others include Armani's projected hotels financed from Dubai, Brioni's investment in the Croatian island of Brioni and a Versace hotel on Australia's Gold Coast.
As Newson is proving, you need a powerful personal identity - and not necessarily an existing luxury empire - as the basis for brand expansion. Beyoncé Knowles and Jennifer Lopez, converting their music fame into clothing, are following a path beaten by sports stars. They are also adding to the roster of celebrities who turned a whiff of fame into fragrance - the most classic of all brand developments.
Armani's dressing of Duran Duran for its coming tour and Sting for his current one is a different form of brand promotion, detonated by Material Girl Madonna's celebrity endorsements in the 1980s.
To BE (brand extend) or not to BE is now the big question of the 21st century. If accessories - another classic development strategy - was the buzz word of the past 10 years, luxury companies are now reaching for the next big thing. And even as new projects are unveiled, analysts are sounding a note of caution.
"Brand extensions are a way of leveraging your brand into a new category - but the danger is brand dilution if it does not contribute back to the core brand," says Rita Clifton, chairman of Interbrand.
"Hotels are very interesting and they have potential to add value," says Clifton, adding that she sees other synergies such as couture fragrances with the Givenchy beauty spa. "But fashion houses need to ask a stern question: What are they bringing that is unique that will inspire a repeat purchase? What is Prada bringing to cosmetics that will tempt people away from Crème de la Mer? We are talking about things that can be skin deep in every way."
But lateral thinking need not be shallow. Francesco Trapani, the chief executive of Bulgari, had a dream when he teamed up with Marriott to create a new jewel in the company's crown. The streamlined hotel with its black and beige textural interior exudes luxury and glamour - not least with a client's orange Lamborghini parked in the forecourt - but it is not intended for cookie-cutter replication around the world, with only a Bali hotel currently under development.
"In Milan, we have done a new luxury hotel that is unique," says Trapani, referring to the urban garden setting. Its restaurant, café and spa are all part of the Bulgari brand awareness and have potential synergies, such as cutlery and photo frames. But Trapani has a more sophisticated vision of "nourishing the brand" than the name across the door and products in a hotel gift shop.
"Armani has additional synergy in that he can sell his furniture and we cannot," Trapani says (referring to Armani Casa products). "But we can sell a diamond ring to a couple getting married in Milan and send them to Bali for the honeymoon. There is cross-marketing."
Andrea Ciccoli, of the Milan-based Bain brand consulting company, analyzes the current craze for brand extensions. "It is high on the agenda for fashion brands," he says. "But is it real business, a license royalty or just a promotion? Attitudes change accordingly." Ciccoli says that "in certain categories there is communal wisdom" that anything can be branded that fits in a flagship store, from the bags and shoes to gifts and home goods.
Yet Rose Marie Bravo of Burberry, who has succeeded in stretching the brand from raincoats to plaid bikinis, says that thinking outside the box still requires consistency. She cites Burberry's fast-growing children's category - now up to 12 percent of total sales in Barcelona - as an example of a brand extension.
"What is embraced in the circle can be widened, but if it extends beyond that it no longer has coherence," Bravo says. She cites the fact that Burberry "tiptoed" into the shoe category and found that espadrilles and sandals in cooperation with Dr. Scholl's have created a new merchandise category. Her policy is to "perfect and maximize" each project, making sure that it fits with the company's core values.
Ciccoli sees Armani in the forefront of brand extension in Italy, since he has bought back his clothing license from GFF and bought the factories that make his shoes and knitwear. He puts Dolce Gabbana "on the same page" and sees other successful explorations of "the boundaries of a brand," such as the fine jewelry at Gucci and Versace. Armani has recently pursued an aggressive brand-extension policy, including even flowers and chocolates. With 17 restaurants - mostly Emporio Armani cafés - the opening of the Armani/$ Privé lounge and bar was considered a one-time thing - until it took off. Now, the name will be used for an exclusive men's fragrance for the autumn and the Privé label might develop as a distinctive brand, even for special clothing and almost certainly within the hotels.
If your company does not have the cash to invest in brand development, the traditional answer is licensing. Although that strategy was overused by the 1980s, there are signs that it is creeping back - especially after Gucci Group announced that it could be a cost-effective growth engine to use alongside global store openings.
Sagra Maceira de Rosen, a London-based analyst with J.P. Morgan, believes that "there is still a lot of the world from a geographical standpoint" to conquer and that "brand extension is just another way of growing." "We should not look down on it because often in the past it was associated with licenses," she says. "Business models in retailing are much more flexible." De Rosen says that Armani is an example of "an elastic brand that is not losing its value," whether the designer is opening restaurants and hotels or customizing a Mercedes. And that Missoni's home collection is a smart extension. But she emphasizes that each brand is different. For example, it is far easier to envisage a Ralph Lauren hotel than a Louis Vuitton one, and an essentially feminine brand such as a Chanel or Valentino can less easily move into menswear. The analyst also sounds a rare note of caution about the hotel business.
"I don't know if I would jeopardize my brand name in a hotel," she says. "For a fashion brand, service is not your core competence. The core of a hotel is service and although the décor can be replicated, hospitality can not."
Ciccoli also emphasizes the importance of individuality.
"No one size fits all - brands are different," he says. "But the industry will find its boundaries. And every brand find its correct balance."
IHT
