What European Luxury Can Learn From American Fashion

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0:46Hello and welcome to The Debrief from the Business of Fashion, where each week we delve into our most popular BOF professional stories with the correspondents who created them. I'm Executive Editor Brian Baskin.

0:57Sheena Butler-Young: And I'm senior correspondent Sheena Butler-Young. For decades, European luxury houses set the tone for the fashion industry. From Paris to Milan, the biggest names defined what luxury meant and set trends globally. American brands were often dismissed as too mass market to be key players in the fashion conversation. But lately, that dynamic seems to be shifting. While European luxury groups are struggling, a number of American fashion brands, including Coach, Ralph Lauren, and Tori Birch, are experiencing a commercial and creative resurgence. Our guest today, Senior News and Features Editor Diana Pearl, has been looking at what's behind that momentum and whether European luxury brands might have something to learn from the American playbook.

1:39Sheena Butler-Young: Diana joins us to break down what American fashion is getting right right now. Diana, welcome to The Debrief. Thanks for having me. So Diana, let's start with that broad shift that your piece maps out. European luxury is in the midst of a prolonged slump. Meanwhile, you've got a number of American brands that are having a genuine boom moment. Can you tell us what's changed in the market? You know, this story idea really first came to me because obviously we talk so much about the luxury slump here at BOF and it's, you know, constantly top of mind. And at the same time, I was like, wait, but Ralph Lauren's doing really well.

2:10Coach is doing really well. Tory Burch is seeing this, you know, Tori-sance, as it's been called. And I just thought, okay, what are American brands doing differently that European brands aren't? I think that what has really changed is that European brands maybe got a little cocky. They raised prices too much. They maybe let the creative slide a little. And I think really it all just sort of came together to allow American brands to have this moment because American brands dealt with a lot of the issues that European brands are dealing with now a decade ago. Ralph Lauren, Tory Burch, Coach, were all very overexposed, too heavily present in outlet malls, in wholesale department stores, on off-price chains like Nordstrom Rack.

2:54So they really had to recalibrate, pull back, think about who is our core customer, who are we really selling to, what do we want this brand to stand for, and laser in on that message. And I think that that's something that now European brands really need to do. And let's talk about what they've actually done. Why don't we take Coach as an example? Because I mean, to me, I think that's the most dramatic turnaround. Like Ralph Lauren and Tory Burch, you know, they'd seen better days, but I don't think they were in quite the level of crisis that Coach was. And now Coach is probably doing better than all of them.

3:26Yeah, Coach is a great example. I always say that Coach was like the first brand that I really like craved as a kid. I remember in middle school, like the girls who had Coach bags were the absolute coolest. And then by the time I got to high school, college, it had just become a little too ubiquitous, overexposed. You could go to any outlet mall and buy a Coach bag there. And for Coach, it's really been a decade-plus transformation that they've had to be very patient in seeing the results for. Creative Director Stuart Beavers joined the brand in 2013. He introduced Ready to Wear a few years after that.

4:00And the brand has really focused on who is our core customer, and they are now looking to younger customers. They want to be that first luxury bag purchase that someone makes when they're in high school, when they are finally, you know, they get their first job and they save up to buy a nice bag. So everything about the brand is really designed to cater to that demographic, whether it's the celebrity sitting front row at their fashion shows, whether it's the products they make, the marketing that really has this sort of Gen Z irony whimsicalness to it, you know, the clothes that walk the runway feel very Gen Z inspired.

4:38And their thought is not just, okay, we're going to be a Gen Z brand and grow up with Gen Z. They're like, we want to be a youth focused brand. And also just being a little smarter about product. Chief Executive Todd Kahn told me that previously he thinks that they were too quick to, they'd have, you know, a bag that did well. And then they would just release a new bag the next season. They would retire that old one. They, they move through product too quickly. Whereas now they have bags like the Tabby bag, the Brooklyn bag, when they see these silhouettes start to pop off, they find ways to iterate them.

5:06And he said, that's actually something they took from European luxury. So the lessons definitely go both ways. But I think that really focusing on that core customer is the key to knowing who you are as a brand. Because when you know who you're catering to, it really makes everything clear. Do you think that European brands, is that what they're missing? Because, you know, like Demna is Mr. Irony. I don't think there's any lack of that at Gucci right now. And, you know, like a lot of what you're talking about, like you said, they're basically taking a page from the European brands. Like no one knows how to have an it bag like, you know, Dior or, you know, Chanel or Gucci.

5:42So I guess, yeah, like what are they missing that Coach has figured out here? I think it's a little early to say if like Demna's irony and could be great for Gucci. I think it's just a little early to say if we'll see those results. And like I said before, I really do think it is the European brands got a little cocky and they thought they could raise prices and they just sort of lost touch with that core customer, what they actually want to buy, what they want to wear. You know, there's a lot of criticism around European luxury brands that so many of them are led by male creative directors. And yet their business is mostly supported by women's wear bags, you know, items that women buy.

6:20Just not creating products that people actually want to buy and incorporate into their lives or provide that sense of like creative just excitement. People don't feel like the it bag is coming from those brands. So they'd rather buy a bag that's much more affordable price or just feels like a more reasonable price. I think that the price point of this is very key. And just knowing exactly who your customer is, how much they want to spend, what feels like a splurge to them, what feels reasonable and what feels just like completely out of the, you know, I think that European brands thought they could just hike prices, hike prices and it would all be fine because they had that brand cachet.

7:01But cachet can only get you so far even when you're some of the most prestigious brands in the world.

7:05Sheena Butler-Young: Can we also talk about the store experience bit? I love the story that Todd Contz tells at the beginning of your story, this anecdote about going into a European luxury store, I think in Florida, and buying like some like elevated essentials and then asking for them to tie it up with a ribbon and they basically refused. I feel like he had his like pretty woman moment, even though he's the CEO coach. It very well could have been his pretty woman moment. But I do think that that's something that's taken off on social media a little bit too around these luxury store experiences where it's intimidating to people.

7:38Sheena Butler-Young: And maybe people feel like they don't want to be subjected to that when they're going to spend a thousand dollars or more, right? Yeah. I mean, I think about the fact that community has been one of the biggest marketing buzzwords of the last five years, there is nothing that feels like community oriented about denying someone a ribbon after they've made a purchase at your store or, you know, a long line that extends outside of a store door, but then you look in and you barely see anybody in there. You know, I think exclusivity has its place and obviously it's a key component of the luxury puzzle.

8:13But I also think it needs to be not just I want to have the status symbol of this brand and be a part of this club, it needs to be like, what do I get out of being a part of this club? Having that sort of like community oriented feeling and feeling like you're welcomed. People don't want to spend their money at a place where they feel like they're being mistreated. And I think, like you said, Sheena, those mistreatments are a lot more visible now on social media. You know, there was this whole thing last year of Bethany Frankel going to a Chanel store and she felt like they were rude to her and put them on blast.

8:44And people just don't want to go to a store and have someone like look down upon them. I think that that is just something that people are really pushing back on nowadays. And that has really changed the calculus as well. Do you think Bethany Frankel would carry a coach bag though? Maybe, maybe. I don't know. I also don't think though that she's their target customer. So I don't really think they care.

9:04Sheena Butler-Young: I should add that Todd said he was told that they wouldn't give him a ribbon because he did not buy a certain tier of product, FYI. So you need to spend a certain amount, which is, I think, a part of the social media critique of that. If you don't get to go to the Hermes backroom, if you're not in a certain category, although they do deny some of that, but I think that's definitely, it's got some blowback on social media. Definitely. Definitely. Although this is the knock on those American quote unquote luxury brands that they're not exclusive enough. And can you really call yourself a luxury brand if anyone can afford you?

9:38And, And, you know, it's a strange balance they have to strike. But, you know, let's get back to what we said in the intro, that the knock on these brands is always that they went too far in that commercial, everyone's welcome direction. Have you seen a movement away from that in any way as, you know, I know Ralph Lauren, for example, has raised prices significantly. I think the others have done the same. Are they trying to move a little more in that European direction when they're doing something like that? I think it's less even moving in the European direction, but just more being more thoughtful.

10:09I think that in America, you know, there can be this history of like when a brand really pops off, they get to scale quickly. They ink all these wholesale partnerships. They do licensing deals. And like suddenly the brand is everywhere. I mean, I think about like Tory Burch in the late 2000s, early 2010s, you know, it just like suddenly it was everywhere. Those Riva flats, the bags, the totes, the sandals, like they were the brand was everywhere. And obviously that's like a commercially successful path, but it only lasts so long. Like it's sort of chasing that like quick win. And I think that these brands, after having had that like big spike, they've realized, okay, we need, if we want to have sustained success, we need to be more thoughtful about how we grow.

10:53And, you know, Todd Kahn said something to me of like, we could add, you know, another billion to our balance sheet every year, but it wouldn't be sustainable growth. They've been able to pull back and think about, again, who is our core customer? How can we be a little bit more elevated, curated, whether it's how we show up? Tori Birch used to be so present in wholesale, and now 85 % of Tori Birch's sales are done directly. That means you get to control how your brand is presented. It's not on a shelf at a Macy's where everything's falling over and it It doesn't look very elevated and curated.

11:29And also, I think it's important to note that there is only so much that any brand can do now to control the messaging around their brand because of social media. And I think that like a perfect example of this is Hermes. Like all these processes around buying the Birkins and the Kellys used to be more of like a if you know, you know, hush, hush sort of process. And now it's like there are so many TikTok videos about Hermes and buying an Hermes bag. And I got my leather appointment. I got my Birkin, Birkin unboxing. It does just take away some of the mystique. So I think that when that happens, you have to do what you can to control the message as much as you can.

12:06And I think that's something that the American brands have really realized from their own moments of overexposure a decade or so ago.

12:13Sheena Butler-Young: Also, we should say that this isn't working universally for American brands. You've got Calvin Klein that has done their elevated collection that didn't go so well. Michael Kors is sort of the poster child for like having the very thing that made you big sort of tear you down. There's definitely differences across these brands. It's not one size fits all what's working, what's not. We'll be back with more of The Debrief right after this.

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15:03I'm curious, Diana. And I mean, how well do American brands do true luxury, you know, at that elevated price point? So think of, you know, you talk to, you know, the CEO of Kate. There's Amiri wasn't in this story, but I'd cite them as an example. You know, these are brands that are that are approaching that European luxury price point in many categories. Are they contending, you know, toe to toe with their European rivals? Yeah, I mean, I think you look at a brand like Kate or The Row and they very much sell at a luxury price point. And I mean, I can just personally speak to like what I see, you know, in terms of my friends and people I follow on social media and that sort of thing.

15:40Like I don't see people wishing for or lusting after a Dior bag the way they lust after the row bags. Like the row bags have become, you know, they've just produced, I feel like, hit after hit from the half moon to the 90s bag to, of course, the Margot, which is, you know, like I feel like people were saying it's the next Birkin, which I think jury's still out on that one. But they really play at a luxury price point and have managed to find a tremendous amount of success in doing so. And I think what's interesting about brands like The Row and Kate is that, you know, they have their very special pieces like in Kate's collection that just showed in February.

16:14You know, they had pieces with this beautiful like monkey illustrations or these sheer dresses with all these like button details. Or they'll have these beautiful hand knit pieces where they'll only produce, you know, you know, just a few of them. And then they also have like everybody's favorite pair of jeans. And the jeans are still, I think they're about$580,$600. Obviously, it's expensive for a pair of jeans. But, you know, you could reasonably like save up and buy those. It's like a nice entry level product for people to experience the brand. And it's just a product that is super wearable, practical.

16:47Like everybody needs a great pair of jeans in their closet. You know, the row, I feel like as well, they have so many products like the Gallopant, which is just like a pull-on pant that people are obsessed with. It's over$1 ,000 for the pants, but people love them and feel like it's worth that investment. And I feel like a lot of the European brands, the ready-to-wear prices have just gotten so high that most consumers, unless you're in that top echelon, just aren't even engaging with it.

17:13Sheena Butler-Young: The other major difference that your story pointed to sort of between American and European players right now is the continuity, the cultural bit, of course, but also just in the creative directors. So you have Ralph Lauren, you have Tory Burch, and you have Kate, that like the founders are the creative visionaries. How much does that matter to consumers that they're seeing a consistent vision? Like we wrote a lot about that luxury reset and excitement around new designers, but in some ways Americans are having success with the opposite. Yeah, I think that creative continuity plays a big role.

17:44And even if consumers don't necessarily know that creative directors are changing or they don't know, you know, about all the creative musical chairs of it all, they see it. You know, they see it in how a brand maybe feels inconsistent from season to season or the vibe changes every few years as they change creative directors. I think that having that consistent aesthetic, that consistent vibe, that consistent ethos is really important to customers. It's important to being able to just like define yourself and know who's the customer you're catering to, who's the woman that you're trying to sell to.

18:17And I think that as some of these European luxury brands have just gotten so big, you know, you have to inevitably just expand and expand who that customer is. And then you start sort of being like something to everyone, but not everything to someone. And you lose a little bit of sight of who you are. I think it's easier in some ways if you have the same creative voice, especially if it's a brand founder like a Tory Birch or Catherine Holstein at Kate, or of course, Ralph Lauren, you know, that really has that vision and it all comes from within them and their brain, I think that that really helps.

18:50And that's not to say you can't evolve. Like, I think that Tory Burch is a great example of this. You know, she was very popular in the 2000s, 2010s for her, the Riva flats and the logoed items and that sort of thing. And now I feel like she's catering to the girl who loved the Riva flats when she was in college. And that was her like splurge birthday gift item. And now she's like a cool 30 something, 40 something adult who, you know, wants a great bag that isn't going to like completely break the bank, but still feels super chic and, you know, items that feel fun. And she had like great sweaters in her fall collection, but also had these fun like sardine brooches.

19:29And I feel like every girl right now is obsessed with fish necklaces. Like she knows how to speak to that customer. So you can still evolve that vision, but it still feels true to who that person is, if that makes sense. Now, European brands are not taking this lying down. I mean, famously, you know, there were all the designer, you know, musical chairs last year, a new creative direction, but also we just did a story about Chanel and Dior's pricing strategy, and they're introducing all sorts of, you know, sub 4 ,000 euro bags and, and smaller items that are theoretically more affordable. They definitely noticed, I think that there are other brands out there playing in that, in that space below them that are, that are really eating their lunch lately.

20:10And, and I'm curious, you know, are, are we maybe talking about this at the very peak of this American ascendant trend? And perhaps, you know, now that you can get a Dior bag again for less than, you know, God only knows what it cost before.

20:26Sheena Butler-Young: Now it's only$2 ,000. Yeah, you wish. I think it's still about 4 ,000. I know. I know. Well, I just always, it's always funny when we do that or like it's so affordable at just$3 ,500 for the wallet. Yeah. Yeah. Well, we've got a very premium audience, right guys? No, but, but I mean, my larger point is just, you know, could we perhaps be about to see the momentum swing in the other direction? You know, I personally would be surprised if it completely swings. I think that the issues with the European luxury brand perception go pretty deep. And I think that there is something that has been awakened in a lot of consumers in recent years of realizing like, oh, I don't need to have just like the most expensive bag, or I don't need to have a bag just because it says Dior on it.

21:16I think that people are, you know, there's been a lot of smaller bag brands that have been having a big boom in the past year. We've seen a lot of brands that people love shopping for ready to wear, like a brand like Nelly Lotan, which is a very beloved New York-based label launched bags last year. I think that people's eyes have been opened a little. And yes, I think that like, I mean, I think Chanel is having great momentum right now. I think that Dior is having good momentum. It's not like people are done with European luxury forever. I don't think that's the case at all. But I do think that the calculus has shifted a little.

21:48And I think that European luxury brands have maybe just lost that ironclad grip on being like the only ones who really can make the it bags, the it items, and just like that top, top tier. I think that the social media of it all and the overexposure has really changed things. And I think that there is now just such a desire to be unique, to have like your own personal style. You see it all the time on TikTok. I think it's something that people are really, really craving. And I think that that's going to like shift for at least a bit of time to come, how people think about buying from these big luxury labels.

22:26I do think it's strange. We're talking about, you know, unique, you know, Gen Z wants unique style and they're all buying coach bags. Like, I don't know what makes you unique necessarily or everyone wearing the Ralph Lauren teddy bear on their sweater. Like, you know, great brands love them. But like, I don't know that you're like a special, you know, you know, snowflake, you know, for shopping with these brands necessarily any more than with Dior Chanel.

22:48Sheena Butler-Young: Well, maybe this is where American brands can borrow from their European contemporaries and just do the whole myth-making thing. Maybe that's working for them, Brian, the myth-making of it all, that you get to be exclusive with your one of 20 ,000 teddy bear sweaters. Well, that's the whole thing we haven't really talked about here, that Diana does a great job of talking about in her story. I mean, Ralph Lauren epitomizes this whole world-building concept. Like maybe you're not totally unique for buying that polo shirt, but you are buying into something that feels authentic and different than other brands that sell polo shirts with logos on them.

23:26Definitely, definitely. And I think this is also where that creative continuity plays a role. Like if you can have that really strong vision, that does a lot to sell to consumers who really are craving, like you said, Brian, that authenticity. And I think when you have the creative directors that, you know, shift so often, it's a little harder to really see that vision through and build that vision. I mean, you think about Coach with Stuart Reavers, like he was at the brand for over five years, almost a decade, I feel like, before they really started seeing that turnaround happen. Like, it takes time.

23:58Ralph Lauren put their turnaround strategy in place in 2016. And I feel like it's been within the last, you know, four-ish years that we've really seen them start to take off again. So I think that it really does take time. And when you have that shareholder pressure that a lot of these, you know, giant European luxury companies do, and obviously Americans have it too, it just can be hard sometimes to see that vision through. There's a lack of patience sometimes to see if something really has the legs to take off. I'm wondering, Diana, you spoke with practically everyone for this story. You talked to, you know, Pierre Yves, the CEO of Tory Burch, Tory Burch herself, CEO of Kate, CEO of Coach.

24:36Do they buy into the premise of this story? Do they see it as an us versus them or that America, you know, has something to prove when it comes to luxury fashion? I think it's less of an us versus them. And I think all of them said, you know, there are things European brands do extremely well. And, you know, you look at Perry Eves from Troy Birch. He was the head of the LVMH fashion group for a number of years. So he's really seen it on both sides of the coin. So I think that it's definitely not an us versus them. But I think there's a little bit more pride in being an American fashion brand now and feeling that luxury brands can be born in America.

25:13American brands can, you know, be more than just these overexposed, ultra commercial businesses. is. I think there is just, yeah, a little bit more pride in being an American fashion brand and showing that we have, you know, a unique skillset or not we, I'm not an American fashion brand owner, but I am an American. But you know, yeah, just, I think there's a little bit more, more pride. And I spoke to Stephen Cole from the CFDA and he said the same thing, you know, that there's just a little bit more feeling like a little bit more of a confidence that maybe didn't exist 10 years ago when sort of these brands were out there.

25:49You know, I feel like European luxury brands were really on the ascendant and these brands were a little bit more in that struggling place of figuring out what's next. How do we regain our cool factor, our it factor?

26:00Sheena Butler-Young: I think that's a nice note to end on. Also that I, as a lot of economists say that when it gets competitive like this, even if they're saying that it's not a competition in that way, it's supposed to be good for the consumers in the end, right? We get the better prices, the better, more creative products and storytelling. So maybe it all works out. They should compete. They should go neck and neck like it's the Super Bowl of designer handbags. Totally, totally. And I think it is like it's an important lesson and reminder that like there is something to be gained from every approach. And I think like, you know, if you went by the traditional American playbook of, you know, 15, 20 years ago, just like expand, expand, expand, do as much as you can to grow the business.

26:39Clearly, that's not a great strategy either. they maybe took a page from the luxury, the European playbook of like being a little bit more thoughtful and curated and focusing on that creative vision. And then I think maybe the Europeans fell, I think, which I think it's very easy to like fall prey to this, you know, growth, growth, growth path. And now they're realizing, okay, maybe now we need to pull back and look at what the Americans have been doing. So I think that there's, there's value to every approach. And I think it's important to remember that.

27:06Sheena Butler-Young: Well, Diana, thank you so much for joining us today. Thank you so much for having me. Please be sure to check out Diana's article, What European Luxury Can Learn from American Fashion at businessoffashion.com. These and other stories are available to BOF professional subscribers only, and you can find the links in the episode notes. You've been listening to The Debrief, produced and edited by Olivia Davies and Eric Bria. I'm Sheena Butler-Young. And I'm Brian Baskin. We'll be back next week with a new episode. Thanks so much for joining us and be sure to follow us wherever you get your podcasts.

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