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Don’t get me wrong, sales of luxury items are well and kicking in Brazil. What has changed is where Brazilian are buying.

Once upon a time, not that long ago Brazil got (in)famous due to Daslu, a mega luxury store that sold from Gucci dresses to helicopters on a humongos mall that was almost all closed to anyone who was not a customer. Its owner, Ms. Eliana Tranchesi is from a wealthy family from Sao Paulo and her mother used to bring luxury items from her trips aboard and sell them from her living room to her closest friends. Later on, Ms. Tranchesi grew Daslu to its mega store status (we are talking about 60,000 square feet).

Then in 2005, Eliane was indited by the Brazilian government for being part of a scheme that brough all these luxury imported goods without paying its proper taxes (note to readers: Brazil has one of the highest level of these type of taxes in the world and of course the local government takes it very seriously). Ms. Tranchesi and her brother were arrested (and then appealed and were realeased) and Daslu’s debt with the government  is around U$ 300 million.

Daslu has declared banckrupcy while Ms. Tranchesi searches for new investors. The Daslu space now belongs to the Iguatemi group (which is a family enterprise that includes many high end shopping malls throughout Brazil). Daslu will soon move out and anchor the newest Iguatemi mall to be opened later this year (it will have about 15,000 square feet now).

Even though business is not as brisk at it once was, I do not think that this is just due to all the legal problems Daslu has been facing. Many of the international luxury brands it sells are now opening their own stores in São Paulo, therefore serving the same customer. Diane von Furstenberg, Chanel, Gucci, Louis Vuitton and Burberry, among others are investing highly in Brazil this year. Daslu needs to really reinvent itself inside and out so it can be relevant during Brazil’s current fashion boom.

Recently the weekly magazine Veja (a Brazilian Time Magazine wannabe that belongs to the largest local publishing company), had and article explaining a new measure of economic growth for the country: the Louis Vuitton bag indicator (I kid you not!).

This is howthe mag did it: they measured the steep growth of LV bag being sold and and looked closely at who is buying them now. The magazine claims that this is a sign not only of Brazil’s economic prosperity but also of its economic stability. Most buyers are middle class, working women that until very recently in Brazilian history would not be able to afford such purchases.

Similar to what Dana Thomas reported about chinese working women in her book “Deluxe: How Luxury Lost Its Luster“, Brazilians LV bag owners are all about showing off that they are moving on up, the most coveted bags are the ones covered with monograms, so its owners can easily show them off.

Another important reason for the growth in LV bag sales is that they allow its Brazilian buyers to pay in installments (which is very common here). It works like a lay-away of sorts but customers do take the bags with them immediately and pay the monthly installments via their credit cards. One of the women mentioned is the owner of a beauty salon in the countryside of Sao Paulo state, who has purchased no less than 7 LV bags in the last 2 years (chances are she spent 24 months paying for all of them).  Also, interestingly enough, these women mentioned that they had already purchased cheaper knock-offs before being able to afford the real thing.

Also curious is that LV has been the brand of choice for these emerging customers, while of ther logo-covered options lag behind (Gucci, for instance). It either means that LVMH has been doing an amazing branding job on these markets, or the other companies are doing a rather poor one.

“Clothes make the man. Naked people have little or no influence on society”

Crowd Sourcing & Fashion

One of Web 2.0 trends in making its way into fashion. Crowd sourcing allows entrepreneurs go directly to customers for content, funding, and distribution by using an online social media model (think Facebook, Twiter).

I just read about a new web site called Fashion Stakes that intends to use Crowd Sourcing so that users can fund up and coming fashion designers, in exchange for credits on the designer’s clothes. Since it is very hard for a newcomer to obtain funding and/or be selected by a department store buyer, this concept seems extremely helpful. For the users, it gives them the opportunity to participate in the launch of a fashion line and to have access to new designs that are still (almost) exclusive. The founders are from Harvard Business School, where this project was born.I will give you updates once the site launches (presumably within the “next weeks”).

Another fashion company taking full advantage of online Crowd Sourcing is one of my favorites online store, ModCloth.com. Its founders also double as buyers and started buying and selling vintage. Now they sell both vintage and non-vintage and they use their web site to ask users to select which merchandise they should carry on the store. Yes, that is right, the customers are actually picking the store merchandise (at least to an extent). ModCloth claims that they have a much higher sell-through rate on the merchandise users picked.

Time will tell how this plays out for the fashion industry but it is sure awesome to see Internet-savvy entrepreneurs bring Web 2.0 technology to our (Fashionistas) benefit.

Today I have stumbled upon this piece of news.

According to Dr. Mark J. Perry, an economist at the University of Michigan, Americans spent a whopping $326 billion on clothing and footwear last year. But that was only 2.98% of their overall disposable income. In 1950, on the other hand, Americans spent 11% of their discretionary income on dressing up. However, this does not mean we are buying less clothes (God forbid!). We are certainly buying more, since not only the price of clothing has decreased by 8.5% since 1929 (even when you adjust the numbers for inflation), but the rise of the Fast Fashion phenomenon also made it cheaper to buy apparel. If you want to feed your stylish inner geek, just click on Dr. Perry’s link, he has lots of info and even graphs on this subject.

So, long gone are the days where people would actually save money to invest on a timeless piece that would last forever on a chic wardrobe. Today, instead, we are stuffing our ever growing closets with more cheaper stuff.

It reminded me of this great book Fashion Victim: Our Love-Hate Relationship with Dressing, Shopping, and the Cost of Style
by journalist Michelle Lee. She dubs it McFashion. Wanna Super Size your closet?