Although the US has contributed to the lexicon global fashion with casual pieces such as jeans, baseball caps and polo shirts, the pinnacle of fashion remains a European domain.
However, Estée Lauder’s purchase of Tom Ford in November— an American company with super-premium prices — may indicate a shift in how the world perceives American brands. After retrieving the valuation $2.8 billion, the company has secured a seat at the table of luxury power.
This is because Ford products are considered expensive even compared to other global luxury brands. A 30ml bottle of Tom Ford Lost Cherry costs $240, which is quite expensive compared to the same size bottle of Hermès D’orange Verte ($132) or Miss Dior ($72). Tom Ford suits start at around $5,000, not as high as Kiton’s, which can run into five figures, but is more expensive than a Dior or Zegna suit, which starts around $3,000.
This is not the usual positioning of a typical American fashion or cosmetics company, which aims for affordable prices like those of Coach or Kate Spade.
Europe dominates high fashion
While France and Italy boast the lion’s share of the world’s top luxury brands, America’s fashion and beauty fortunes have historically been made in mass-market and sportswear, such as Gap or Nike, or in categories such as affordable luxury—think Ralph Lauren , Tommy Hilfiger and Calvin Klein.
Although there are some notable American dress designers, Oscar de la Renta and Vera Wang among them, these brands have never reached the size or influence of business powerhouses like Chanel or Dior.
In part, this is because the US as a nation was formed without a formal aristocratic class. European monarchies were the birthplace of luxury, explains Karla Martin, head of fashion clothing and footwear at Deloitte.
“If you think of Burberry in London, they started with a commission to the Queen. There is a strict apprenticeship model and, for couture, it is something where every single element has to be sewn by hand. It takes a long time to learn,” says Martin. He notes that the work was also nationalistic and exclusive. “There were people who weren’t allowed to be in the business, and we’re a younger country of immigrants.”
There is also a certain timelessness involved. Chanel and Louis Vuitton do not dramatically change their look from season to season, but rather reinterpret already known house rules. This is partly why Kering is in November broke up with Alessandro Michele after holding the designer in a top creative position for seven years. Michele’s magpie eclecticism revived the brand in 2015, but sales were sluggish and his designs I felt too modern and fashionable.
Martin points out that the true test of a luxury brand is whether it can survive on its own without its founding designer. Japan has produced acclaimed avant-garde designers such as Yohji Yamamoto, Issey Miyake and Rei Kawakubo, but while they don’t come cheap, their creations fall flat more under designer fashion rather than grand maison.
“It’s very much the aesthetic of that designer and it’s hard to carry on when that designer is gone. Whereas if you think about Dior, he managed to be quite successful with many designers other than Christian Dior. This is how the house of Chanel stands against Japanese designers, that is, Tom Ford or Ralph Lauren. 100 years of additional history is important,” says Martin.
Americans are especially good at beauty and underwear
But Americans have proven themselves in sectors such as high-end cosmetics. Tom Ford, for example, is more famous for his fragrances and beauty than for his fashion line.
Even at luxury prices, beauty is still relatively affordable, so in many ways it’s more suited to American innovation. Seven of the ten largest American billionaires in the fashion and cosmetics sectors stem from one fortune: Estee Lauder. After selling Tom Ford, its founding designer is in debt his billionaire status and that company.
Another category Americans have a firm grip on: underwear. Les Wexner built his fortune on the back of Victoria’s Secret, which was once the star of L Brands. Sarah Blakely became the youngest self-made billionaire to start her own Spanx company. Kim Kardashian has also found a lucrative niche with her Skims line.
The gradual maturation of American fashion
It’s not just Tom Ford who is climbing the luxury ladder. Capri Holdings, the parent company of US fashion houses Michael Kors and Jimmy Choo, is looking for another European luxury brand to buy after its successful acquisition of Versace in 2017.
At the time of the deal with Versace, there were concerns that there would be a culture clash between the American group and the European label. But Versace integrwhose have went well. Capri is targeting $2 billion in sales for the Italian label, and analysts are became more positive on the prospects of the group as a whole.
Meanwhile, China has also produced several ambitious companies, but Fung Group, Shandong Ruyi and more recently, Lanvin Group, all gave disappointing results. The latter specified via SPAC recently, but the vast majority of investors in the special-purpose takeover company backed out of the merger. At the time of writing, Lanvin Group shares were down to about half their initial price of $10 per share.