Luxury brands have dominated the fashion world for decades; however, as of late their position has been threatened by the creation of an underground imitation industry that appears to garner more favor than the luxury brands ever could due to their affordability. It is based on this that I have chosen Saint Laurent in Rodeo Drive, one of the most sought after high-end fashion retail destinations in the world, in order to examine the current popularity of the brand, its general level of competitiveness, how the brand attempts to operate within a world filled with fashion fakes and whether it will continue to be profitable in the future.
The main area of contention I have with the iconic products of the fashion world (i.e. the various brands such as Yves Saint Laurent) is that when broken down into their basic components, they are actually comprised of the same type of materials that can be found in other brands at less than a quarter of the price. Brands such as Saint Laurent defend the quality of their products as being far superior to cheap knockoffs, however, the fact remains that at times suppliers for luxury brands are also the same suppliers for other lesser known brands as well.
The overall quality of what is being sent to each individual company is exactly the same. This calls into question the validity of defending a brand based on the concept of quality. It is true that the designs produced by luxury brands exceed those of most other companies in the same type of business. However, if the type of material used is the same and if the design could be replicated, then it can be assumed that the same type of product could also be produced at a lower cost. It is based on this that I will investigate what practices are currently being done by the company in order to contend with such an issue and maintain their brand position.
Background of Channel
History of the Brand
The Yves Saint Laurent brand was started in 1961 by Yves Saint Laurent and his business partner at the time, Pierre Berge (The Man, The Designer: Fashion Weighs Legacy Of Yves Saint Laurent 1-3). Presently, the products under this fashion line signify wealth, high fashion, extravagance and, of course, the exclusivity of possession. As a fashion house, Saint Laurent was a pioneer in women’s fashion creating numerous iconic designs such as “the beatnik look”, the female tuxedo, various ballerina inspired dresses and an assortment of boots, pants and coats that defined the epitome of high fashion during the 1970s to 1980s. (The Man, The Designer: Fashion Weighs Legacy Of Yves Saint Laurent 1-3)
Primary Locations
Since the brand focuses on selling high end fashion, its various boutiques and fashion houses are primarily concentrated in some of the richest metropolitan areas in the world. These include, but are not limited to: Tokyo, London, Paris, New York, Beverly Hills, and Monaco. By placing itself in these locations, this has enabled the company to more effectively target its desired market segment.
How the Brand Started
Originally, the brand was created as a partnership between Laurent and Berge as a fashion house that expanded into becoming a luxury brand company. Over time, the company expanded into other industries such as perfume, hand bags and an assortment of other luxury products.
Sale of the Company
Eventually, the fashion house was sold to Sanofi (a pharmaceuticals company) which helped to provide the necessary capital and financial infrastructure to expand the company’s market share into the cosmetics industry as well as provide it with sufficient capital to continue operations due to lackluster local demand during the early 1990s (The Man, The Designer: Fashion Weighs Legacy Of Yves Saint Laurent 1-3).
Current Ownership
Presently, the brand is owned by Gucci with many of its locations closed due to a lack of patronage from local buyers as well as the emergence of newer brands that rival and even exceed the original customer base of Saint Laurent.
Production Methods
Initially, the company focused on producing their bags within Europe, however, by the late 1990s production shifted towards areas in India, China and Vietnam. Unfortunately, once the method of production was exported, this also led to the proliferation of many fake goods bearing the Yves Saint Laurent brand.
Current Issues Facing the Company
An investigation into the means of product duplication showed that the process starts with the factory where the products are initially made. After the methods of production are taught to the local workers, they are subsequently copied by local groups, even down to the method of stitching utilized. They are then made in nearby factories, sometimes even adjacent to the one producing the original product. With the designs copied and similar materials used, the end result is a product nearly identical to the original. The only difference between the two production methods is that those who made the imitation used inferior materials in certain stages of the production process to create the following imitation product categories:
- Class A (nearly identical to the original)
- Class B (still identical but cheaper due to inferior materials used)
- Class C (not quite as identical but far cheaper and can be passed off as an original)
After the imitation products are made they are then subsequently shipped to either local malls to be sold or are shipped to locations such as Hong Kong, which has become one of the major hubs of imitation product retail in the world (Murphy 5). It is estimated that through the production and sale of fake Saint Laurent products, the company loses several billion dollars a year (Murphy 5).
Primary Mission Statement
The primary mission statement of Saint Laurent is to help people dress to impress by providing a style that is, in their words, “eternal”. It is based on this mission statement that the brand has attempted to create a variety of iconic fashion items that exemplify the term “eternal”.
Success of the Mission Statement
Evidence of the success of the brand when it came to the development of such items can be seen in the iconic tuxedo for women, its various bag designs as well as its fashionable men’s clothing line (Yves Saint Laurent: Style 267). Unfortunately, within the past few years the brand has lost its appeal to its current customer base either through the development of new brands within the hyper competitive fashion industry or the fact that its original customers that patronized the brand have begun to die off due to old age (Yves Saint Laurent: Style 267).
Customer Service Philosophy
Unlike the service philosophy of hotels where “the customer is always right”, Saint Laurent has a more “uptight” personality when it comes to dealing with customers. While they are polite when it comes to product inquiries, general customer service and phone inquiries, they lack sufficient flexibility when it comes to returns, promotions or guarantees wherein it is far easier to buy a product than it is to return it. Aside from that, their sales promotions and online services are actually quite good and showcase an attempt to better connect with young customers (Tom 13).
Employee Relations
One of the more interesting aspects of Yves Saint Laurent is that there are actually two types of employees that work for the company with each receiving a different level of treatment. The current global business environment has become dominated by one word “outsourcing”; it is the process by which a company transfers different aspects of their management and production capabilities to other locations that are far cheaper to conduct their manner of business. Countries such as India, China, Taiwan and the Philippines have become the new outsourcing hubs of the world with China dominating the industrial sector as a prime location for producing any manner of goods to be shipped and sold in any shop located in any country around the world (Cornett 539).
Companies such as Saint Laurent, Nike, Gucci and numerous other brands have capitalized on the cheap source of labor and materials that China can provide in order to produce their products cheaply and sell them at current market rate in their major retail outlets. This is where the first type of employee for the company is present wherein they are normally paid far below the minimum wage rate of any western country (ex: $10 to $15 a day), have little in the way of health insurance, promotions and cannot even hope to afford a single one of the company’s products.
On the other end of the spectrum, the company’s store employees within its various locations do have commissions on the products they sell (5 to 10% in certain cases), receive high salaries, vacation time and do have employee discounts on the products. However, promotion in the company for store based employees is not often done since there is a considerable level of segmentation behind store operations and the management division of the company (Cornett 539).
Conclusion
When examining the future of the brand, it is immediately apparent that it will run into a considerable amount of problems in the future due to its current outsourcing of its operations to locations such as China. One problem with outsourcing methods of operations is that at times the means of production as well as the design of the product itself could be copied by the outsourced factory and produced at another location.
Not only that, but due to globalization the means of procuring the materials used by luxury brand companies has become far easier than it used to be. The end result of these factors has been the creation of an underground industry solely for the production and distribution of imitation luxury goods for the express purpose of taking advantage of the one thing a customer loves, namely a good discount. This underground industry has its roots in Taiwan, China, South Korea and Vietnam which are synonymous with locations of many of the factories of various luxury brands (Rawsthorn 266).
Taking this into consideration, it can be seen that Saint Laurent actually set up their own downfall by outsourcing their methods of production. This resulted in the proliferation of fakes that are bringing down the value of the company’s products resulting in billions of dollars lost every year.
Works Cited
Cornett, Rhojonda. “Seeing Red: A Critical Analysis Of Christian Louboutin S.A. V. Yves Saint Laurent America, Inc.” Alabama Law Review 65.2 (2014): 539-566. Web.
Murphy, Robert. “Yves Saint Laurent: Still ‘Smoking’ After All These Years.” WWD: Women’s Wear Daily 190.66 (2005): 5. Web.
Rawsthorn, Alice. “The Genius Of Yves Saint Laurent.” Harper’s Bazaar 3484 (2002): 266. Web.
Tom, Leonard. “Yves Saint Laurent ‘copycat’ heels that has Christian Louboutin seeing red.” Daily Mail. 2011: 13. Web.
“The Man, The Designer: Fashion Weighs Legacy Of Yves Saint Laurent.” WWD: Women’s Wear Daily 195.117 (2008): 1-10. Web.
“Yves Saint Laurent: Style.” Biography: An Interdisciplinary Quarterly 32.1 (2009): 267. Web.