Capturing brand value: D&G in-houses beauty line

Most fashion houses out-source their beauty product production, sales and distribution under a licensing agreement; Dolce & Gabbana’s move bucks the industry trend as it attempts to bring back control over the customer relationship and profits.

Why it matters

Ultimately, the beauty business is very different from the fashion business, even if they bear a surface-level similarity.

Most fashion houses tend to concentrate on their expertise, while using manufacturers and distributors with beauty expertise as a simpler way of cashing in on their inarguable brand value. Many attempts to do both have ended in disaster as costs, especially marketing, rise way beyond profits.

Size and history are critical to success. Chanel and LVMH, as Vogue Business explains in its report, have vast cosmetics arms. These are built as much on scale as they are on having developed a team of experienced professionals running the beauty show. To this end, D&G is hiring for between 130-150 new roles in Milan over the next year.

The reward

Should you get past the difficulties, the rewards are colossal. Under licensing, the brand would only see 9% of profits. There are no such limits on a directly controlled model.

Beauty is booming, but it is also changing. As a key entry point for many younger buyers, a successful integration can reap long term rewards. By going in-house – D&G’s current licensing deal will conclude production at the end of 2022 – the brand will need to exploit this position of total control over the online and retail experience.

Sourced from Vogue Business. [Image: Dolce & Gabbana]