Why it’s so hard for luxury brands to align their fashion and beauty strategy

Everyone wants to know what’s next for Gucci Beauty.

When beauty conglomerate Coty relaunched the luxury house label in 2019, it reflected the maximalist style and sensibility of Gucci creative director Alessandro Michele. Once indistinguishable from a suite of other glossy black palettes and lipstick tubes, the Michele-influenced iteration of Gucci Beauty featured bright floral and retro-inspired packaging and campaigns featuring punk musicians like Dani Miller. It was eccentric and over the top – and a lot Michele.

Initially, Michele’s vision found resonance in fashion and beauty, both commercially and among industry insiders. Sales soared, sparking a renaissance for Gucci. But in 2021, sales have slowed and Michele’s Gucci has lost its appeal to executives. In February 2022, Kering Chairman François-Henri Pinault told investors that the brand would refocus on timelessness. Michèle left in November. Even before new designer Sabato de Sarno’s official solo debut, his team-designed menswear show in January was cut short.

The same kind of tightening can be reserved for beauty. A March campaign for Gucci Guilty fragrance showed actors Elliot Page and Julia Garner and rapper A$AP Rocky sprawled on the floor of a dressing room, with softer colors and looks. Gucci Beauty declined to comment.

The future of Gucci Beauty raises questions about how luxury fashion brands should approach their beauty businesses. Aligning fashion and beauty, which operate on different timelines and serve different customers, is historically difficult. While embracing a designer’s aesthetic can be an effective tactic for a fashion house’s beauty business, leaning too far comes with risks, especially when the brand is making a creative shift.

As designer tenures get shorter – in recent history, Ann Demeulemeester, Bottega Veneta and Burberry have all said goodbye to creative directors after less than five years – creating a timeless yet timely beauty line gets more complicated. Consistency in messaging is increasingly important as competition intensifies: luxury brands must now compete with savvy upstarts as well as each other. Selling dreams is the competitive advantage of luxury.

“The picture that [consumers] finding in the product they can afford has to be consistent with the brand image, otherwise you’re not buying the dream,” said Mario Ortelli, managing partner at luxury M&A firm Ortelli & Co.

The movements of luxury conglomerates indicate that beauty is becoming a higher priority. Kering opened its own beauty division in February, hiring former Estée Lauder executive Raffaella Cornaggia as chief executive. LVMH named former L’Oréal executive Stéphane Rinderknech to head its beauty segment in March.

“History and the creative world [a brand] built is the most vital asset a luxury brand has,” said Tony Wang, founder of Office of Applied Strategy who has worked with luxury brands – including Balmain, whose line is set to debut in 2024 – on the beauty strategy.

How fashion builds beauty

Traditionally, luxury brands entrust their beauty lines to partners like L’Oréal, Estée Lauder and Coty, who handle development, marketing and distribution with brand advice.

At best, these licensed beauty lines reinforce a brand’s identity: L’Oréal’s line for Armani, known for its relaxed and sultry silhouettes, addresses the brand at the product level with a foundation in light and luminous silk and a red lipstick, and creatively through light and sensual lines. advertisement. Through licensing, smaller brands like Balmain or Maison Margiela, both of which work with L’Oréal, can scale up beauty lines without putting their own capital at stake.

A lack of cohesion can undermine brand equity. Of course, a licensee wants their license to be renewed, but they also have an incentive to earn as much money as possible during the contract, while for the luxury brand, the preservation of brand equity is most important, a said Ortelli.

When a conglomerate’s beauty production doesn’t align with a creative director’s approach, the results can confuse consumers. In 2018, for example, Coty launched a campaign for Burberry’s Her Fragrance in the style of former creative director Christopher Bailey. The campaign, however, was scrapped just after new creative director Riccardo Tisci unveiled his streetwear-centric vision for the brand, complete with a new, more modern logo and monogram.

Similarly, Valentino Beauty, launched in 2021, uses red packaging, reminiscent of more historic Valentino hues, rather than the electric pink creative director Pierpaolo Piccioli has been pushing lately. Its scent bears the brand’s signature rockstud, which it first launched in 2010 and hit its peak soon after.

Misalignment means that the vast majority of consumers who primarily interact with a brand through beauty don’t have a clear picture of it. Brand erosion is hard to track, especially when working with a licensee, said Ariel Ohana, managing partner at investment bank Ohana & Co.

“If it comes at the cost of global brand equity, which will make the brand sustainable for decades to come, you will end up paying the price,” Ohana said.

Operating in-house, as mega-brands like Chanel and Dior do, offers more control, not to mention better margins. Much of the mystery surrounding the manufacture of beauty products has been solved, making it easier to launch beauty today, compared to a decade ago, said Audrey Depraeter-Montacel, chief executive of Accenture and responsible for beauty. However, this still requires a lot of time and capital; beyond investments in products, marketing and distribution capabilities, harnessing beauty internally requires a shift in mindset. The research, development and business aspects of the company interact more with the creation, and earlier, Wang said.

“In fashion, creation is on a golden pedestal, isolated and setting the agenda, but in beauty it’s much more cross-functional,” Wang said, saying brands need to think more like a business. of consumer packaged goods like P&G.

Consistency, consistency, consistency

In luxury, the tension between heritage and currentness creates a unique dilemma, Wang said, especially when a brand has a creative director with a particularly strong point of view, or is in the midst of a transition.

However, aligning a luxury brand’s beauty business with that of fashion is not easy, especially since brands have become accustomed to rotating creative directors quickly. Redesigning products and packaging is operationally demanding and can hurt profitability. It is therefore more important to develop a solid strategy from the start.

At Gucci, for example, giving Michele more weight when it comes to beauty made sense at the time, Wang said. A pivot to a post-Michele, more heritage-centric Gucci Beauty era could be a slower transition — and an expensive process.

“The cost of re-doing things in fashion is lower because clothes are seasonal, so people forget about it, but with beauty, you have so much inventory on hand,” Wang said. “Second, third, fourth chances don’t come so easily.”

Small brands especially need harmony between fashion and beauty. Puig-owned Dries Van Noten’s range of lipsticks and fragrances use colorful refillable packaging, reflecting the brand’s use of bright hues and prints in apparel and its focus on sustainability.

A house like Dior, which has a larger budget and greater brand awareness, can handle more fragmentation. The brand’s fragrances, including Miss Dior and J’Adore Dior, are distinct from each other. Johnny Depp’s Le Sauvage, which was reintroduced in 2015, doesn’t necessarily reflect Kim Jones’ streetwear take on the brand’s menswear collection, but it remains the most popular fragrance of all time and is a huge sales driver. .

“You’re not going to destroy a good thing because they have power… At the same time, if you ask a random person on the street, I don’t think they necessarily know [Sauvage] is a Dior fragrance,” said Thomai Serdari, professor of luxury marketing at NYU.

Even Dior needs beauty to emulate what’s happening in the house today. Its new logo now appears on certain make-up and perfumery products; The creations of artistic director Maria Grazia Chiuri are featured in some beauty advertisements, notably for her perfume Gris Dior.

Still, experimentation is necessary, and beauty can be a channel to see how audiences react to particular cues or to attract new audiences like Gen-Z.

“Trends don’t just reverberate down, they can also go up, so [experimentation] is very important for luxury homes in particular,” Serdari said.

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