Upscaling Ferrari’s Brand Extensions

THE NEW LUXURY LIFESTYLE

• Ferrari will hold its first-ever runway show on Sunday at the automaker’s Maranello, Italy factory
• Though cars make up the vast majority of sales, Ferrari sees its future as a luxury lifestyle brand
• The automaker’s owner, Exor, has built a portfolio of luxury fashion brands and is reportedly considering a tie-up with Armani (which says it’s not interested)

Ferrari sells cars that cost more than most people’s homes. But even for those who can’t afford the latest 812 Superfast, the brand is synonymous with a certain high-octane lifestyle. Sunday’s event, heralding a reboot of the company’s fashion offerings, is designed to cement the idea of Ferrari as more than an automaker. It’s a milestone in a years-long effort by the company’s last two CEOs, the late Sergio Marchionne and Louis Camilleri, who spoke of Ferrari in terms that would be familiar to followers of Hermès or Louis Vuitton, and reined in licensing deals that stamped the company’s black-on-yellow horse logo on stationary and cheap cologne.

Ferrari’s new CEO, who starts Sept. 1, comes from the unglamorous world of semiconductors. But it would be a surprise if he fails to build on his predecessor’s work. Big luxury fashion brands have found enormous success in extending their brands, launching hotels, restaurants, home goods lines and other ways for superfans to immerse themselves in their chosen label’s world. Of course, for Ferrari to pull this pivot off, its non-car offerings must be desirable. For that, we’ll have to wait for Sunday’s fashion show.

The Bottom Line: Covid-19 and climate change have lent some urgency to the diversification project; luxury auto sales plunged last year during the pandemic. While they will likely recover, the rise of Tesla and other premium electric cars represents a more permanent change to Ferrari’s core market. It underscores why it’s important for Ferrari to build its brand around more than a history of perfecting the internal combustion engine.

HOW BRANDS ENGAGE WITH JUNETEENTH

• Juneteenth, a holiday celebrating the end of slavery in the US, is on June 19
• Most large brands didn’t introduce sales or themed merchandise around the holiday until last year
• Marketing around Juneteenth is complicated by the fashion industry’s ongoing reckoning over its treatment of Black workers and consumers

Brands normally aren’t shy about marketing around holidays (for proof, see the rainbow explosion inside many retailers this month). For Juneteenth, which marks the end of slavery in the United States, many are taking a more cautious approach. Most large fashion brands all but ignored the day until last year. George Floyd’s killing and the protests that followed put pressure on companies to show they weren’t taking Black consumers for granted. Subsequently, a handful of Juneteenth campaigns popped up on social media and in customers’ inboxes.

It remains to be seen whether Juneteenth will become a fixture on the retail calendar. This year, only a handful of brands have launched Juneteenth sales or collections (more are likely to follow this week), according to Edited, a retail analytics firm. J.C. Penney and Old Navy are selling themed merchandise, though the latter retailer scrapped a marketing campaign after some influencers said they were offered below-market rates to participate, generating a backlash online. As the Old Navy example shows, brands walk a fine line in marketing around Juneteenth, as they face greater risk of being seen as profiting from a holiday linked to issues where they are seen to be on the back foot.

The Bottom Line: Messaging around Juneteenth is complicated by fashion’s own grappling with its lack of diversity and history of poor treatment of Black workers and customers. Until brands can show they’ve made progress on those fronts, they’ll continue to be exposed to criticism if and when they mark the holiday.

LIVE FROM ATHENS

• Dior will debut its next Cruise collection via a live runway show in Athens, in front of an audience
• It will be one of the highest-profile in-person shows since the start of the pandemic
• Fashion geared toward wealthy jet-setters has proven resilient despite the sharp drop in travel last year

Dior is making a big bet that its customers are ready to head back into the world again. It will show off its latest Cruise collection in Athens, one of the first shows from a large luxury brand with a live audience since early 2020. The label is also opening pop-up shops in Mykonos and taking over Selfridges’ restaurant, again with a vacation theme. Dior’s summer plans are a flex; where smaller brands used the pandemic as an excuse to hop off the production treadmill, the LVMH-owned label is showing it can easily stage destination runway shows and launch between-season collections.

The Bottom Line: There’s also a big market to chase in the millions of people once again eager to hop on a plane and head to exclusive resorts. Swimsuits and resort wear are lucrative categories; in the age of Instagram, many consumers want a deep summer wardrobe, and are willing to pay full price to stock it.

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