30-day Challenge – Day 9

One thing that I highly admire about companies in the luxury segment of any product or service category is the uncompromising passion with which they pursue their strategic goals. I have never been a fan of trying to be everything to every consumer because it is not always an efficient way to drive your business. However, I do believe in leveraging your brand in any way possible to reach your current and future customers. That brings us to today’s topic on co-branding.

Co-branding in the Fashion Industry 

In today’s competitive environment companies are scrambling left and right to appeal to an ever-changing consumer. In finicky industries like fashion, you can be “hot” one moment and “gone” the next; and so the key in that business is to stay on-trend and deliver whatever you believe consumers are looking for. Fast fashion brands like H&M and Zara’s do this so well that they can have the next fashion trend delivered to consumers in two weeks. A couple of days ago, H&M and Versace launched a new cobranded line, Versace for H&M.

Versace for H&M - Launched Nov. 19 2011

No stranger to co-branding, H&M has worked with design houses and celebrities such as Madonna, Karl Lagerfeld, Viktor & Rolf, Jimmy Choo and Lanvin. The strategy helps differentiate H&M from the competition, ultimately increasing turnover for both H&M and its luxury brand partners. Since fast fashion appeals to younger consumers, who want cheap access to the latest designs, co-branding also helps luxury brands educate and indoctrinate a future customer base.

I am not sure if this is a good idea because of the implications on the perception of luxury brands. In some ways, this can be a loss of focus on the part of luxury brands, which sell customers on the premise of brand heritage, exclusivity, and artisan quality.  By embracing the new trend of mass market consumption of prestige products (or masstige – meaning prestige for the masses ), brands may not be setting themselves up for longevity. As Clay Christensen’s article ( “How Pursuit of Profits Kills Innovation and the U.S. Economy“) points out, these prestige companies may be going the same way as Dell, when the computer reseller chose to outsource most of its production to ASUSTek.

Labbrand, an Asia-based marketing and brand consulting firm has an interesting perspective on the H&M/Versace collaboration:

Luxury co-branding sometimes occurs between different industries as well. Famous examples include cell phones by Samung and Armani, laptops by Asus and Lamborghini and vodka by Absolute and Swarovski. Luxury brands are known for their exclusivity, but by merging their unique characteristics with a familiar product or brand that all consumers can enjoy creates a sense of excitement and adventure, which then builds positive brand perceptions and enhances sales revenue. Featuring cobranded luxury goods in a fast fashion store also acts as a gateway for mass market customers to enter the luxury goods arena.

Pros and Cons of Co-branding from Labbrand

I certainly have my reservations about co-branding, especially where the operational and strategic vision of each party to the collaborative may differ. However, H&M has been very successful with this strategy. I am more worried about the implications for prestigious lifestyle and apparel brands like Versace, which might be more focused on short term than they would like to admit. Could Versace be another Dell?