Yves Saint Laurent: A History

In a similar route of Dior, Saint Laurent made his debut on the fashion scene with French textile tycoon, Boussac. The termination of their business relationship serves as the origination point for the YSL brand story, which I’ll outline for the sake of “brevity”. It’s amazing how fun business can be!

1936 YSL is born in French Algerian port of Oran

1955 YSL joins the creative staff at Dior

1958 After Dior’s death, YSL makes his debut collection (trapeze line) as new Creative Director of the Dior Maison, age 21

1960 YSL launches the beat style at Dior, and Boussac quickly replaces him with Marc Bohan (Sounds a little like the Marc Jacobs grunge line at Perry Ellis, no?)

1962 YSL launches his own line with life and business partner, Pierre Bergé, backed by American financier, J. Mack Robinson

1963 Robinson sells his shares, and American fragrance brand Charles of the Ritz obtains 80% share of the couture house against 20% held by YSL and Bergé

1965 Infamous Mondrian collection debuts

1966 Relatively affordable pret-á-porter line, Saint Laurent Rive Gauche, is launched

1967-8 Makes headlines with launch of ethnic, safari and nude looks

1972 Pharmaceuticals giant E.R. Squibb takes over Charles of the Ritz, along with control of YSL perfume and cosmetics, allowing YSL and Bergé purchase full control of group’s couture activities

Full ownership of couture activities gave YSL and Bergé the right to expand the business beyond couture, using the brand’s name through licensing agreements.

Haute couture will stay for perhaps another five or ten years. I’m only keeping the salon going because I cannot ethically justify putting 150 people out of work.” ~Yves Saint Laurent, 1971

1977-8 Launch of Opium perfume and creation of YSL Beauté

1986 YSL and Bergé buy Charles of the Ritz back from E.R. Squibb, acquiring full rights to the YSL fragrances and cosmetics, expanding their business 10 times over; many financial partners were required for this purchase, among them Carlo de Benedetti, who came to own the largest share of the company after YSL and Bergé themselves.

1989 To meet burgeoning debts, YSL is forced onto the secondary stock market in Paris

1991 De Benedetti demands to be released from his investment amidst the global recession of the early 90s; Bergé and YSL, unable to find new investors, drive themselves further into debt buying him out of his share

1992 Another major investor, Wasserstein-Perella Bank, indicates that it must sell it’s 15% investment in the YSL Groupe; Bergé demands that their replacement investor be European (to avoid having a multinational company)

L’Oreal makes an offer for 100%, but Bergé does not want the company to be run by consumer goods giant, Nestle (L’Oreal will acquire YSL Beauté). LVMH also expresses interest, but backs out after Bergé requests that he and YSL maintain creative control over the YSL brand and its primary competitor, Dior (remember, LVMH structures its brands to avoid collaboration, brand dilution, and in this case, sabotage).

YSL and Bergé, unable to come to an agreement for an investor, begin selling off their personal shares, and are subsequently investigated for insider trading. (Check out the 1992 film documentary by Hamish Bowles on YSL here.)

1993 The groupe is sold at 100% to French national company, Sanofi, for a reported $650 million. YSL maintains position as creative director of his couture line

1997 After years of losses on the YSL brand, Sanofi shops around for a new buyer for YSL

1999 After serving as white knight in rescuing Gucci from a hostile takeover from LVMH, Francois Pinault (head of PPR and majority stakeholder of the Gucci Group at 53.2%) acquires the YSL brand

The Couture Division (including pret-á-porter and fragrances) is sold to Gucci Group, where Tom Ford is named Creative Director of YSL Rive Gauche in addition to his role as Creative Director for Gucci.

The Haute Couture Division stays under direct control of Pinault through his holding Artemis, and remains under the creative direction of YSL.

The DNA of Yves Saint Laurent is completely different from the DNA of the Gucci brands. These dreams are kept alive by our creative directors and our designers.” ~Robert Polet, Gucci Group CEO

2000 Gucci Group immediately applies its direct-control mantra for production and distribution on the YSL brand, terminating more than 150 licensing agreements and creating a network of +62 directly-operated stores in order to create brand image and service consistency, but this attempt drives YSL further into the red

2002 YSL’s final show as creative director of YSL Haute Couture

I have today decided to bid farewell to the world of fashion I have so loved.” ~Yves Saint Laurent, 2002

2004 Tom Ford leaves Gucci Group, and is replaced by Stefano Pilati as Creative Director of YSL couture

2005 YSL brand profits fall from €169m in ‘04 to €162m, with losses ballooning to €76.4m

2006 Valerie Hermann, a veteran of LVMH, assumes position as CEO of YSL

After her first full year, YSL revenues rise 19% and operating losses fall 24.9%

With the fixed costs I have, I need more volume.” ~Valerie Hermann, YSL CEO

Lessons in Luxury from the French

• The French model for luxury presents a growth pattern that typically occurs through brand extension and/or brand-buying, in the case of conglomerates.
• Individual brands pursue growth primarily through brand extension, with very limited second line development (YSL Rive Gauche is an exception, not the rule).
• Most French brands have moved from singular couture brands into luxury conglomerates, where specific skills and resources may be shared through brand synergy, but unique brand image must be carefully managed.
• It’s a good idea to keep your brands separated, from the creative director down to the production staff, in order to maintain unique brand identities.
• Too many licensing agreements can dilute the brand image when not properly controlled, but a group-wide policy of one-size/strategy-fits-all can have the same effect.
• Today, the labels of former couturiers make their money in accessories, fragrances and cosmetics. Couture is needed to hold uphold the luxury brand image (for now), but the market for couture has nearly disappeared.
• Without the high profit margins of couture sales, luxury fashion companies must rely on volume sales in lower price categories. This impacts the image of what some feel a luxury company should be (for example, a guy I look up to, Seth Godin), but without a couture market, the industry must look for a new strategy.

I’ve always said that the couture would die with Yves Saint Laurent. Now it’s a domino effect. The couture has lost its raison d’etre. Couture isn’t art. It’s not meant to be hung in a closet like a painting. The women who wore couture no longer exist; the art de vivre that spawned couture has died. If houses such as Chanel and Dior one day get proof that they can sell as many bags and fragrances without a couture show, they’ll stop couture, too.” ~Pierre Bergé, 2004, upon hearing that Emanuel Ungaro would leave couture (Vogue)

Sources: International Directory of Company Histories, Vol. 23. St. James Press, 1998; Vogue Magazine; www.fundinguniverse.com; personal notes

There are many available histories of Dior himself online, so let’s dive into the business side of things.

The Brand’s Origins

As many are well aware, Dior became famous with the New Look after WW2, and was integral to bringing French fashion back to the forefront after the occupation years.

Dior was the first to exploit his name with licensing agreements, which at the time tailored products to local markets and offered unique price per value products at varying price ranges. (It is very difficult to do this today- a company must maintain consistency across all markets because information is so easily exchanged over the internet and worldwide travel. People don’t like to see plastic pens being offered by their favorite luxury brands in certain markets when they are paying the big bucks for couture by the same brand at home. If products are to be specialized for separate markets, they must remain within the same quality and price range as all products offered elsewhere.)

Dior was the first to give a name to each collection, alluding to future generations of designers, both high and low end, who name their collections based on an inspirational theme. He used garment models and made spectacular fashion shows, which are of course used by everyone today (we’ll see how that keeps up as carbon footprints and insane exchange rates mixed with a faltering economy effect travel plans).

Many copies of the New Look and subsequent collections were made around the world, proving that one man could influence the style of the world while isolated in his studio. This is no longer possible today.

From Single Brand to Luxury Conglomerate

By 1984, as a result of diminished stylistic value after the death of the brand’s namesake and a brand image spread thin through various uncontrolled licensing agreements, Dior was on the verge of bankruptcy. Bernard Arnault took a major stake in the textile group Boussac Saint Fréres, to whom Dior belonged, and converted it into the Christian Dior S.A. Holding.  Just 5 years later, in 1989, the holding became a major shareholder of LVMH at 42%. Arnault had become the president and chairman of the largest luxury group in the world in a number of years. Christian Dior was divided into the CD Couture Management Group and the LVMH management group for a brand turnaround.

Reviving Dior

Because the French luxury brands are typically older than those borne of Italy, the UK and the US, they have already faced the brand transition that must occur if a brand is to continue after the death or retirement of the founder (”founder’s dilemma”). We have yet to see examples of this in the US market, with a few notable exceptions, but in Italy, two prominent houses are currently undergoing the transition this year: Valentino and Gianfranco Ferré.

It was, in fact, Gianfranco Ferré who was placed as the Art Director of Dior in 1986, however, he did very little to move the brand forward. After understanding that fashion needs a wow-factor, the company wisely placed wild boy John Galliano at the helm of Dior in 1996. Galliano had a way of making headlines, and advanced through the company as quickly as he helped bring Dior back to the forefront of the fashion scene. He began as the Head Designer of women’s haute couture and ready-to-wear collections, and became the Art Director for all Dior women’s brands by 1999.

Galliano created a buzz through his design of outrageous characters on the runway, making his fashion shows a mix of art exhibit and theater. However, in addition to revamping the look of the brand through his couture creations, he also focused on beautiful ready-to-wear and accessories and cosmetics (the real money makers today). This is where the real success of the brand’s renewal came from.

As you can see by looking at the CD and LVMH websites, a great deal of the marketing budgets are set aside for fragrances (64%) and only a small portion for fashion (6%). Today’s Christian Dior is therefore not so much a house of haute couture as it is a part of the luxury cosmetics industry. However, without the built-in marketing genius of Galliano and his couture shows, all other lines and products under the brand would be devalued. He is needed to sell the dream.

Conglomerates: The Modern French Model for Luxury

Today the French model gives complete freedom to designers in high fashion only. In the end, even the wildest designer must be able to design the bag of the season and design ready-to-wear that is in fact wearable. This is often done in collaboration with marketing and merchandising teams.

Luxury conglomerates such as LVMH allow line and brand extension, as well as brand-buying to serve various levels of clients and all the needs of the high-end clients. LVMH carefully manages brands to have the correct balance of cash cows and strugglers. They also work to ensure that there is limited collaboration between brands within the holding to limit the dilution of brand identities (this includes dedicated production staff per brand, often within the same facility). When buying a tired old brand, the holding company must also decide if it’s worth the time and effort needed to revamp the brand.

A Sustainable Element

The most recent brand acquisition of LVMH is the ethical fashion label Edun, brainchild of U2’s Bono and his wife, Ali Hewson (LVMH took a minority stake, estimated at 45%).  This brand has been at the forefront of sustainable fashion and advocacy, and has implemented guerrilla marketing tactics and pop-up stores recently. It also provides a great compliment to the LVMH portfolio, at a time when consumers want their purchases to mean something beyond frivolity. Caring is the new black, and philanthropy is beginning to represent status at an increasing rate. One would hope that the brand’s acquisition will not hamper their youthful marketing or ethical initiatives. There is every reason to believe that the brand will be nurtured to continue in this way, in spite of the lackluster economy.

At this month’s annual shareholders’ meeting, Chairman Arnault announced that first-quarter revenues gained 0.4 percent to 4.02 billion euros, or $5.26 billion, and added “April continues this trend, with a very slight improvement” [WWD] Louis Vuitton continues to be the group’s biggest cash cow, continuing to grow with their no-sale-ever policy. The profits from the booming brands are used to further nurture the newcomers, and those brands whom might be struggling.

For me personally, coming from a background in sustainability, it is inspiring to see this recent development within LVMH. The idea that the primary example of French luxury, the powerhouse of LVMH, has made a commitment to advance Edun also suggests that the holding will create synergies between the ethical brand and it’s other holdings. Perhaps the future of luxury may be a sustainable one, after all.

By the way, the LVMH site has included some information on the main page about CSR activities the holding participates in.

A Digital Element

In January 2009, LVMH announced that they would be phasing out their e-commerce portal e-luxury. This site pioneered luxury e-commerce for the brands within the conglomerate (in addition to others, including Dolce & Gabbana) nearly 10 years ago, while other fashion and luxury brands continue to struggle with the concept today.

In place of an online luxury “mall,” e-luxury will be transformed into an online magazine delivering news and cultural bits related to the luxury lifestyle.

It is unlikely that this strategic move had anything to do with the conglomerates lack of faith in e-commerce for luxury, but is rather a giant leap in online luxury strategy.

Luxury brands increasingly need to represent themselves as a singular entity online, and many are moving towards developing their own online stores instead of participating in the sort of grouping that e-luxury provided. Furthermore, it is highly likely that the players at LVMH understand that not only is it important for luxury brands to control the supply of their products and distribution (in fact, Louis Vuitton is one of the most protective over their highly counterfeited designs), but furthermore it is important to control the message.

Today, amongst the bloggers, tweeters and other mass-communication savants, it is critical to have a powerful brand voice to deliver a message of identity, and to establish a unique brand voice online. However, as many brands move into conversational online media, such as Facebook and Twitter, they enter into a medium of a dialogue where third parties can completely alter or dilute the power of a message. To control the message, you need to control the media. With the creation of the online magazine NOWNESS, it is clear that LVMH understands this strategic magic bullet.

For now, NOWNESS is a platform providing daily news bursts on items that may be of interest to the luxury market. The “real” site will not be officially launched until early 2010, but it appears that the developers are going to wow us with an algorithm that provides content based on our preferences.

Here’s a word from the website:

So far, I’m impressed. Now let’s see how they execute it…

Another word on digital marketing (because I must): the LVMH site also hosts an “online magazine,” but it proves *visually non-engaging* at best. It is likely (hopefully) that this will serve more as a portal for company news than an online magazine for fans and the brand community.

I’m especially interested to see how CHANEL will perform in the digital environment, since they have taken the initiative to dip their toes in the 2.0 waters. If anyone has any thoughts on this, I’d love to hear them!

Here is my presentation:

Some other links:

Lagerfeld’s Twitter Feed

CHANEL’s Facebook Fan Page

CHANEL’s Official Webpage

I personally think this exhibit represents a duality in Paris, at a time when haute couture could not be made due to market and supply shortages, and where Paris was itself isolated from the global audience. Here you can see how everyday-people in Occupied Paris incorporated radical and creative pieces into their daily wardrobes, demonstrating the early ingredients of a culture that would take France beyond the couturiers of the French Court of Louis XIV, and into the modern spotlight of high-fashion after the war.

Photo By E.Emo and S.Piera/Galliera/Roger-Viollet

What is Couture?

Haute couture is identified as unique pieces constructed with precious materials, made-to-measure, and made for special occasions- not daily wear. A dress of this nature today should run you on average between 20,000 and 30,000 euro and up.

According to French law as of 2008, the following points must be met for a fashion company to be considered a house of couture:

• the atelier must produce at least 50 garments per season by hand
• the atelier must employ at least 20 skilled in-house workers for production

Note: This model is changing under the current economic situation, in order to protect the existing haute couture legacy; too many couturiers were closing their doors under the weight of these expensive restrictions.

Where there were once more than 30,000 clients per year for the highest form of French fashion, today there remain less than 3,000, and most of these are irregular clients. Hence, haute couture is not a big business anymore; it is unaffordable and impractical, as there are fewer and fewer occasions in today’s world to wear such items. It has become much less profitable than it once was, having lost the link with modern life.

Most companies that made their name in haute couture today sell primarily accessible products and democratic accessories like lipstick, perfumes, and so on. However, to continue to sell these more “basic” goods at high profit margins, they must continue to produce high fashion. People are now buying the legacy of couture, rather than the couture itself. Therefore, to make the big bucks selling goods at the bottom, you must be positioned at the top.French companies based around haute couture lack a bottom-up business model, and have no second-lines: consider French powerhouses Dior and Chanel, as opposed to Armani, Ralph Lauren, Dolce & Gabbana, etc.

The Dream created by the haute couture collection is used to sell cheaper products from the same brand.

Brand images and communications demonstrate a high level of arrogance and provocation, in order to build The Dream. Have you ever wondered how or why that “crazy stuff that nobody is ever going to buy” makes it onto the catwalk? The most elaborate and provocative designs are taken onto the runway because the goal is not to sell as many units as possible, but to demonstrate creativity and uniqueness, and generate buzz around the brand. Consider the wild boys Jean Paul Gaultier for Hermes, or John Galliano for Dior (below).

The buzz-factor has become increasingly important for luxury fashion labels in recent years, especially in France where the namesake designers (Dior, Chanel, Vionnet, Yves Saint Laurent, etc) are no longer with us. In fact, most clients are unaware of the designers behind today’s major labels. Instead, it is much more common to know which celebrities are wearing which labels (the Poiret legacy lives on!).

The French Fashion System

To summarize, the French business model is derived from a long tradition of craft and individualism… and marketing. Couture was the original product of the French fashion and luxury system, which was recently integrated with and then overtaken by accessories. The image of sophistication and provocation are used to produce the sense of luxury at the highest levels of the brand (through couture), which is what the companies are selling (through cosmetics and accessories). Viola!

• Couture = Image
• Accessories/Cosmetics = Sales

Here’s my hastily-made visual (with apologies to France):

France

Post-WW2 recovery of the fashion industry was not easy in France.

The geography of fashion has distant roots, and world capitols rely on a large accumulation of materials from around the world in order to grow. As a Nazi-occupied island, isolated from the rest of the world, Paris lost its monopoly on fashion, with competition growing stronger in New York, London and Italy. In order to recover, French ateliers returned to the haute-couture stage, but with innovative cooperation between the fashion and textile industries.

The Theatre de la Mode was a traveling exhibition of more than 150 wire-frame dolls, each about 70cm tall, dressed in miniature couture clothing (see photo, above). These small sizes were used to save on expensive materials, while still demonstrating the tangible qualities of the garments’ designs and construction. More than 50 French couture houses participated in the exhibition.

In 1946, Christian Dior (1905-1957) came on the scene, opening his own couture house. He was contacted by the French Minister of Fashion (what a title!), a man named Lucien Lelong, and asked to partner with French textile tycoon, “The Cotton King” Marcel Boussac, in order to reinvigorate the fashion and textile industries of France on a global scale. Jacques c, a young civil servant, was hired to serve as business administrator. Dior launched his first collection in 1947 in cooperation with Boussac. The collection embraced the “New Look”, which recalled the formerly popular S-shaped silhouette without the underlying cage. Dior abandoned the masculine look, and emphasized luxury and opulence. The look was indeed new after years of the plain, shapeless ration dresses of WW2, and came with huge amounts of layered textiles and embroideries. Dior and Boussac used their marketing skills to promote the extensive use of fabrics (promoting the textile industry) and opulent details and construction (promoting the fashion industry) by playing to the optimism that followed years of suffering.

No one person can change fashion- a big fashion change imposes itself. It was because women longed to look like women again that they adopted the New Look.” Dior, 1947

There was a backlash to the New Look in the States in 1946-7, when people thought it inappropriate to display such opulence after such great suffering, and for women to bind themselves again after working in the place of men and revolutionizing their fashion in accordance. They weren’t the only ones speaking out against the New Look.

Coco Chanel re-emerged and gave many interviews against Dior, saying that his design was an easy dress to impose on women, but that they needed to be able to be comfortable in their daily lives and be able to move independent of assistance. She remarked, “A woman should do her shopping without being teased by the housewife. Whomever laughs is always right.” (Ironically, the North American market would become Dior’s biggest by the mid-50s.)

Over time, Rouët worked to extend the brand into a range of licensed items, exploiting the financial rewards of export deals and licensing contracts. Dior understood and exploited the promotional value of press coverage, and frequently made headlines while catering to Hollywood’s best and brightest, and by giving headline-generating names to each of his collections.

For a more in-depth look at the life and work of Dior, check out his biography at the Design Museum site.

You can also read more about the birth of luxury conglomerates, exemplified by Christian Dior and LVMH, here.

The birth of fashion occurred somewhere around the end of the 1300s. We can trace the history of fashion through several key sources:

• Dresses & Garments: these artifacts become more rare before the 17th century, and the artifacts we have were typically of the most expensive nature, as cheaper garments were worn more frequently and were more likely to be ruined.
• Fabrics: these give us an idea of the technology and distribution systems the existed in different periods and regions, providing insight into markets and distribution chains
• Figurative arts: these are of course subjective, depending on what the artist (or the artist’s patron) wanted you to see, based on their own values, symbols and priorities (for example, a Renaissance master might use more expensive colors to demonstrate wealth in his patron’s clothing, and we have no way of knowing what is factual and what is not)
• Archives: accounting records and postmortem inventories often documented dresses, as these were among the most valuable items transmitted to heirs
• Literary texts
• Oral history

Okay, so we’ve got our sources down. Back to the history!

Prior to the mid-14th century, in Classical Periods, colors were dull and derived from a limited palette (typically white, yellow, red and some blues… all were dull). Clothing was neither cut nor sewn, but was draped indifferent to the body shape. Think: toga. Mid-14th century Europe brought about the appearance of a new type of clothing, with strong differentiation among men (short and tight, with silk tights) and women (long and close-fitting). Ah, how the times have changed!

Clothes began to show the body, and were cut to form. Men wore bright, contrasting colors, short blouses and tight silk or wool stockings, with an emphasis on the groin region (although this was shunned by the Church). Note the image to the left of The Martydom of Saint Sebastian, by Vincenzo Foppa 1489. Women’s fashion was equally tight around the bust, with a low neckline, and typically hung quite low (the longer the dress, the richer the woman).

We call this era the birth of fashion because there were changes in style taking place, there was an increase in options, and there was an increase in the speed of change of style (in contrast with previous uniformity in appearance). Furthermore, in previous times, unnecessary items were publicly burned by the devout. This was the first time in several hundred years where accessories could be displayed. There were also more available colors and construction techniques to provide increased options.

The birth of fashion was not merely about changes in style. It is also connected with the commercial revolution in Europe. People still typically wore rags in this period, and masses would wait outside of hospitals to beg for or steal the clothing of the recently deceased. However, new technologies invented in the 14th-15th centuries enabled great economic expansion. Eye glasses were invented, enhancing science and optics industries, and enriching the economy by allowing those with poor vision to work better and longer, and to see smaller objects in the manufacturing process. (Glasses at this time were basically magnifying glasses.)

People left serf conditions on farmland to move into cities for freedom and the ability to buy and sell. Innovation, itself, was centered in the urban communes. This was a new world, open to talent and ambition, based on different values from those in the countryside. Within the walled cities, people were getting rich. Here, fashion was born.

Clothing became the means through which the new business community (merchants and craftsmen) could affirm its social, political and economic status over traditional dominating classes. The use of clothing as a means of attesting one’s social status is confirmed in the sumptuary laws, whereby appearance was a public decision, not a personal choice. More specifically, these laws dictated what could be worn, and by whom. Sumptuary laws were most common in England.

Regarding new technologies, draped clothes were eclipsed by sewn garments thanks to buttons. Buttons allowed men’s tights to fasten and women’s form-fitting dresses to be worn. Sleeves became important as detachable elements because they gave the appearance of a whole new dress, and could be easily removed for more frequent laundering.

Colorful clothes were made possible due to improvements in dying. People in the Middle Ages placed great importance on color. The contrast in light versus dark, the social value of colors in the church or politics, and combinations of patterns or stripes prevailed. Take, for example, the famous Van Eyck painting, The Arnolfini Marriage, 1434. The husband is darkly dressed, demonstrating his seriousness, and that he is thrifty and committed. His wife wears green, demonstrating loyalty to her husband and wealth, while the white accents symbolize her purity. It was extremely difficult to find black or green clothing in this era, so this family is shown to be extremely wealthy.

Modern age trend setters were focused solely in the royal courts of Europe. The Spanish Court was known as the Black Triumphant. The Papal court also demonstrated magnificent elegance. Yet most important was the French court under Louis XIV. Versailles became the center os creation and diffusion of fashion, and Lyons became the center of silk production. The daily-changing spectacle that ended in revolution continues to influence fashion and culture through the tales of Marie Antoinette to this day. At the time, fashion ideas were transmitted through portraits, individuals (ambassadors or princes), gifts, and second-hand-clothes (the first example of ready-to-wear). We can see in this portrait of Louis XIV, he was quite a fashionable guy, with his wig, fur mantle, draped garment, silk stockings, and red heels!