[Nettime-bold] futurefeedforward obviously "learning from Prada"

["bruces@well.com" <bruces@well.com>]

Original Message:
-----------------
From: futurefeedforward fff@futurefeedforward.com
Date: Sun, 28 Jul 2002 21:41:13 -0600
To: bruces@well.com
Subject: LVMH, Prada to Replace Luxury Goods with Warrants



April 6, 2014

LVMH, Prada to Replace Luxury Goods with Warrants

MILAN--In a move extending last season's alliance between
design firms Prada and LVMH, the two announced Monday that
significant portions of each of the major lines from the two
houses would be replaced this season by warrants for the
purchase of designer outfits and furnishings.  "It has
always been among our deepest convictions that good design
should be more widely available," explains LVMH Chief of
Initiatives Basil Sprout.  "Good design is for the People,
for all of the people, and this warrant initiative ensures
that great design is within the means of the masses."

The warrants--special certificates entitling the bearer
to purchase a specified product at a specified price during
a specified season--will be sold at a fraction of the cost of
the underlying product, typically between 3% and 7% of the
retail price.  "The public may not be able to afford to
purchase outright a Bobois handbag or a Prada toe-sock,"
notes Sprout.  "But, with our new line of warrants, they can
enjoy designer products without all the fuss and expense of
owning the base material object."

In addition to expanding the size of the market for high-end
designer goods, the warrants are also predicted to cut
production costs at both firms.  "The Street is bound to
recognize the profoundly greater opportunities for
scalability in the warrants market," opines SSBPWC
analyst Trumpet Graine.  "Scale efficiencies are much
greater in the production of warrants.  While, in general,
costs per unit decrease the more handbags you produce, it
literally costs almost nothing to produce a new warrant,
especially when that warrant isn't really designed to be
exercised and hence never requires production of the
underlying asset."

Beyond anticipated savings in production costs, the two
houses point to the space-saving convenience of owning
warrants rather than storage-hogging pants suits and
propylene couches.  "Besides budget constraints, many of
our clients, and potential clients, are space
constrained," explains LVMH's Sprout.  "You can only fit so
many Diesel armchairs in that loft apartment.  How many
Sander suits can fit in that closet?  Well, warrants don't
take up any space!  They offer the leverage to fit 10, 20, even
30 DK armoires into your bedroom!  Luxury!"

Experts point to the warrants as an ideal solution to two
challenges facing the industry:  "On the one hand
increasing income disparities have been eroding the
market for elite luxury goods for years, forcing houses to
raise prices dramatically just to maintain brand
exclusivity," explains Graine.  "On the other hand,
lowering prices and expanding production dilutes the
value of the brands.  If you see every Tom, Dick, and Harry
wearing that designer watch, it loses its cachet."

Because sale of the proposed warrants does not involve
increased production of the underlying goods, the firms
expect to gain the revenue benefits of a broader, near
mass-market without the deleterious effects of brand
dilution.  "That's the genius of the warrants," exclaims
Graine.  "Market-saturating sales without market
saturation!"

The initial run of warrants is to include $5,500 warrants
for Fall '14 Prada loafers, and a series of subscriber
warrants priced between $3,000 and $47,000 covering Fall
reissues of classic Gucci bags and wallets.  Offered
through the firms' traditional outlets, including
company stores, independent boutiques, and specialty
counters in select department stores, the warrants will
also be available on a trial basis in special register-side
displays at Circle K and Dean & Deluca convenience stores.

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