An exploration of the fur industry: the factors which contribute to the success of a Chinese fur fashion brand Lu Ruiqi N0527827 18th July 2014 International Fashion Business Nottingham Trent University
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Cover: Nathaniel Goldberg, 2012. Venus in Furs: Daria Werbowy [photograph]. V MAGAZINE (ISSUE #30)
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MA International Fashion Business FASH40083: Dissertation Declaration
This submission is the result of my own work. All help and advice other than that received from tutors has been acknowledged, and primary and secondary sources of information have been properly attributed.
Should this statement prove to be untrue I recognise the right and duty of the Board of Examiners to recommend what action should be taken in line with the University’s regulations on assessment contained in its handbook.
Signed: ................................................................................................................. Date:.....................................................................................................................
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Contents Contents 4
The condition of entry
List of Figures
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Substitutes 30
Executive Summary
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Introduction
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Methodology
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1. THE FUR INDUSTRY
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2. FUR CONSUMPTION Literature review
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The motivational consumption associated with consumers of fur fashion 37 The ethical beliefs which impact on fur fashion 37
Literature review
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The ethical issues and commercialization of the fur industry 23 The reach and concentrated power of fur suppliers
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The decline and transformation of the fur industry 25
The SCP framework: Analysis of the fur industry 26 The power of buyers and suppliers 27 The primary drivers for fur demand 28 4
How the strategic communications turn the private choice of buying fur into a social controversy 41
Consumer behaviour towards fur fashion
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Shifting public opinion and fur fashion involvement 42 Fur consumer profiles
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Consumer factors
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Fur fashion communications from the perspective of the fur industry 51
3. THE FUR FASHION BRAND Literature review
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Strategic brand management 58 Defining the segmentation
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Product strategy associated with conspicuous consumption 61
Case Study: A Chinese Fur Fashion Brand
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Background 62 How the brand respond to the changes 63 The evaluation of HLS business model 66
Conclusions
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Recommendations 72 Implications 77
Bibliography
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Appendix
Figure 1. Giampaolo Sgura, 2012. Fur Regal Reasons [photograph]. Vogue Japan December 2012
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List of Figures Figure 1. Giampaolo Sgura, 2012. Fur Regal Reasons [photograph]. Vogue Japan December 2012 5 Figure 2. Mario Testino, 2008. Fur is Dead. Vogue Paris, Aug 2008 8 Figure 3. Mario Testino, 2008. Fur is Dead. Vogue Paris, Aug 2008 11 Figure 4. The Fur Industry. Source complied from: British Fur Trade Assoication, Peta, RSPCA, International Fur Trade Federation 12 Figure 5. Pelts are examined in the fur department of the Hudson’s Bay Company Store, Manitoba, Canada July 1937 (Dyhouse 2011) 13 Figure 6. Competence Centres Worldwide. Source: European Fur Information Centre. 14 Figure 7. Giampaolo Sgura, 2012. Fur Regal Reasons [photograph]. Vogue Japan December 2012 15 Figure 8. Luis Monteiro, 2011. Tatler fur. 16 Figure 9. The respondents information of survey 18 Table 10. The respondents information of structured interview 18 Figure 11. Nathaniel Goldberg, 2012. Venus in Furs: Daria Werbowy [photograph]. V MAGAZINE (ISSUE #30) 21 Figure 12. Kopenhagen Fur’s auction room. Source: Kopenhagenfur.com 22 Figure 13. The world Production of Fur. Source: European Fur Information Centre. 23 Figure 14. The flow of fur skins and fur garments (Siomkos and Shrivastava 1987) 24 Figure 15. 1920s fur coat adverts. Source: weheartvintage.co 25 Figure 16. The Basic Structure-Conduct-Performance Model (Jones 2006). 26 Figure 17. Fur pelts. Source: Kopenhagenfur.com 27 Figure 18. The tendency of mink production, retail sales and pelt average price. Note: Some statistics are not available 28 Figure 19. The fur fashion industry chain in China (Yue 2012). 29 Table 20. Fur consumer Interview: Do you also purchase fake fur products? Why? 31 Figure 22. See Liz Taylor, Jane Birkin, and More Vintage Ladies in Chic Outerwear. Source: Nymag.com 31 Figure 21. The general consumer survey: Which type of fur coat are you more likely to purchase? 31 Figure 23. The environmental impact of natural fur and artificial fur. Source: European Fur Information Centre 32 Figure 24. Brian Daly, 2011. Venus in Fur [photograph]. Blanchegirl.tv. 33 Figure 25. Nathaniel Goldberg, 2012. Venus in Furs: Daria Werbowy [photograph]. V MAGAZINE (ISSUE #30) 35 Figure 26. Classic fur coat. Source: Pinterest, Tania Foniciello 36 Figure 27. “Furs in Disguise” Source: New York Times Magazine, 27 September 1992 39 Figure 28. AMERICAN LEGEND, 2014. Campaign. Source: www.americanlegend.com 40 Figure 29. Selecting multiple target audience members (Pickton and Broderick 2001) 41 Figure 30. Luis Monteiro, 2011. Tatler fur. (Background) 42 Table 31. Public Opinion on Wearing Fur (Herzog, Rowan and Kossow 2001) 43 Figure 32. Conceptualizing Involvement (Solomon and Rabolt 2009) 43 Figure 34. AMERICAN LEGEND, 2014. Campaign. Source: www.americanlegend.com 46 Table 33. Fur consumer interview: What does a fur coat mean to you? Why did you buy a fur product? 46 Figure 35. Survey: How do you think a fur garment means to people? 47 6
Figure 36. Maslow’s hierarchy of needs: Western and Asian (Adapt from: Solomon and Rabolt 2009) 47 Figure 37. Luis Monteiro, 2011. Tatler fur. (Background) 48 Figure 40. Survey: Would you consider yourself as an informed consumer about fur? 49 Table 38. Fur consumer interview: What do you like about the fur product and what do you dislike about it? 49 Table 39. Fur consumer interview: What do you like about the fur product and what do you dislike about it? 49 Figure 42. Survey: Which of the following ethical issues are you concerned most about in relation to fur fashion? 50 Table 41. Fur consumer interview: What do you like about the fur product and what do you dislike about it? 50 Figure 44. Chris Nicholls, 2013. Fashion Canada October 2013 51 Figure 43. Survey: How do you agree with the following statements? 51 Figure 45. Pradasphere exhibition, London Harrods, 2014 (Author’s picture) 52 Figure 46. Celebrities wear fur coat: Miley Cyrus, Lily Allen, Rita Ora and Rihanna. source: fashion.telegragh. co.uk 53 Figure 47. Karl Lagerfeld, 2013. FENDI 2013 FW campaign 54 Figure 48. Survey: To what extent do the following communications influence your current attitude about fur fashion? 55 Figure 49. Nathaniel Goldberg, 2012. Venus in Furs: Daria Werbowy [photograph]. V MAGAZINE (ISSUE #30) 57 Figure 50. Joan, 2013. New Fendi flagship store opens at 51, Avenue Montaigne, Paris. pursuitist.com 58 Figure 51. The pyramid brand and business model in the luxury market (Kapferer 2008) 59 Figure 52. The constellation model of luxury brands (Kapferer 2008) 59 Figure 53. The cycle of brand management (Kapferer 2008) 60 Figure 54. Shoes with fur trim. Gucci 61 Figure 55. Lauren Fair Photography, 2013. A Rustic Glam Wedding. USA. 61 Figure 56. Andree.H, 2014. Street style diary: NYFW 2014 61 Figure 57. HLS 2013 Fall & Winter campaign (HLS 2014) 62 Figure 58. HLS Fur collection, 2012/13 (HLS 2014) 63 Figure 59. HLS Fall & Winter womenswear Collection, 2014 (HLS 2014) 63 Figure 60. HLS Store (HLS 2014) 64 Figure 61. The average price of a fur garment from 2004 to 2013 (HLS 2014) 65 Figure 62. The production volume of the total garment and the fur garment: 2004-2013 (HLS 2014) 65 Figure 63. The sale revenue of the total garment and the fur garment: 2004-2013 (HLS 2014) 65 Figure 64. Product life cycle (Stamm 2008). 66 Figure 65. HLS 2013 Fall & Winter campaign (HLS 2014) 67 Figure 66. HLS 2013 Fall & Winter campaign (HLS 2014) 68 Figure 67. A collection of HLS in store display (HLS 2014) 69 Figure 68. Reece Hudson, 2014. Fur Coat ad (1962) [REECE HUDSON Blog]. Available at: http://reecehudson. com/blogs/news [Access: 9 July 2014]. 70 Figure 69. Sarah Burton, 2014. Alexander McQueen, Paris fashion week. 73 Figure 70. AMERICAN LEGEND, 2014. Campaign. Source: www.americanlegend.com 75 Figure 71. Bo Brinkenfalk, 2011. Divine Elegence. Schön Magazine, 2011. 75 Figure 72. Harrods, 2014. The fur products in Harrods. London. 76 Figure 73. John-Paul Pietrus, 2011. Tao Okamato with furs for Numéro China 81 7
Figure 2. Mario Testino, 2008. Fur is Dead. Vogue Paris, Aug 2008
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Executive Summary This report aims to explore the structure, the changes and the current state of the fur industry and identify the relationship between fur consumption and external changes in terms of politic, economy, social and culture. By defining analytical model at the beginning, the research process follows the structure with mixed methods to collect both secondary and primary research. Both online survey with general consumers and structured interview with natural fur consumers will be conducted to explore different opinions toward fur. An actual case of a fur fashion brand will be studied to access their strategies about how effectively they respond to the changes based on the previous analysis. The research findings show that the fur industry confronts with challenges including the imbalanced power of suppliers and buyers, the social controversy stems from the ethical concern of using animal and the change of consumer perception about luxury. The response strategies of the fur industry and the fur fashion brand accord with those changes are mainly focus on product development and marketing communication. Therefore, the recommendations will be proposed for the suppliers, the government and the fur fashion brand which suggest to make more alliance between suppliers and manufacturers, to implement international level of fur production standards in China, to carefully manage the product and brand extension, to communicate with target consumer efficiently. The limitations of this report including the lack of neutral stance information about fur, the difficulty to explore the consumer attitude due to the sensitive of wearing fur and the single of case study which cannot be generalised.
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Introduction Fur is no doubt one of the oldest fabric for clothing in human history and this traditional industry has been developing internationally with both endorsement and controversy for decades. The anti-fur organization People for the Ethical Treatment of Animals (PETA) (2014) accused that whether the fur came from an animal on the farm or was trapped in the wild, the entire fur industry is cruel because it causes animal suffering. Whereas the International Fur Trade Federation (IFTF) (2014) argued that the fur is a sustainable resource which is more environmental friendly than the petroleum based products such as fake fur. Torben Nielsen (2014), the CEO of KOPENHAGEN FUR, said that the fashion industry is the second most polluting industry next to the oil industry but the fur is one of the few green products with good animal welfare and minimal environmental impact especially in Europe. Moreover, renowned fashion designer Karl Lagerfeld has made an influential statement that “in a meat-eating world, wearing leather for shoes and even clothes, the discussion of fur is childish” (Adams 2009). The fur industry also responded that it is a heritage which is “offering multiple
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benefits in terms of employment and production, therefore we need to act for its enhancement” (EFIC, 2014). All of these debates are coming from either pro-fur organization, anti-fur organization, fashion designer, media or consumer those who are the important roles within the fur industry. All of these debates happened along with the movement of fur fashion in relation to the changes of cultural politic, consumer behaviour and industrial development, which exemplifies how social controversy influences the relationship between production and consumption. Thus, the future of the fur industry will be questioned by the issues about how the fur industry respond to those changes and how a fur fashion brand achieve success towards these changes. In this report, the term of the fur industry refers to the legitimate trade which 80% of its resources come from specialty farms such as mink and fox, and 15% of them come from abundant wild populations (IFTF, 2014). Different from other fashion sectors, fur skins are mainly sold through auction houses including Denmark Kopenhagen Fur, Finland SAGA Fur, Canada North American
Figure 3. Mario Testino, 2008. Fur is Dead. Vogue Paris, Aug 2008
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Ireland has yet to outlaw fur farming
European sales are £2.9bn - 28% of the global total
Asian sales are £3.7bn more than 35% of the global total
Natural fur has a
20 30 to year life span
More than
400
designers are now using fur on the catwalks of London, Paris, New York and Milan
95%
of Britons say they would never wear real fur
Global retail fur sales
2001/02 =
More than
1bn
£7.2bn
animals are slaughtered in the global leather industry every year 2011/12 =
As estimated
2m
£10.3bn
44%
increase in last ten years
cats and dogs are killed in China every year for their fur FurBritish Industry. from:Peta, BritishRSPCA, Fur TradeInternational Fur Trade Federation SourceFigure 4. The compiled from: FurSource Tradecomplied Association, Assoication, Peta, RSPCA, International Fur Trade Federation
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Figure 5. Pelts are examined in the fur department of the Hudson’s Bay Company Store, Manitoba, Canada July 1937 (Dyhouse 2011)
Fur and US American Legend (IFTF, 2014). The fur action house started in 1670 by the Hudson’s Bay Company who bought skins from trappers and then sold at London (Coster 2007). Until today, they majority of fur skins are sold at those major auction houses (IFTF, 2014). The main sectors within the fur industry are fur farming or trapping, auction, fur processing, design & manufacturing and retail & consumer. “In such a context, women up and down class gradients, within and outside social norms and traditional constraints, commanded and informed the expansion of the market itself. The fur garment defies simple generations about consumer behaviour or designer control. In a discussion of the female body as a contested terrain, this aspect of clothing was hardly dominated by industrialized capitalism.” (Colpitts 2013, p.148) As Colpitts described above, the social influence is an important subject should be discussed in relation to the fur industry. Beyond that, there are many more questions need consideration of which marketing communication, production, branding and new technology in the modern society underpin the current state of the fur industry. The main discussion of this report is divided into three major chapters which are the fur industry, fur consumption and the fur fashion 13
brand, in order to attain the following objectives: To explore the structure, the change and the current state of the fur industry. To describe the pattern shift of fur popularity and the driving force behind it. To describe the relationship between social controversy, consumer opinions and organization communication strategies in relation to fur. To examine the ways of the fur industry respond to changes of fur consumption. To evaluate the strategies of a Chinese fur fashion brand respond to challenges which associates with the fur industry and fur consumption. The entire fur industry is integrated internationally as some countries or regions has their different importance (Figure 6). This report starts with the analysis of the whole fur industry at the international level and then historical data will be used to describe the fur consumption. Due to the current fur market is largely drove by the growth of China, the later chapter of the report will narrow down to a specific Chinese fur fashion brand to evaluate their strategies in response to the challenges identified in previous chapters.
Fur consumption distributed on countries:
The current state of countries or regions:
USA: 17.3% China: 16.4% Russia: 19.3% Germany: 6.4% Italy: 6.5% Japan: 1.2% Korea: 1.1% Other countries: 32%
North America: The original of fur breeding and still having great appetite for fur Europe: Centuries’ old tradition of production and fur use Russia: The world’s largest fur market China: The fastest growing fur market
DESIGN RESEARCH FARMING
Figure 6. Competence Centres Worldwide. Source: European Fur Information Centre.
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Figure 7. Giampaolo Sgura, 2012. Fur Regal Reasons [photograph]. Vogue Japan December 2012
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Figure 8. Luis Monteiro, 2011. Tatler fur.
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Methodology The overall research objective is to identify the relationship between the fur industry, the social controversy generated by organization communication strategies and fur consumption, then to evaluate how a fur fashion brand to achieves success within this relationship. The research is designed base on the Saunders’s research “onion” and the philosophical stances of this research are realism and interpretivism. The use of fur in fashion industry is a controversial subject. Whether using fur for fashion is wrong or right, it will be interpreted and understood differently, which depends on the particular culture background and social condition. Saunders (2012) suggested that the quantitative analysis of officially secondary research and followed qualitative research methods for identifying perception will be appropriate to “accommodate this realist ontology and interpretivist epistemology”. Therefore, the combination of inductive and deductive approach will be used to design a multiple method. The main route of research is based on theoretical framework and then intend to collect primary data to supplement the literature review finding. The research begins with defining the analytical framework which shapes the structure and provides the coherence for research materials (Fisher, 2007). The structure-Conduct-Performance model (SCP model) is the main framework from the perspective of the fur industry while the Maslow’s hierarchy of needs model is used to explore the different perception of fur from the consumer perspective. The strategies of the
fur fashion brand will be evaluated according to its position within the product lifecycle by analysing the profitability, the sale volume and the number of players. Moreover, the SWOT analysis of fur suppliers and the fur fashion brand will be used to support the evaluation of strategies, and the PESTLE analysis brings an outlook of current business environment. For certain research project which associates with national and international comparisons, secondary research will probably be the main resources (Saunders, 2012). Books and Trade journals which are relevant to subjects of fur industry, brand strategy and culture provide academic resources for this research. Other secondary data including the figures about fur industry from the official database, the fur and consumer reports from varied organizations, the records of related forum or exhibition events, the up to date news from magazines, newspapers, internet, etc. The systematic and critical review of the literature provides the information of similar topics, the stimulus of discussion and argument, and the appropriateness of method choice and justification (Hines 2007). The state of the fur industry can be explored through literatures but most of the social controversy statements are one-sided and associated with organizations’ marketing communication strategies. Thus further primary research on fur consumer behaviour and the fur industry are necessary. One of the theoretical approaches to study consumer behaviour is cognitive approach which views consumer as an “information 17
processor” who are “actively seeking and receiving environmental and social stimuli as informational inputs aiding internal decision making” (Bray 2008). It has been acknowledged that the environmental variables are influential role within this approach (Bray 2008). Thus the research will focus on how the marketing communication strategies from the contrasting sides generate the social controversy of fur and in turn influence fur consumption. General consumer survey. This survey is designed for the general consumer whether they have bought or used fur products before or not. The questions of survey are to explore the public perception of fur in relation to the main arguments, which to what extent they have been influenced and how they have been influenced. The data will be collected with anonymity by self-completion online which aims to achieve a high response rate as the bigger samples it is, the more meaningful result Germany 4%
Indonesian 6% 7%
French 16%
Indian 11%
30-40 8%
Name Aidi, Z Aiying, L Lihua, L Lihua, Q Xiaoli, C Xixi, L
Dutch 4%
Male 21%
20-30 92%
Female 79%
Figure 9. The respondents information of survey
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Structured interview with fur consumers. There are 6 fur consumers has been invited to participate in the structured interview, who have bought and used natural fur products before and 4 of them are the real customers of HLS, the fur fashion brand in the case study. The table 10 shows the information of respondents in this structured interview. The results are expected to draw the differences of attitudes and opinions about fur compare with general consumer and identify to what extent they have been affected by the social controversy of fur. Table 10. The respondents information of structured interview
Taiwanese 13% Chinese 39%
will be. The figure 9 shows the information of respondents in terms of country, age group and gender. The question formats in the survey are mainly the choice question and the Likert scales. The statements used in the Likert scales are the updated opinions in relation to fur which are summarized from literature review. In order to ask opinions and attitudes, the Likert scales with a series of statements and the agreement degrees is a valid way to have an overall measurement especially the statement relates to subject appropriately (Fisher 2007).
Chinese Chinese Chinese Chinese Chinese Chinese
Age 32 56 47 58 50 28 F
Government Senior Engineer, £1000 Finance, £800 inance, £700
Interview. In order to gain inside information from the industry perspective, an expert from the fur industry is necessary to clarify major opportunities and challenges. The CEO of FURWARD, William Chen, who has been serving the fur industry for around 9 years, will be invited to participate in an interview. FURWARD is a consultancy firm
which specializes in fur fashion marketing and branding. Their customers are mainly Chinese fur brands. Therefore, the results from the interview are valuable to explore the state of the fur industry and examine the strategies used by the fur brand to respond to the changes. Case study. To examine brand strategies of a particular fur fashion brand, the case study strategy could provide a rich understanding of a research topic meanwhile triangulate multiple methods are required within one study (Saunders, 2012). This single case study is about a Chinese fur brand called HLS which purchases fur materials from international suppliers and produces fur garments for both the domestic and international market. Quantitative data such as the production volume, the sale revenue and the price index of fur compared with other products will be analysed to identify how HLS is influenced by the change of external environment as well as how HLS responds. Qualitative data will be collected from company public literature and by in-depth interview with the manager, who is in charge of the fur product management, to describe the specific issues. There are some disadvantages associate with the above research methods. The inadequate number of respondents and information from the survey and structured interviews may insufficient to draw a persuasive conclusion. Moreover, there is an obvious gap between the general consumer survey and the structured interview because the respondents of these two methods are mainly two different generations. On the one side, the result of the general consumer survey is more
likely to reflect a future trend of the attitude change and the possibility of their influence on others. On the other side, the answers from the fur consumer interviews reveal the perception associated with fur buying, which also provide evidence for examining the responses of the fur industry and strategies implemented by the fur fashion brand in the case study. In addition, a single case study has been chosen because it is more manageable but the disadvantage is that the result of the single case study is too small to be claimed and applied generally (Fisher, 2007). Due to the controversy of fur has been intensified by the complex marketing and communication approaches, and the interpretation and understanding of fur are varied from different culture background and social condition, the variables of consumer behaviour towards fur fashion are difficult to identify. Also due to the limited resources the researcher could access, the results are largely constituted by Chinese respondents which has bias for analysis then influences the value of recommendations. Other limitations including the research process will be influenced by the experience and knowledge of the researcher as there is no completely impersonal and objective research. During the research, there are many factors could which affect the quality of findings including time limit, probability sampling of quantitative research and transparency of fur industry information. The nature of these limitations results from the characteristics of the fur industry which based on the niche market, particular consumers and sensitive ethical debates.
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Figure 11. Nathaniel Goldberg, 2012. Venus in Furs: Daria Werbowy [photograph]. V MAGAZINE (ISSUE #30)
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Literature review
Figure 12. Kopenhagen Fur’s auction room. Source: Kopenhagenfur.com
N. America 10%
S. America 0.5%
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The existing literature in relation to the fur industry has examined the operational structure of the fur business in different regions and raised some arguments about the current state of fur fashion. It is suggested that discussion of either the cruelty or the necessity of fur fashion is accompanied by the changing of cultural politics. It is suggested that the fur industry has strong reach and high concentrated power of fur suppliers which is different from the other fashion sectors and determines the profitability of the industry. It is suggested that the fur trade has experienced both development and decline as same as other commodity industries.
The ethical issues and commercialization of the fur industry In the UK, the Fur Farming (Prohibition) Bill (1999-2000) Bill 6 was published “to prohibit the keeping of animals solely or primarily for slaughter for the value of their fur” and “to provide for the making of payments in respect of the related closure of certain business”.
McGinness (2000) interpreted the main points as the fur industry should not keep wild animals in cages and the fur garment is a luxury product which is essentially unnecessary. Contrary to this statement, North (2000) argues that the Fur Farming (Prohibition) Bill “would be bad news for freedom, for good sense, and for fair play”. The study of Skov (2005) set out the argument that the approach of an industry interacts with social movements. In this way, the dialogue between the animal rights and the fur industry should be based on “consensusseeking” rather than blaming or criticising fur consumers with radical anti-fur campaign (Skov 2005).
The reach and concentrated power of fur suppliers The majority of fur, of which about 85% comes from fur farms, is commercially graded then sold through major auction houses where the stakeholders are also the farmers (IFTF, 2014). Coster (2007) stated that the cooperation
Europe 58%
Russia + Asia 31%
Africa 0.5%
Figure 13. The world Production of Fur. Source: European Fur Information Centre.
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Consumer
Trappers
Country Collectors (Receiv.II)
Large Dealers
Fur Farmers
Brokers
Small Dealers
Small Retailers
Samll Manufacturers
Wholesales of Fur Garment
Large Manufacturers
Large Retailers
“Piece Made” Fur Garment Manufacturers
Figure 14. The flow of fur skins and fur garments (Siomkos and Shrivastava 1987)
of ranchers could keep the consistency of colour and texture meanwhile ensure the breeding process complies with strict regulations. However, Skov (2005) argued that this auction process is a way of unfair competition and collusion because auction uncertainties in relation to price and allocation of goods are regulated by the ranchers’ community, which the similar skins will be allocated to be sold at the same price. Moreover, the profits of selling fur through auction houses has been further advanced by the fur grading system and sales reports publication (Skov 2005). The flow of fur skins and fur garments (Figure 14) demonstrates a within country network that the multiple middleman from large dealers, auction companies to brokers exist in the process (Siomkos and Shrivastava 1987). The above significant aspects of the fur industry reveal the strong reach and the concentrated power of country suppliers. According to Gereffi (1999, p.40), it is different from the apparel industry which is “a prototypical buyer-driven commodity chain because it generates a highly 24
aggressive pattern of global sourcing through a variety of organizational channels”. Another significant supplier behaviour is that major fur suppliers make a greater effort to promote the popularity of fur fashion through advertising than fur garment manufacturers did (Siomkos and Shrivastava 1987, WGSN 2013). For example, SAGA, the marketing organization of fur breeders’ associations in Nordic countries, produced an industry-wide strategy to generate fur fashion through a variety of unconventional marketing routes (Skov 2005). Jones (2006) concluded, concentration is a significant dimension of market structure because it determines the business behaviour and performance that high concentration produces high profits.
The decline and transformation of the fur industry Siomkos and Shrivastava (1987) indicated that the fur industry as a traditional crafts-based industry has been experiencing decline in industrialized countries or significant pattern shifts in manufacturing and trade due to changes in “cultural values, changes in fashion, technological obsolescence, function obsolescence, and the introduction of competitive, substitute products”. One of those shifts that has been identified by Siomkos and Shrivastava (1987) is the largest skin supplier centres, which are “North America, Europe (Scandinavian countries and the United Kingdom), and the Soviet Union”, remains stable largely. However, the traditional fur garment production centres are shifting to Korea and Hong Kong. Another change is that new dimensions of fur design have been brought into the industry in the US in terms of fur farming techniques, new colours of mink and the variety of combinations and styles, which retain the popularity of fur (Siomkos and Shrivastava 1987). Regarding this decline or the pattern shift of the fur industry, Skov (2005) explained that this transformation is a typical change in the luxury industry from a global commodity chain perspective, which is from the craft-based industry serves a niche market to the supplier of the high end fashion market. Indeed, the fur product used to be considered as a luxury because of the rarity of material and the specialization of craftsmanship whereas its exclusivity now refers to the creative vision of a designer but its production observes standard industrial conditions (Skov 2005).
Figure 15. 1920s fur coat adverts. Source: weheartvintage.co
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The SCP framework: Analysis of the fur industry
Rivalry, strategy, structure
Conduct e.g. Pricing R+D
Figure 16. The Basic Structure-Conduct-Performance Model (Jones 2006).
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Figure 17. Fur pelts. Source: Kopenhagenfur.com
Through the literature, a systematic analysis of the fur industry is required. Jones (2006) developed the Structure-ConductPerformance (SCP) Model (Figure 16) as a descriptive device in order to explore the state of an industry and factors which will possibly influence the shape and size of this industry in the future. In the case of fur industry, the development and pattern shift over time can be described by statistics of farmed mink; the performance can be described by trends of the average fur price and fur product consumption. This framework provides a starting point which is useful to organising the relevant facts for the industrial structure analysis. However, one of the problems of this framework is lacking the analysis of international variables (Jones 2006), especially for the internationally integrated industry such as the fur industry.
The power of buyers and suppliers Countries such as Italy, Greece and China import furs for manufacturing fur coats whereas countries such as United States and Denmark import a large number of furs for transactions through auction houses or manufacturing in other countries and then import fur garments (Siomkos and Shrivastava 1987), which constitutes the international configuration of the fur industry. According to the industry report (GAIN 2007), China is the largest importer of fur and the largest exporter of fur garments that over 80% of fur garment manufacturing and raw skin processing are taking place there, while the Nordic countries are largely dominate the fur production as 85% of mink fur are produced 27
in Denmark. The Figure 19 demonstrates the current state of the Chinese fur industry tends to emphasize the expanding of retail distribution which serves the large demand of fur garments. However, the fur business as well as in China are dominated by small firms which are mainly family running with low production volume and small employment size (Yue 2012). The industry report (GAIN 2007) also stated that the margin of fur garment manufacture is said to be 10% or lower. In addition, in China, shipping fur skins into mainland have to pay tariffs and taxes which is 39% of the furs’ value (GAIN 2007). These are the reasons that countless of fur skins are transferred from Hong Kong to the China’s mainland through grey channels. A fur smuggling case uncovered in China last year that the illegal imports involved more than 1 million pieces of animal fur, ¥7.6 billion value and 26 suspects (Yingqian 2013). Thus, the degree of buyer concentration is relatively low whereas the degree of supplier concentration is extremely high as identified in literature review, which determines the cost structure of the fur industry is largely influenced by the
price of fur skins. Figure 18 shows an overall tendency between world mink production, global retail fur sales and the pelt average price sold in the US. Obliviously, the growth rate of the pelt average price is higher than the retail sales growth, which gives the evidence of profitability within the fur production sector. As Siomkos and Shrivastava (1987, p90) identified that “Wholesale and retail in the international fur industry is price-sensitive. Competitive price-cutting makes the trade volatile. Firms are forced to prematurely exit the industry due to sizeable write-off losses from abruptly plummeting demand, or due to substantial re-investment requirements. To a lesser, but still important, extent uncertainty regarding demand duration and its effects on re-investment, and the cyclicality of demand inherent in fashion markets increases volatility.”
The primary drivers for fur demand Firstly, the colder climate will directly generates the fur demand (USITC 2004). Secondly, the fur trade is “a bell-weather of
Figure 18. The tendency of mink production, retail sales and pelt average price. Note: Some statistics are not available
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Figure 19. The fur fashion industry chain in China (Yue 2012).
Fur Farming
Fur Processing Fur Farming
Manufacture
Fashion Brands
Wholesalers Retail
Fur Specialty Retailers the world’s economy” (North, 2000), which the trend of demand parallels the trend of world economy. The global fur business has been squeezed by the credit crisis in 2008 as the extravagant purchase like mink coats have been postponed and the pelt price in auction house decreased 30% accordingly from a year ago (WSJ 2009). The current global fur retail sales is largely drove by demand in Asia where the emerging economy produces a large number of luxury-hungry consumers who uses luxury as a way of displaying their wealth (WGSN 2013). Lastly, fur designers and manufacturers play an important role as an intermediate consumer to facilitate the popularity of fur (USITC 2004). It is relatively important to the modernism of
Department Store
Brand Flagship Store
fur business which has been identified in literature. Besides, the anti-fur messages is influencing the demand for fur largely (USITC 2004). Since the anti-fur campaign raised the moral argument in Europe and the US in the 1980s and 90s, the fur sales has plummeted and people who involved fur has felt uncomfortable with it (WGSN 2013). More recently, in the case of Chinese fur industry, the performance has been affected by the cooling down economy and the campaign against corruption (William 2014). “Financing is much difficult to come by for all industries, and fur is no exception. People are spending less on luxury product”, said by William (2014) in the interview. 29
The condition of entry In the interview, William (2014) said that one of the most important change which relevant to the fur industry is: “The fur industry has attracted many new investors. Some invest in manufacturing, and has been a force in driving up prices in international auctions. Some invest in big fur centres, which quickly saturate the market with homogeneous products.” Jones (2006, p.54) concluded that the main barriers to new entry are “the existence of patents; the presence of important economies of scale; heavy initial capital investment requirements; and existence of special skills or techniques”. In the fur industry, the dominance of fur production by Nordic countries is primarily due to the geographic condition and advanced agricultural production system which is difficult to be replicated, especially the high standard regulations for “animal welfare, environmental and biodiversity sustainability”. When it comes to the sector of retail and garment manufacture, the initial capital investment that reduced by the small firm size and economies of scale (GAIN 2007); the specialization of craftsmanship (Skov 2005) are relevant but these are more likely to achieve. This condition of entry may lead to potential risks within the fur industry which has been identified by William (2014) in the interview that: “The risk has already turned into reality - flooding of the market with lookalike, uninspiring fur coats that the
30
market can hardly absorb. Business went down dramatically last season, resulting in high-carry-over inventory and losses for many manufacturers”.
Substitutes The developing technology of fake fur is certainly provide an alternative option to natural fur. The developed polymeric fibres produce a close natural fur look with similar feel but much lower cost of which the special techniques could simulate the mink fur as well as the beaver fur (Romanowski 2014). However, according to Siomkos and Shrivastava (1987), the imitation furs are not able to form a threat to the industry due to the clearly different target consumer between imitation fur and real fur. This is also evidenced by the interviews with Chinese fur consumers, whereby when asked do they also purchase fake fur products, most of them said that they will not purchase fake fur anyhow (Table 20). The vintage fur could be another alternative for the appetite of fur fashion which does not directly contributing the profits of fur trade and is also less toxic to the environment than fake furs (Hix 2013). However, the vintage fur is not an option for some countries due to the cultural difference. The general consumer survey demonstrates the types of fur which are more likely to be purchased are fake fur, vintage fur and natural fur in sequence. Apart from about the half of people who are not interested in buying fur product, the choice of fake fur, vintage fur and natural fur are account for 25.4%, 12.7% and 11.3% respectively (Figure 21).
Table 20. Fur consumer Interview: Do you also purchase fake fur products? Why?
Aidi, Z: If there is really good style, reasonable price and it depends on how much I like it. Aiying,L: I don’t buy fake fur because it’s poor quality; it’s not that warm and the pattern are always not fitted. Lihua, L: No, I don’t. I always feel that the artificial things are harmful. And it is terrible looking. Lihua, Q: No. It’s far different from the natural one in quality. Xiaoli, C: No, I definitely will not buy fake fur. Xixi, L: No, I don’t. The plastic fur is not comfortable and has more negative impact on environment.
Figure 21. The general consumer survey: Which type of fur coat are you more likely to purchase?
I don't buy fur.
50.7%
Vintage fur.
12.7%
Fake fur.
25.4%
Natural fur.
11.3% 0%
20%
40%
60%
Figure 22. See Liz Taylor, Jane Birkin, and More Vintage Ladies in Chic Outerwear. Source: Nymag.com
31
To compare the natural fur with faux fur or other common textile, The DSS Management Consultants Inc. (2012) conducted a Life Cycle Analysis (LCA) produced some positive arguments about natural fur. These arguments include: the usage of a fur garment can last for more than 30 years whereas a faux fur coat is less than 10 years; the natural fur garment is more likely to be reused in new garments production; the production of natural fur use by-products from waste; the natural fur could have environment benefits like producing biogas and deriving fertilizers
organically if the fur farm is managed properly; the faux fur consumes about 20% more nonrenewable energy such as oil, gas and 17% more greenhouse gas emissions. On contrary, the environment specialised organization CE Delft calculated the environmental impacts within each step of fur and textile production process, which reveals that mink fur are more negative than other common textile like cotton, acrylic, polyester and wool (Bijlevel, Korteland and Sevenster 2011).
Resources 157,0249
Human health 95,7171*
Resources 58,4343
Climate Change 113,4507
Natural fur Human health 98,7944
Climate Change 49,5762
Ecosystem Quality -11,8683
Ecosystem Quality 23,8284
Figure 23. The environmental impact of natural fur and artificial fur. Source: European Fur Information Centre
32
Figure 24. Brian Daly, 2011. Venus in Fur [photograph]. Blanchegirl.tv.
33
34
Figure 25. Nathaniel Goldberg, 2012. Venus in Furs: Daria Werbowy [photograph]. V MAGAZINE (ISSUE #30)
35
Figure 26. Classic fur coat. Source: Pinterest, Tania Foniciello
Literature review Through the literature, the meaning of a fur coat has been changing according to the different social-economy and culture context. It is suggested that the meaning of fur associates it with social controversy, which in turn pushes fur into new modes of representation. 36
The motivational consumption associated with consumers of fur fashion From the historical view, fur has a significance in the fur trade context and economic interests. In some area like North America, fur used to be a new forms of exchange value for guns, tools and food staples which finally came to the dominate gather-hunter production (Emberley 1997). Until now, some communities still largely depend on the fur trade whereby 80% of the population in Kastoria and Sisatista, Greece are employed by the fur trade; hunting and trapping fur animals for trading is vital for those first nation people and their marginal economies in north of USA, Canada, Finland, Sweden and Norway (IFTF 2014). From the commodity perspective, fur is a various “material signifier” as it has been a symbol of wealthy and display since the beginning of history (Emberley 1997, North 2000). Colpitts (2013, p.134) describes the importance of fur coat in Canadian history: “After the First World War, the fur coat clothed the Canadian woman’s body and became a means by which women negotiated their place in a society grappling with modernity. The fur garment was, in many ways, the ultimate selection identifier, from the higher class and impossibly expensive chinchilla to the working-class rabbit.” In post-war Britain, a mink coat not only stand for the height of luxury but also became “a defining quality of femininity, tantamount to a secondary sexual characteristics” (Emberley 1997, Dyhouse 2011). Emberley (1997, p.5) concluded that the exchange value of fur including “commodity, currency, sexual fetish, luxury good, article of clothing, animal hide, natural product”. Contemporarily, fur has been designed as a new way of fashion creativity which perhaps represent fashion,
self-expression rather than symbolic and material value of fur (Skov 2005). It is a part of ready-to-wear collection whereby 50 fashion designers use fur in 1980s compare with over 400 in 2003 winter (Skov 2005).
The ethical beliefs which impact on fur fashion Olson and Goodnight (1994, p.253) introduced the main social convention of fur controversy disputed concerns “the relationship between humans and animals, traditional meanings attached to buying and wearing fur and the sanctity of consumption as a matter of private choice”. On the one hand, anti-fur advocates devote to invert the expressive meaning of fur from a positive social status to a public shaming through advertising campaign, involving celebrities, etc. (Olson and Goodnight 1994). Notably, it is the role of fur as an exclusive item and as a “material signifier” make it an ideal site for controversy rather than other aspects of fur, which may be a prejudice that is unjustified to those proceed fur humanely (Skov 2005). Also, Emberley (1997) introduced the “scapegoat mechanism” that the target focus have been shifted away from the animal treatment to the women consumers during the radicalization of anti-fur campaigns in the mid-1980s. On the other hand, pro-fur advocates respond by claiming the benefits of fur production to animals and the environment; emphasizing the private matter of fur consumption and promoting in the name of fashion (Olson and Goodnight 1994). Finally, a counter-strategy that push fur into fashion and trend has been made through creative alliance to respond those judgements. These are including to endorse celebrities to maximize media exposure; to enter sponsorship cooperation with major suppliers such as Swarovski; to collaborate with major fashion designers; to train young talents for the fur industry; to develop new seasonal colours and patterns; to 37
“Mrs Silver Fox” “Mrs Russian
Sable”
“Mrs Beaver A fine (or shorthaired) fur came to represent, quite literally, the elite woman’s body itself (Colpitts 2013). 38
combine the fur with leather or textile fabric; to use the knitting and weaving in fur design (Skov 2005). Indeed, it has been featured in New York Times Magazine (Figure 27) that: “Furs were disguised, dyed and cut to foreground their ‘artificiality’ as well as to create the illusion that fur resembled fabric—could be woven, textured, and patterned” (Emberley 1997, p.171). This impact on fur fashion in a sense is strange as the officer of In Defence of Animals
Christy Griffin (2013) said that: “More and more people don’t want to be associated with the cruelty that’s inherent in the industry, and the fact that they are dead animals. In the ’20s, it was a little more socially acceptable to be parading around with the full bodies of animals. These days, people want to be less associated with the cruelty, which is why you see the shaved furs and the multi-coloured furs now” (Hix 2013).
Figure 27. “Furs in Disguise” Source: New York Times Magazine, 27 September 1992
39
Figure 28. AMERICAN LEGEND, 2014. Campaign. Source: www. americanlegend.com
40
How the strategic communications turn the private choice of buying fur into a social controversy The anti-fur poster from animal rights organization Lynx exemplifies their communication strategy is: “Our aim is to create a new climate of opinion which ensures that wearing fur garments is no longer acceptable. In this way we will strike at the heart of the fur industry depriving it of customers for fur products and so dramatically reducing the number of animals killed for their fur. This is being achieved by a spectacular and innovative advertising campaign using billboard and bus shelter posters and cinema commercials, which show the unpleasant reality behind the glamorous image portrayed by the fur industry” (Emberley 1997, p.23). Respected celebrities have been used by antifur advocates as a powerful tool who not only
END CUSTOMERS
disseminates the negative message associated with fur but also make fur unfashionable (Olson and Goodnight 1994). From the conceptual perspective, both concepts of the “diffusion of innovation” and the “two- (multi-) step flow of communications” have suggested that identifying the opinion leader is of importance to be “created” or “simulated” (Evans 1989). But not only that, the communication content is recoded by Lynx through the politically charged message and the seductive power of image to involve relations among human and animals, as well as social group such as European bourgeois, Third World fur factory workers and indigenous hunters (Emberley 1997). Anti-fur advocates also have adopted an “at once consumer-directed and confrontational” style which addresses their protests to the most open to influence group (Olson and Goodnight 1994). These target audience within a communication should be determined as those who might be involved in the purchase decision making as well as who might influence it (Figure 29: Pickton and Broderick 2001).
TOTAL POPULATION
OPINION LEADERS AND INNOVATORS
Internal to the
Trade Customers
External to the
TARGET MARKET CONSUMERS
TRADE
OTHER PUBLICS
MEDIA Figure 29. Selecting multiple target audience members (Pickton and Broderick 2001)
OTHER DMU 41
Consumer behaviour towards fur fashion
Figure 30. Luis Monteiro, 2011. Tatler fur. (Background)
Shifting public opinion and fur fashion involvement According to the Herzog, Rowan and Kossow (2001), a number of polls have been conducted in the US about public opinion toward wearing fur in which shows a uncertain result during 1980s (Table 31). This public opinion may not be able to apply to the general consumer worldwide, but it examplifies the confrontation bewteen accepting fur and opposing fur. However, the consumer attitudes about wearing fur changed greatly along the change of value these years. On the one side, consumers used to accepting fur have been changed by the various anti-fur campaign from PETA, Lynx and others in many countries which has transformed the wealthy identity of fur to a derision (Mike, 2009). On another side, Some influential anti-fur advocator like Naomi Campbell and others who appeared in the “rather go naked than wear fur” anti-fur campaign in 1990s changed their stance to represent top designers’ fur collections except Turlington has stayed (Figure 13,14: Day 2009, in the next page). The shifting public attitude is reflecting the different level of fur fashion involvement. Solomon and Rabolt (2009) defined that involvement is “a person’s perceived relevance of an object based on their inherent needs, values, and interests”. The level of involvement may be affected by different factors (Figure 32). Towards fur fashion involvement, there is a linkage between motivational consumption of fur, value and knowledge of fur and confronted marketing communication which influence the information process. 42
Table 31. Public Opinion on Wearing Fur (Herzog, Rowan and Kossow 2001)
Public Opinion on Wearing Fur 1986
45
% Opposing 47
1989
13
85
1989
50**
46***
1993
35
50
1999
43.8
51.4
Year Is it okay to wear (ranch) fur coats? (Sieber 1986)*
%
dominance over animals, please tell me if you think each of law, if you personally disapprove but don't feel it should be illegal, or if it is acceptable to you: Killing animals to use their skins for fur coats. (Roper Center 1989b) Do you think ther are some circumstances where it's perfectly okay to kill an animal for its fur or do you think it's wrong to kill an animal for its fur? (Roper Center 1989d) Do you generally favor or oppose the wearing of clothes made of animal furs? (Balzar 1993) The use of animal fur in clothing should be banned in the United States. (Survey Research Center, University of Maryland, College Park 1999) *Survey of 802 Toronto adults **Responding that under some circumstances it would be all right to kill an animal for its fur. ***Responding that it would always be wrong to kill an animal for its fur.
POSSIBLE RESULTS OF IN OL EMEN T
ANTECE ENTS IN OL EMEN T PERSON FACTORS needs importance interest values
IN OL EMEN T
OBJECT OR STIMULUS FACTORS
SITUATIONAL FACTORS purchase/use occasion
Figure 32. Conceptualizing Involvement (Solomon and Rabolt 2009)
43
Fur consumer profiles There are 6 fur consumers have taken part in the structured interview, who have bought and used natural fur product before.
Aidi, Z: Chinese, 32, Government. I have bought a mink jacket in 2006 which is 9000RMB. Favorite fur brands: Karl Lagerfeld; China: HLS; Hong Kong: KC.
Aiying,L: Chinese, 56, retired. More than ten years before I have bought a black mink coat with collar which price is around 5000RMB. Then I have bought a leopard brown mink jacket and its price is 6000RMB. Just three years ago I have had another black coat which price is 13000RMB. Favorite fur brands: I didn’t pay attention on specific brand. I like shopping in department store where I think could offer best brand with best quality.
Xiaoli, C: Chinese, 50, Finance and income is 8000RMB. I have bought a long hair mink coat in 1999, a sheared mink coat in 2005 and a long hair cape with hood. The price from 9000RMB, 11000RMB to 14000RMB. Favorite fur brands: HLS.
Lihua, Q: Chinese, 58, retired. My first and only purchase of a fur coat is in 2010. It’s a brown mink coat and the price is around 10000RMB. I’m still wearing it until now. Favorite fur brands: I don’t have.
44
Lihua, L: Chinese, 47, Senior Engineer and monthly income is around 10000RMB. I have bought a black one long ago. Totally I have bought three coats and they are black, red and white. The Black one has a big fur collar but it is out of fashion so I rarely wear it now. Ten years before I have bought a jacket when it just begins popular. Favorite fur brands: I do not pay attention to the designer, too. I purchase clothes when I think the product itself suit for me.
Xixi, L: Chinese, 28, Finance and income is 7000RMB. I got a black mink jacket with silver fox trim for my wedding last year. I also bought some small pieces like the fox vest gilet which is 3000RMB, accessories which are around 100RMB to 1000RMB during these years. I wear these small pieces a lot. Favorite fur brands: Currently I have no favourable designer or brand.
45
Figure 34. AMERICAN LEGEND, 2014. Campaign. Source: www.americanlegend.com
Consumer factors The motivation of fur consumption has been identified in literature review including commodity exchange in the past, primary industry for some areas, wealthy symbol, social class identification, femininity, luxury, fashion and more recently individuality. The Chinese fur consumers in the interviews
state the fur product is a must-have piece for women, an identity of wealthy and social status, an irreplaceable warmth and a little fashion (Table 33). Moreover, the fur garment also has been bought for some special occasions, for example, the consumer Xixi, L said she got a black mink jacket for her wedding. When it comes to worldwide general consumers, the meanings of Luxury, Social identity and fashion have been addressed by the mast majority people meanwhile the meanings of self-expression and physical protection also have significant scale (Figure 35). The Maslow’s hierarchy of needs suggests certain benefits of a product consumers might be looking for depend on the different levels of their development and these levels are progressing up from basic needs to higher level needs (Solomon and Rabolt 2009). However, the use of this hierarchy is not simplistic whereby the fashion needs can satisfy a number of levels and the levels of needs appear different order in western and Asian (Figure 36). Especially in the case of fur which can satisfy almost every level of needs for different people in different geographic regions and in different self-development conditions. Also, regarding to the highest level of needs, fur products tend to satisfy the needs of individual self-expression in the Western context whereas the needs of identity within certain group in Asian context.
Table 33. Fur consumer interview: What does a fur coat mean to you? Why did you buy a fur product?
Aidi, Z: “It’s noble, gorgeous and luxury as every women should have one in their wardrobe”. Aiying,L: “It’s extremely warm than any other winter clothes and it’s high class”. Lihua, L: “I don’t think it refers to any particular meaning. I just think it is fashionable and easy to care. And it seems that every women should have some pieces”. Lihua, Q: “It means wealthy. I bought the fur coat with my friend”. Xiaoli, C: “Status identification and good-looking”. Xixi, L: “For me, a fur coat would be identification of luxury and high class which is definitely for formal events. But the small pieces is about fashion and casual as well as the fine quality which is more favoured by young people”. 46
0%
20%
11.3%
40%
16.9%
60% 49.3%
Fashion 0.0% 11.3% 21.1%
84.5%
36.6%
45.1%
12.7% 12.7%
Low
Medium
22.5%
71.8%
Luxury 0.0% 4.2% 11.3%
Not at all
100%
67.6%
0.0%11.3% 16.9%
Self-expression
80%
49.3%
18.3% 0.0%
25.4%
High
Figure 35. Survey: How do you think a fur garment means to people?
Figure 36. Maslow’s hierarchy of needs: Western and Asian (Adapt from: Solomon and Rabolt 2009)
47
Figure 37. Luis Monteiro, 2011. Tatler fur. (Background)
48
Apparel and fashion purchasing, especially the exlusive item, is generally identified as a high-involvement acitivity (Solomon and Rabolt 2009). The increasingly demanding consumers in today’s market and the huge controvercy of using animal for clothing require maximum possible transparency of the fur industry. The objective perception and attitude of fur are not only stop at the material and the design but also are predicted by further information about the orgin fur prodcution process, the animal treatment practical and environmental impact. As the involement with fur increased, the consumer would like to pay more attention to related information and pay cognitive effort to understand the related knowledge (Solomon and Rabolt 2009). The interview with Chinese fur consumers reveals that the imported mink fur are more likely to be perceived as excellent quality, fine workmanship and well-dressed appearance (Table 38). Most of them believe that there is difference between domestic fur and imported fur, moreover, some of them even have the ablity to distinguish those difference (Table 39). On contrary, the general consumer survey where half of people are entirely not interested to buy fur product, meanwhile, shows 54.9% of them are not imformed about fur and 39.4% of them have limited knowledge (Figure 40). Thus it is relevance to the results mentioned above that half of respondents state that they will not buy fur. No.
I have limited knowledge.
Yes.
39.4%
5.6%
0%
10%
20%
30%
40%
50%
Figure 40. Survey: Would you consider yourself as an informed consumer about fur?
Table 38. Fur consumer interview: What do you like about the fur product and what do you dislike about it?
Aidi, Z: Its irreplaceable warmth, its beautiful appearance and its excellent quality fur. Aiying,L: I like its material and manufacture quality. Lihua, L: It makes me well-dressed and decent. But the concept of wearing fur is seems changing nowadays and it should be controlled. I usually bought simple and classic style not strange design which is appropriate for work place. Lihua, Q: I like the excellent function of keeping warm. But I think fur is not practical for daily wear. Xiaoli, C: Firstly, it is the quality of mink furs. Secondly, it is the fine workmanship. Last is the style. Xixi, L: I pretty into the nature feeling of fur material. As long as it is made by natural fur, it will be a nice product. Table 39. Fur consumer interview: What do you like about the fur product and what do you dislike about it?
Aidi, Z: I think the Chinese fur industry is developing gradually which is becoming international, fashionable and brand oriented. I get information through specialty fur company and internet. Aiying,L: I know something like there are domestic produced fur and imported fur. I know from my friends and family members. Lihua, L: I know that various kinds of fur material come from animal. I get information from television and internet. 54.9% Lihua, Q: I don’t know much. I’m living in the North and there are several large fur wholesale market. The few things I know about fur from there. Xiaoli, C: I don’t know much about the inside of the fur industry. I only get some information about the imported mink fur and the original production in Europe and the US. These information I heard from the salesman when I buy fur coat. 60% Xixi, L: I know that the mink furs come from the major auction house around the world.
49
There is an Approach-Avoidance Conflict exists in the motivation process of buying fur which suggests that people desire fur but want to avoid the negative consequences at the same time (Solomon and Rabolt 2009). The ethical concerns in the fur industry are unquestionable perceived by consumer, however, the point is which issue consumers concern specifically. Through the general consumer survey, the concern about environmental impact that if fur production has more negative environmental impact than fake fur or common textile production
Figure 42. Survey: Which of the following ethical issues are you concerned most about in relation to fur fashion?
Animal rights - If animals are used for clothing.
has been rated highest (Figure 42). Then the rate scale follows the animal welfare, the animal rights and the social responsibility. In China, William (2014) has bring forward the problem that animal welfare is likely to be a big issue especially in big cities like Beijing and Shanghai. From the consumption perspective, Chinese fur consumers hold two major different attitudes about ethical concerns that one is to reduce the buying of fur and another is to perceive information selectively and rationally (Table 41). 0%
20%
0% 21.1%
Animal welfare - If animals in a farm are not treated humanely. 0% 8.5%
40%
29.6%
Mot at all Table 41. Fur consumer interview: What do you like about the fur product and what do you dislike about it?
50
11.3%7.0%
Low
80%
Medium
100%
49.3%
56.3%
0% 5.6% 26.8% Social responsibility - If fur garment manufacture observes labor and fair trade standards.
60%
35.2%
67.6%
53.5%
28.2%
High
Aidi, Z: Yes, I will concern the issues about using animal. But I don’t trust every issues blindly. Aiying,L: I agree with the concept that promoting use less animal for clothes. But I don’t really concern when I buy clothes. Lihua, L: Yes, I realized some concerns recently. I am concerning these issues that if there are many negative environmental impacts and if animals have been treated well. Now I am very difficult to buy the clothes which the whole piece is made by animal skins. But if the using as a trim or a small part and if it is an accessory like wallet would be fine. I definitely resist the using of rare species. Lihua, Q: I have no idea about the specific issues. Xiaoli, C: Yes. I think it will influence me more or less to buy a fur coat. Xixi, L: I will concern the ethical issue but not the way of using fur. I believe that the farmed fur has its high standard regulation for breeding and animal welfare. And also, comparing with the pollution of the common textile production, I think the natural fur is more environmental friendly.
Fur fashion communications from the perspective of the fur industry The communication loop between sender and receiver suggests that the key elements of messages will be encoded by sender to a set of symbols like words, picture and other sensory stimulants, meanwhile the receiver decodes those symbols to understand the meaning (Pickton and Broderick 2001). The encoding of message could be decoded correctly only if the senders and receivers have experience in a common field (Pickton and Broderick 2001), which thus decides the right encoding process as a major role to lead the way of social controversy of fur. Both sides of fur controversy are taking an uphill battle to convince the influential opinion leaders (William 2014). The following statements (Figure 43) show the different stances of wearing fur and each of them has varying degree of supports from general consumer survey. Notably, the first statement achieved 28.2% high agreement and 49.3% medium agreement, compares with the extremely confronted third one also has 36.6% high agreement and 15.5% medium agreement, then the last one has 60.6% high agreement and 21.1% medium agreement.
Figure 44. Chris Nicholls, 2013. Fashion Canada October 2013
Figure 43. Survey: How do you agree with the following statements?
0%
20%
0.0%
40%
22.5%
80%
49.3%
5.6% 14.1%
7.0%
60%
28.2%
49.3%
40.8%
Not at all
31.0%
15.5%
18.3% 0.0% 21.1%
100%
36.6%
60.6%
Low
Medium
High
51
Figure 45. Pradasphere exhibition, London Harrods, 2014 (Author’s picture)
52
The above substantial divergence of opinions are determined by the factors that influence the source credibility including the sender attractiveness, the level of trust and the expertise (Pickton and Broderick 2001). The responses of the fur industry are: Celebrity endorsement. In order to increase the message effectiveness of communications which is largely depending on the perception of sender credibility (Pickton and Broderick 2001), celebrity endorsement of either antifur or pro-fur has been used extensively. Especially the pop stars wearing fur in the public places or performances which make fur a part of pop culture rather than the meaning of fashion. For example, Miley Cyrus took stage in Miami at the BB&T centre by wearing a fur coat; Lily Allen draped a fur coat at the 2014 NME Awards; Rihanna takes a Liberacestyle to wear fur coat on several occasions this winter (Bergin 2014). In the age of social network and “selfies”, the advocating of fur
countries where have fur production regulations in force (OA, 2014). Additional, to disseminate the fur knowledge and increase the fur popularity, the core capability of fur suppliers is the strategic alliance in main market like China in terms of relationships with well-known universities, apartment stores and media publicity (Classen 2011). The expertise of fashion. Fur is presented in the name of fashion with various approaches from the houte couture, the ready-to-wear collection and the designer label. FENDI is collaborating with Karl Lagerfeld to produce a revolution that “fur is changed, mould, redesigned and reinterpreted, becoming a fashionable, soft, light items of clothing” (FENDI 2014). Recently, Prada released a high profile Pradasphere exhibition in London Harrods deparment store to display a wide range of historic collections which includes a number of exclusive fur items, even in the place where fur are unacceptable by public.
Figure 46. Celebrities wear fur coat: Miley Cyrus, Lily Allen, Rita Ora and Rihanna. source: fashion.telegragh.co.uk
by those young celebrities will produce a fur’s pervading presence for the new generation of fashion lovers (Bergin 2014). The level of trust. For example, the Origin Assured label has been launched to assure that the approved fur only from particular
Prada couples the design of fur with fashion concepts, new technologies and complex materials to produce a new form luxury of fur and to amplificate the fashionable feature of fur (Figure 45). Unfortunately, it is difficult for the whole 53
Figure 47. Karl Lagerfeld, 2013. FENDI 2013 FW campaign
54
industry acts consistently world wide. Most of the evidences released in the PETA website and used by the anti-fur organization to convince public to refuse fur come from China. And those shocking videos or pictures show cruelty in the Chinese fur farms have been wide spread on social network and produce a severe negative impact on the whole industry. The survey results shows that the information
from anti-fur publicaitons on social network influence their attitude about fur fashion most (Figure 48). Beyond that, the survey results also proved that the commuication strategies of promoting fur knowledge and fur popularity though renowed designers and reliable media have influenced people second most.
Figure 48. Survey: To what extent do the following communications influence your current attitude about fur fashion? 0%
10%
The renowned fashion designers' view 11.3% of fur related to fashion, glamour or luxury.
20%
30%
23.9%
The fur product features: product durability, 5.6% biodegradable, reusable, warmth, etc.
21.1%
43.7%
80%
90% 100%
29.6%
11.3%
29.6%
50.7%
9.9%
39.4%
40.8%
4.2% 21.1%
19.7%
31.0%
22.5%
49.3%
42.3%
edium
70%
45.1%
18.3%
8.5%
ow
60%
40.8%
19.7%
o t at all
50%
19.7%
21.1%
8.5%
40%
31.0%
28.2%
25.4%
12.7%
14.1%
igh
55
56
Figure 49. Nathaniel Goldberg, 2012. Venus in Furs: Daria Werbowy [photograph]. V MAGAZINE (ISSUE #30)
57
Figure 50. Joan, 2013. New Fendi flagship store opens at 51, Avenue Montaigne, Paris. pursuitist.com
Literature review Due to the lacking of specific literature directly in relation to the fur fashion brand, the key factors which contributes to competitive strategies of fur fashion brand could refer to the literature about luxury consumption or conspicuous consumption. 58
Strategic brand management Kapferer (2008) introduced two different approaches for building luxury brand. One is represented by the luxury pyramid which the griffe has been highly invested to provide creation and unique work and then industrialized the product through the third level to accrue profit (Figure 51, Kapferer 2008). Another one is the constellation model (Figure 52) which extensions and licences distance equally from the centre of the brand ideal and are all manifestations of the brand (Kapferer 2008). The relationship between brand and product is that brands alternate focus between different phases in competitive behaviour which from capitalising brand image to recreating or nurturing the belief
Figure 51. The pyramid brand and business model in the luxury market (Kapferer 2008)
Figure 52. The constellation model of luxury brands (Kapferer 2008)
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of product superiority and then continue to recapitalise brand image (Figure 53, Kapferer 2008). As the market increasingly diversifies and the luxury becomes democratize, brands try to reposition themselves through “line extension, category extension, co-branding and franchising” (Hennigs et al. 2013). In order to satisfy the change of consumer preferences, the luxury brand developed various branding strategies which are strategic pricing, advertising and brand extension with either upgrading or downgrading method (Zheng 2013). Moreover, Kim et al. (2001) suggests the distancing techniques for vertical brand extension strategy that it might be desirable “to create a larger distance or separation between the core brand and the brand extension using a graphical or linguistic distancing method”. However, when brands are trying to reach to the broader market of consumers, they confront challenge that transfer the core category may lead to diminution of the product exclusivity and the fashion authority meanwhile they take risks of unprofitable cannibalization and brand
Figure 53. The cycle of brand management (Kapferer 2008)
image dilution (Nueno and Quelch 1998). Arnault (2000) listed key factors of a successful luxury brand which are “product quality, creativity, image, company spirit and a drive to reinvent oneself and to be the best”. Specifically in China, some key factors have been identifies by Zhang and Kim (2012) 60
would positively influence consumers’ attitude towards purchasing luxury fashion goods which are “brand consciousness, materialism, social comparison, fashion innovativeness and fashion involvement”. From a conceptual perspective, the symbolic interactionism theory and the social comparison theory all emphasize that interpersonal factors are priority of the product and brand strategy in China (Zhang and Kim 2012). Next, branding consists in transforming the strategic market segmentation and the strategic product differentiation (Kapferer 2008).
Defining the segmentation According to Solomon and Rabolt (2009), consumers’ attitudes toward luxury could be divided into three groups which are “Luxury is functional, Luxury is reward and Luxury is indulgence”. For Chinese consumers, luxury consumption is considered as symbols of success and good taste rather than waste of money or being superficial (Zhang and Kim 2012). Moreover, after experiencing socialpolitical-economic turbulence in the early ages, the wealthy parents in China tend to give the next generation their accumulated wealth and happy lives directly which they think is the best to show their love (Zhang and Kim 2012). In another word, many Chinese youth are more likely to continue to behave high materialism in consumption. Leigh and Gabel (1992) introduced a type of consumer segmentation which is the “nouveau-riche” as a particular upwardly mobile individuals whose practice of conspicuous consumption to buy high-priced, exclusive items based on the ability and desire to belong to a particular reference group. Solomon and Rabolt (2009) also concluded other forms of conspicuous consumption which are the gift-giving, the “idle rich” who do not need to work, and the “conditional hedonism” who rationalizes their spending as good investment. Differently, Hines and Bruce (2001) suggested that the
growth of premium fashion brands have obscured the true nature of luxury whereby many luxury brands have diversified their products to be affordable in the dynamic context of fashion market. Then, the fashion luxury market is segmented to three categories: Accessible luxury, Middle luxury and Inaccessible luxury (Hines and Bruce 2001).
Product strategy associated with conspicuous consumption The product life cycle model suggested that along with the product move through from the stage of development to maturity, a better understanding of market demands and sets of different innovation processes and skills associated with change are required (Stamm
2008). One phenomenon of the product life cycle is the emergence of a dominant design which reduces uncertainty, produces standardised and interchangeable parts, and optimise product volume and efficiency (Stamm 2008). Another one is the competition shift from product innovation to product improvement and product differentiation, which emphasizes on the feature and styling of product (Stamm 2008). When it comes to the conspicuous consumption, the product development should be specified and diversified to create appropriate and desired symbolic images which may entail symbolic elements such as high price, association with performance risks, complex product, specialty goods and association with one’s ego (Leigh and Gabel 1992).
Figure 54. Shoes with fur trim. Gucci
Figure 55. Lauren Fair Photography, 2013. A Rustic Glam Wedding. USA.
Figure 56. Andree.H, 2014. Street style diary: NYFW 2014
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Figure 57. HLS 2013 Fall & Winter campaign (HLS 2014)
Case Study: A Chinese Fur Fashion Brand Background William Chen (2014) stated about the current state of Chinese fur industry in the interview that: “The Chinese fur industry and fur market have been growing much faster than the international market over the last two decades. China now makes around 75-80% of all the fur coats of the world. It has also become one of the largest retail markets of fur coats in the world. Around 1.5-2 million mink coats 62
are sold in China per year. According to China National Leather Association, there are around 1,500 leather and fur centres in China, offering both wholesale and retail of leather and fur products. However there is no shortage of challenges for the Chinese fur industry. Compared to fur companies in other industries, Chinese fur manufacturers lag considerably behind in design and creativity, marketing and branding, as well as overall operational level.”
HLS is a Chinese fur fashion brand which founded in 1998 within above context. During these years, HLS experienced rapid
development from the beginning as a simple fur garment manufacturer to the current state as specializing in mink fur coats, leather wear, ladies’ fashion lines and accessories. The competitive advantages which underpin the rapid development are mainly the specialized fur garment and well-managed distribution channel. HLS’s fur garment is reputed because its quality and various style offers whereby they are one of the first and only use imported fur skin from world leading auction house to assure the consistency of quality. Moreover, HLS owns specialized fur factory and employs a number of fur experts who bring delicate workmanship. HLS releases 500 to 600 styles of fur garment for every winter with almost all kinds of silhouettes, collar types, and colour options. When the fur retail is dominated by the large fur centres in China which largely rely on the low price, HLS is one of the few brands builds strong relationship with department store and expand retail network rapidly. However, only seasonal products cannot support HLS to continue growth within the changing retail environment. These changes has been specified by William (2014) in the interview: the new investor not only drives the fur price up in international auctions but also saturate the market with homogeneous product; the animal welfare becomes a big issue especially the top tier city; the cooling down of Chinese economy and the campaign against corruption; consumers become increasingly demanding.
fashion ideas. The collections contain not only fur garments but also leather products, accompanied clothes and accessories which is developed base on brand image and have balanced combination of leather and various textile fabric. Figure 58 and Figure 59 are the recent fur collection and Womenswear collection, which the former shows the high
Figure 58. HLS Fur collection, 2012/13 (HLS 2014)
How the brand respond to the changes While both these external and internal factors appear pushing HLS to reform, HLS implements following strategies in response: Product development. HLS used to only work with fur specialty designer and now have fashion designers join in to bring better concepts about collection, colour and
Figure 59. HLS Fall & Winter womenswear Collection, 2014 (HLS 2014)
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quality fur coats which the whole garment made by mink fur skin and the latter shows the wool coats decorated by mink fur collar. Brand marketing. In order to create more added-value, HLS adjusted the marketing strategies. While the product range has been developed from limited to all kinds of categories, HLS provide more flexible offers for different stores in different regions and the changing of consumer preference. The whole brand image is re-established and upgraded through improving shopping experience and customer relationship management. The HLS newest store (Figure 60) uses high standard interior design and impressive display to create high quality shopping atmosphere. The fur garment price is accordingly increasing (Figure 61). Distribution channel. HLS distributing through retail, franchise and wholesale of which revenue account for 60%, 30% and 10%
Figure 60. HLS Store (HLS 2014)
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respectively. HLS increases the percentage of the retail channel whereas reduce the number of franchising stores and improves the retail network to build unified management and consistent brand image. Through applying those three major strategies, HLS positions themselves at the middle-upper level of market. Meanwhile, some significant consequences reveals. First, the production volume of fur garments accounts from 76% in 2004 to 4% in 2013 (Figure 62) whereas the percentage in sale revenue decreased from 93% in 2004 to 38% in 2013 (Figure 63). Second, the sale revenue of other products is increasing stably which becomes an important complement for HLS as the sale performance of fur garments is fluctuate (Figure 63). Third, HLS has transformed the limited product range into an integrated fashion brand according to the product development, the store image and the statistics mentioned above.
Figure 61. The average price of a fur garment from 2004 to 2013 (HLS 2014)
¥19,930 ¥16,771 ¥15,813 ¥13,656
¥8,132
¥9,688
¥10,604 ¥9,188 ¥8,999 ¥8,798
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
250000
Figure 62. The production volume of the total garment and the fur garment: 2004-2013 (HLS 2014)
200000 150000 100000 50000 0 2004
2005
2006
2007
2008
2009
Total production volume
2010
2011
2012
2013
Fur garment production volume
Fur garment production volume ¥400,000,000
Figure 63. The sale revenue of the total garment and the fur garment: 2004-2013 (HLS 2014)
¥350,000,000 ¥300,000,000 ¥250,000,000 ¥200,000,000 ¥150,000,000 ¥100,000,000 ¥50,000,000 ¥0 2004
2005
2006
2007
2008
2009
Total sales revenue
2010
2011
2012
2013
Fur garment sale revenue
Other products sale revenue
65
Figure 64. Product life cycle (Stamm 2008).
The evaluation of HLS business model According to the production volume (Figure 62) and the sale revenue (Figure 63) of the fur garment, it could be matched with the product life cycle (Figure 64) that HLS’s fur product has experienced the Growth stage and is in the Maturity stage currently as the inflection point in 2010 is clearly identified. During the Growth stage, more competitors and more aggressive pricing leads to the peak of profit and then more product differentiation and proliferation as well as expanded distribution occurs (Kerin, Hartley and Rudelius 2012). When it comes to the Maturity stage, the slowing of total industry sales parallels the declining of the profit due to the fierce price competition and the cost of attracting new buyers (Kerin, Hartley and Rudelius 2012). This is the same as the current situation of the fur industry in China which has been identified in the first chapter. Moreover, the power of suppliers increase the fur skin costs and facilitate the life cycle progress of 66
the fur industry in China. In doing so, HLS has to re-evaluate the market demands, improve or differentiate the classic fur garment or optimise the production volume. The corresponding strategies which HLS has implemented is integrating the fur products into the fashion collection and marketing all the product categories through the brand name HLS. There are both advantages and disadvantages. Firstly, in order to consolidate the business and be less dominated by the suppliers in terms of material costs, HLS’s product development and marketing strategies would gain relevance to strengthen brand equity. The brand equity is “the set of associations and behaviour on the part of a brand’s customers, channel members and parent corporation that permits the brand to earn greater volume or greater margins than it could without the brand name” (Leuthesser 1988). The brand
Figure 65. HLS 2013 Fall & Winter campaign (HLS 2014)
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is an instrument and a business tool for growth and profitability because brandinvolved consumers bargain less and are willing to pay more (Kapferer 2008). In this way, HLS is able to differentiate from others, maintain the market share and pricing according to the brand positioning rather than material costs through the Maturity stage of product life cycle. From the national industry perspective, Kapferer (2008) stated that it is important for Chinese group to think of way to transfer the status of low cost suppliers into being a part of the high margin segments. In a sense, the Chinese fur industry is underway and it have to go through what the Chinese fashion industry has gone through 20 years ago (William 2014). Secondly, HLS would benefits from the product development strategy which emphasize the fashion feature of fur garment rather than the
Figure 66. HLS 2013 Fall & Winter campaign (HLS 2014)
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fur itself. Because the “furs in disguise”, which was discussed in the fur consumption chapter, make people reduce attention on the ethical concerns especially when the representative impression of luxury and social status weakened. Additional, a fashion valueadded item are less likely to be influenced by the weather condition and economic condition as fur products are. Lastly, HLS’s reaction to some extent is accord with the future consumption trend as consumers are more diversified and the market is largely fragmented in China meanwhile the public opinion about wearing fur in the future is uncertainty. However, since the fur garment is sold accompanied with other product categories or designed to combine with other fabrics, the authoritative value and the luxury identity of fur will be more or less diminished. It might be contrary to the current consumers’ preference
mentioned before that Chinese consumers regard the high quality fur material and its sense of luxury as the most important motivation to buy fur coat. As Hennigs et al. (2013) stated that it might result in a negative brand image and damaging associations if the extension in product or brand is excessive and inconsistent. As long as the price level was concerned, a classic style of HLS mink fur coat priced at £5000 whereas a fashion dress is around £200 in retail. Thus, HLS takes the risk of loss prestige because consumers question the dissonance of the quality level of the brand. Regarding to the marketing strategies, HLS lack of relevance communications with consumers accord with their attitude change in relation to the ethical concerns. As William (2014) suggested that Chinese fur brands have to respect the new shopping environment and the consumers who are sophisticated and are equipped with powerful tools like the internet.
Figure 67. A collection of HLS in store display (HLS 2014)
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Figure 68. Reece Hudson, 2014. Fur Coat ad (1962) [REECE HUDSON Blog]. Available at: http:// reecehudson.com/blogs/news [Access: 9 July 2014].
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Conclusions This report firstly analysed the fur industry structure by using the SCP framework in the respects of the power of buyers and suppliers, the primary driver for fur demand, the condition of entry and the substitutes. An expert from a fur fashion branding consultancy provided insights from both international and Chinese perspectives of the fur industry. Then the following fur consumption chapter described the fur popularity and more importantly the driving forcing to push such a private choice of buying fur into a social controversy. A general online survey, which constitutes mainly of people aged from 20 to 30, revealed a universal attitude towards fur and how people are influenced by the communication strategies, meanwhile it implicated the potential consumer trends in the future. Also, specific fur consumers have been involved in the interview to expose current consumption pattern such as the motivation, the knowledge and the perception of fur. In the last part, the case study of a Chinese fashion brand exemplified how they are affected by the industry transformation and the changes in consumer attitude as well as how they respond accordingly. The key limitation of this report is that fur has been seen as a commodity product in contemporary society which is industrialised in different market level so that the issues from one particular Chinese fur fashion brand cannot be generalised. The first part of this report explored the fur industry which is attractive but vulnerable. Firstly, the strong reach and high concentration of fur suppliers remain dominant role within the fur industry whereas the small size and the decentralization of the fur retail sector determine the relatively low profitability. Thus, the future profitability of
the suppliers is also in question as Jones (2006, p.57) stated that “power conditions between adjacent stages in the production chain are related to a firm’s profitability”. And the current Chinese fur industry is lagging with the role of the World’s factory, lacking in design and marketing and illegal ways of trading. Secondly, the fur demand is largely driven by the external environment such as the weather, the economy and the social change, which make fur fashion brand difficult to have the initiatives to change fur consumption. Thirdly, the low barriers of manufacture and retail sectors pave the way for new investors to enter while it exacerbate the market saturation and price competition. Lastly, the comparison between natural fur and faux fur cannot be examined scientifically as there is a lack of neutral and accurate proof. But from the consumer perspective, the substitutes of natural fur like faux fur and vintage fur are unlikely to be the threats because it have different target consumers. The second part of this report described the fur consumption including consumer factors and the communication strategy influences. The motivation of buying fur varied from the signifier of wealthy or social class to the fashion feature of luxury or individual expression. It is the luxury image of fur rather than the ethical concerns that bring this private choice of buying fur into the public discussion so that the marketing communication of fur involves a wide target audience to increasing influence. Afterwards, the fur industry has been driven to transformation with more fashionable feature in terms of colour, pattern, silhouette, technology and combination of other fabrics. And the fur fashion has been promoted in the ways of celebrity endorsement, increasing the level of trust and disseminating the fur fashion 71
expertise. The results of primary research shows that the current Chinese fur consumer still emphasize the quality of mink skin and the workmanship of fur garment have great importance to them, whereas the younger generation in China are more likely to be influenced by the anti-fur campaign and ethical concerns. The third part of this report is about the case study of a Chinese fur fashion brand - HLS. After analysis of the fur industry and the fur consumption, the major challenges confronted by HLS emerge: the low margin of fur manufacture and retail in China; the fluctuation of fur sale performance; the new investors who facilitate the growth of fur skin price and the homogenous production which cannot be absorbed and also produce malignant price competition; the fur production standard lag behind international level whilst the ethical concerns about using fur is increasing in China; the fragmented Chinese market; the diversified and sophisticated Chinese consumers. Thus, the critical factors of success is for HLS to be able to understand the market segmentation and then create competitive advantages of product and brand accordingly, meanwhile to avoid being jeopardised by competitors offering similar product and the negative impact from ethical concerns.
Recommendations Suppliers. Since the fur industry is integrated internationally and multiple middleman exists, buyers have to spend a big amount of brokerage fee which lower the level of profitability in manufacture and retail sectors. The suppliers are also more difficult to understand different market and different consumer sufficiently. The continuing price-sensitive in manufacture and retail sectors makes the fur industry volatile, which will become a threat to fur suppliers. Therefore, the recommendation for fur suppliers is to build a strategic alliance with their main market: 1. Not only cooperating with world class designers but more importantly connecting with local renowned designers to gain more relevant market information. 2. To promote direct buyer-seller relationship with fur manufacturers. A long-term direct business 72
Figure 69. Sarah Burton, 2014. Alexander McQueen, Paris fashion week.
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relationship will beneficial to suppliers to increase clients’ loyalty and consolidate their business. 3. Even though the suppliers have more initiatives than the buyers in the fur industry, but it is undeniable that their relationship is relatively interdependent. So that fur suppliers should collaborate with fur retailers to implement common marketing strategies to enhance the popularity of fur fashion. Another recommendation for fur suppliers is to develop new markets and new buyers as the fur product is increasingly focus on the fashion feature and will be used by more fashion brands. It would be a threat for those fur suppliers who are concentrating on Chinese market. Because this market is dynamic such as the influence of anti-corruption policy on the luxury sales (Sudworth 2013) and the slowing of economy growth. Moreover, the Chinese fur farming technology is gradually maturing (GAIN 2007). Government. William (2014) proposed in the interview that the risk of smuggling still existing in China which definitely should be given attention: “Many big cases have been uncovered in the last couple of years. Fur industry carries a stigma. If manufacturers feel unsecure about the future, how can they invest in branding and design for the long run? But to change all these, they must change their own behaviours first and stop smuggling.” It is Chinese manufacturers’ fault to trade illegally, however, Chinese government should take the responsibility to offer reasonable policy and supervisory system for fur skin imports as well as the fur trading. In addition, there is lacking of regulations about fur production and fur garment manufacture in China. The laggard fur farming in China has produced a numbers of negative news which need to implement regulation with international level, even though the cruelty in fur farm might be exceptional case but it has been considered as the whole fur industry. That is, the transparency of the fur industry is urgently required in China. The fur fashion brand. As the market segmentation has been described in this report, HLS should manage the brand and product more effectively and efficiently to serve relevant consumer groups rather than combining fur with fashion collection simply. It is also difficult for HLS to follow the western brand route like FENDI carry out a revolution of fur fashion in the hands of Karl Lagerfeld. The primary recommendation for HLS is to reposition the original brand and launch the subbrand: 74
Figure 70. AMERICAN LEGEND, 2014. Campaign. Source: www.americanlegend.com
Figure 71. Bo Brinkenfalk, 2011. Divine Elegence. Schön Magazine, 2011.
1. Original brand: A prestige fur product line which consititutes by fur clothes and fur accessories. It maintains a high price level and emphasizes on the high quality of fur skin and the authoritative luxury image of fur. It aims to serve consumers who prefer the classic style of fur coat, who want to buy a fur coat to deliver the wealthy identity or to be a member of elite social group and who need a fur coat in their occasion events like wedding.
2. Sub-brand: A high fashion collection with integrated product categories which uses a wide range of fashion elements and updated manufacture techniques. Fur is much more likely to be used as one of the material and combined with other fabrics in disguise. It is appealing to consumers who are fashion-forward, but indecisive about wearing fur. The price level is lower than the original brand as the cost of fur skin is lower.
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Figure 72. Harrods, 2014. The fur products in Harrods. London.
Other recommendations for HLS are to manage distribution channel and to coordinate marketing strategy accord with the above brand and product line extensions. In order to differentiate with other fur retailers especially the large fur shopping centre in China, HLS have to develop retail network through flagship store, leading department store and selective wholesalers for two brands separately. In this way, the competitive advantage of HLS should be offering greater value in terms of brand commitment to the design, the quality and the service. Moreover, as the fur fashion are promoted by fur suppliers mostly, HLS could apply similar strategies or participate in their strategies to share the benefit from the large extent. For example, to use the Origin Assured label could help to increase the level 76
of trust from the consumer perspective. What has been missed in the HLS marketing strategies is the communications with consumers. HLS should deliver positive information about the environmental impact, the animal welfare and the social responsibility which are the ethical issues people concern about most in the survey. It could be disseminated through sales training, various publications or marketing campaign. Moreover, the internet is the most important tool in this age should be used for one of the communication channel as both natural fur consumer and general consumer all state they get information from internet.
Implications This report has many practical implications. From the fur industry perspective, the fur suppliers in Scandinavia and North America remain domination of fur price, fur fashion marketing communications. They are more likely to be even stronger by understanding more of their main market and implementing more strategic alliance. From the fur fashion brand perspective, the appropriate management of brand and product could help to define the attractiveness of brand values and reach a broader market coverage. It also consolidates the sale performance by extending product categories to cope with changes of weather, economy and
consumer preference. The effective marketing communication strategy will increase the confidence of consumers to buy fur product and foster the positive perception of fur. Those investment in branding and marketing is the ways for fur fashion brand to increase profitability and to achieve success. Due to only one case study has been analysed in this report, further research involving other fur fashion brands will be useful to generalise the results and investigating other fur brands in different market level or other countries can help to identify more factors in relevance to the fur industry. Additional, the sample size of general consumer survey and fur consumer interview is too small to verify the public attitude toward fur fashion so that further testing is necessary. 77
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