For as much as collaborations between brands have now become commonplace, there are some partnerships that are considered textbook practice because of their remarkable success and ability to innovate the fashion industry.
The partnership between Karl Lagerfeld and H&M is certainly among them. The creative director of Maison Chanel established an unprecedented collaboration with the Swedish fast-fashion retailer H&M leaving many people confused about a partnership that seemed to defy everything we know about the fashion market.
Exploiting this sense of confusion the first genius move the two brands made was to communicate this unprecedented collaboration, through a remarkable commercial.
The ad took a lighthearted look at French bourgeois, depicting them in the mids of an existential crisis due to the apparent demise of the most luxurious haute couture brand.
If you missed the commercial, we’re posting it below, for context.
But obviously, this collaboration made a lot of business sense, and if we look at the way the two brands approached their respective markets, we’re quick to notice that H&M and Karl Lagerfeld have a lot in common, if analyzed under the right lens.
Both brands had a lot to gain by partnering together and for the purpose of our case study, we can look at the benefits that Karl Lagerfeld and H&M gained from this collaboration.
Let’s start our analysis from the more obvious benefits associated with H&M.
What H&M had to gain from the partnership
H&M seemed the most obvious winner from the partnership as a collaboration with a high-end luxury brand can help the fast-fashion retailer gain many valuable associations.
Let’s see the more important areas of impact for H&M.
H&M Could Develop a Stylistic Identity
Fast fashion companies are global organizations that base their business models around achieving high volumes of production which are distributed globally with fast inventory turnover.
In order to please a “global customer,” these brands cannot pursue a particular fashion style, as any product deviation from global trends would impact the supply chain.
In many cases, fast fashion companies have been accused to simply “copy the look” of high-end brands and bringing high-end collections to market faster and at a lower price.
As a result, customers develop an attachment to these brands which is simply connected to their ability to save money, but not connected to the identity of the brand from a stylistic perspective.
By partnering with Karl Lagerfeld, H&M was able to show that in fact, they can do so much better than simply copying. With this collaboration, the brand showed that Chanel’s look could be affordable for once, thanks to their ability to be true disruptors and bring style (and not only convenience) to the masses.
Implementing Luxury Distribution Strategies
In the mass market, like the one where H&M operates, collections are sold as commodities or undifferentiated products. Because of this, the approach followed in distribution is intensive distribution.
The focus of intensive distribution is to make the product available anywhere it can possibly be sold. Intensive distribution is the strategy adopted by fast-moving consumer goods and can be found in fashion too.
In order to build upon the hype of this new paradigm-shifting partnership, H&M was able to use Karl Lagerfeld’s collection through the approach of artificial scarcity. By using only selected locations, and a limited number of garments, the brand tried to recreate a luxury experience for the customer, which would meaningful and memorable because of its high emotional impact.
As a result, the impact of the strategy on the customer’s mind may be much more long-term than the actual collection sale in itself.
As the last element of benefit, we can certainly consider the fact that due to the highly innovative strategy developed by the brand, H&M made a lot of waves in the industry and was able to be seen as an organization that was able to embody the creative spirit of fashion, where businesses need to be inventive not only at the stage of collection development but also through marketing and communication.
As we’ve seen there’s quite a full list of benefits for H&M, but what about Karl Lagerfeld and Chanel? Let’s look into that in the next section of our post.
What Karl Lagerfeld and Chanel had to gain from the partnership
Even if H&M may initially seem like the brand in the position to benefit the most from this collaboration, in actual facts, Karl Lagerfeld and Chanel had much to gain too. We’re now going to focus on the benefits that the French Maison was able to tap into, thanks to this innovative co-branding approach.
The Cool Factor
First and foremost, Karl Lagerfeld and Chanel were able to acquire through H&M a massive cool factor, given by the innovative nature of this initiative. The brand showed that it was able to take itself not-so-seriously and showed to be open to new generations of consumers and new dimensions of fashion. This communication revolution created big waves and made Chanel not only one of the most famous luxury brands, but also one of the coolest in 2004.
Acquiring New Aspirational Customers
As Chanel and Karl Lagerfeld are haute couture brands, most of their garments are inaccessible to the average fast fashion shopper.
Because of the fact that H&M customers could never buy a Chanel garment, there was no opportunity to build a relationship with them, one that could potentially escalate in making them fully-fledged lifetime customers.
By allowing them to purchase a Karl Lagerfeld garment at a very low price, that journey could now begin, and because of the aspirational nature of haute couture, some of them could in time become Chanel aficionados.
This approach is echoed by the overlapping customer segmentation the two brands shared. If Chanel’s customers are affluent and are therefore able to buy high-ticket items, H&M customers could be fashion victims, meaning that despite not having the same amount of resources, they may spend a disproportionate amount of their income on fashion products. This overlap in terms of fashion expenditure shows the potential to build upon this new customer category and benefit both brands.
But not all H&M customers are fashion victims, so what about those who still can’t afford to buy from the brand? We’ll address that in the next section.
Selling Masstige Products to H&M Customers
As we just mentioned, not all H&M customers are fashion victims. In fact, most of them are looking to save money, not spend more of it. So what can Chanel and Karl Lagerfeld do, to monetize this new audience which through the Karl Lagerfeld collection just started a journey with the brand?
Well, what the brand can actually do is to use its masstige products to monetize this audience. Masstige products like fragrances, cosmetics, eyewear, and leather goods are the perfect product to sell to newly acquired customers who want to keep the connection to the brand and partake in the myth of Chanel.
As a result, we can see that Chanel did have a lot to gain too and that the two brands were able to create a unique synergy between them.
Great, now that we’ve discussed all relevant areas of debate, let’s move on towards drawing a few conclusive remarks.
As we’ve seen there was a lot to unpack in this case study analysis. It was really important to notice how mutual the benefits of this collaboration were and how much both brands had to gain from breaking the barriers of traditional fashion markets.
The impact of this successful strategy has been long-lasting and has inspired many brands to follow suit, by developing new strategies focused on building luxury retail experiences around lower-level products, in order to increase their profit margins and connect with new customer profiles.
If this is something you’re interested in reading more about, in this article, we discuss Nike’s strategy to use collection drops to enhance the value of their limited edition sneakers.
On 440 Industries’ blog, you’ll be able to find a lot of useful resources to explore the fashion business further and learn how to use marketing strategies to develop a successful product, attract an audience and even start a business.