Luxury brand Nicole Farhi is in administration, but were the warning signs there to be seen?

Luxury brand Nicole Farhi is in administration, but were the warning signs there to be seen?

The collapse into administration of premium fashion brand Nicole Farhi last week illustrates perhaps just one thing: you never know where you are in luxury world. OK, so perhaps the signs were there. This is a brand that used to have a large flagship on New Bond Street with an attached restaurant (now home to Chanel’s recently opened UK flagship) and which moved around the corner to the smaller, and presumably lower rent, premises on Conduit Street.

Even so, it appeared to have lavished a fair amount of money on its new location and was midway through putting the finishing touches to a revamp when the axe fell.

The kind of minimalism that the current Nicole Farhi flagship seemed to embody does not come cheap, being reliant on expensive materials and pricey lighting schemes, not to mention props that would look good in expensive flats. And there was the product. Nicole Farhi merchandise has been known for expensive understatement for years and looked a hardy perennial if you talked to fashionistas who claimed to be in the know.

Yet this is another scalp claimed by the tough trading environment which until last week showed few signs of faltering. This, however, is perhaps the point. If you go looking for clues about the performance of a luxury brand, it’s probably best not to look at the shops and go out of your way to avoid flagships when reading the runes.

Such are the margins and the prices being charged for much of the merchandise in luxury emporia that you’ll rarely see more than a handful of people in a store at any one moment, unless it’s sale time, of course. Traditional notions of footfall do not really apply at this end of the market, as a handful of high rollers will probably be sufficient to keep things rolling at a lustrous pace.

How then do you assess a luxury brand and if you’re a department store operator how do you work out whether it’s a good prospect for your branches? The answer is probably rather more to do with shoppers than shops and it boils down to personal preference, with a few brands still managing to maintain a leading position. Establishing a foothold at this end of the market is a completely different proposition from almost any other part of retail and the same rules do not apply.

The other point perhaps is that contrary to popular opinion, luxury brands and retailers are no less immune to recessionary winds than others trading from less rarefied environments. The question is how many more are in trouble?