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Kate Spade and Jimmy Choo: What’s a Luxury Brand Worth That ‘Ain’t Got No Soul’?

I confess, Led Zeppelin is one of my favorite bands and ‘Black Dog’ is one of my play favorites.  It’s filled with such classic-rock lines like:

“I don’t know, but I been told,
A big legged woman ain’t got no soul.”

Which makes me think about the acquisition market for luxury brands.  Well, not all luxury brands, but two in particular – Kate Spade and Jimmy Choo – both brands that, to my mind, ‘ain’t got no soul.’  Obviously, Kate Spade has found its ‘Black Dog,’ but JAB-owned Jimmy Choo still is looking.

By now you’ve probably heard that ‘Black Dog’ Coach paid $2.4 billion for Kate Spade.  Quite a step up from the $574 million it put out for the Stuart Weitzman shoe company two years ago.

But unlike Kate Spade, a brand running ‘soul-less’ since 2006 when its founder left, designer Stuart Weitzman is quite literally the ‘shoemaker’s child.’ He has shoes in his blood and personally guided the company through the rough patch since Coach took over.

While Weitzman just retired, he leaves his ‘child’ in the very able design hands of Giovanni Morelli, coming from Loewe, the LVMH-leather goods brand, and previous stints at Prada, Burberry, Marc Jacobs and Chloe.  Though Deborah Lloyd, chief creative officer, has done a fair job of copying the ‘Kate Spade’ flair, her CV with stints at Daniel Hechter, Kenzo, Banana Republic and Burberry, hardly matches that of Morelli’s.

I’m no expert at brand valuations, but it looks to me like Coach got a lot more for its money with Stuart Weitzman than with Kate Spade.  No doubt, Coach’s play has the JAB folks burning for their own panting ‘Black Dog.’

But Jimmy Choo, like Kate Spade, is just a brand, heavy on the marketing, but low on authenticity.  And authenticity is something luxury consumers are high on.  They want the real deal, not poseurs. Both brands have been able to prop themselves up after losing their namesakes, but I don’t think the magic will last.

Today more than ever, brand authenticity matters. A recent survey conducted by BCG among nearly 1,400 consumers, including 400 U.S. Millennials, found that for all consumers one of the most important things brands can do to “engage and interest” them is to “be authentic.”  For Millennials authenticity ranked even higher than for GenXers and Boomers, though it remained important to all.

Unity Marketing has found much the same thing with its surveys among young affluent consumers we call HENRYs (high-earners-not-rich-yet).  In a survey among nearly 1,200 Millennials and GenXers, they were asked to rank a variety of terms to complete the statement “Luxury is…”  Rising to the top of the ranking were two negative values: expensive (45%) and over-priced (37%).  About one-fourth of the young people surveyed viewed luxury as over-rated and not important to me, and more status than substance.  And about one-fifth also reported that luxury is just a label used by marketers.

Most telling is this comment from qualitative research with high-earning Millennials on the road to true affluence, “Luxury is just a marketers’ label.  It means something is over-priced.”

To my mind, both Kate Spade and Jimmy Choo are merely brand labels, not authentic luxury.  I’d count neither brand out for what they are, but we need to be crystal clear about what they truly are.  I don’t think either warrants the kind of luxury-brand valuation that Coach divvied up.

I’m afraid that Coach, at least, might be singing another line from the song:

“Didn’t take too long ‘fore I found out
What people mean by down and out.”