LONDON — Is Estée Lauder a more powerful brand than Coca-Cola? Is Coach more resilient than McDonald’s?
When it comes to weathering the political ill winds of a company’s home country, fashion names — particularly luxury labels — appear to be more robust in Europe than mass-market brands in various other categories.
“Luxury consumers tend to decode brands a bit more than consumers of Nike and McDonald’s,” said Paddy Byng, Dunhill’s global marketing director. “They might reject a brand if the chief executive officer comes forward and says something political. But otherwise, I don’t think luxury consumers are going to be that literal, associating a brand with a government when they’re out there shopping.”
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In contrast, mass-market U.S. and U.K. brands, like Coke, McDonald’s, or Cadbury, are less likely to be purchased by people in such European markets as France, Germany and the U.K. because of those individuals’ negative feelings towards President George Bush and Prime Minister Tony Blair. That’s based on a global poll of 1,200 opinion leaders — college-educated individuals with annual income of $75,000 and up, who are considered business savvy. The survey was taken last June by Chicago-based Edelman Public Relations Worldwide, which released its findings this winter.
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The Bush administration is the least trusted in five of the six markets surveyed by Edelman — Brazil, China, France and Germany, as well as the U.K., and that has resulted in relatively low trust in American brands such as UPS, McDonald’s and Coca-Cola, compared with high levels of trust in those marketers in the U.S. Roughly half of the American opinion leaders surveyed, or 51 percent, said they trust U.S. businesses “to do what is right,” up from 41 percent in 2003, the survey found.
Among the Europeans polled:
- Thirty-one percent of the British said they were less likely to buy British brands because of the Blair government and 42 percent said they were less disposed to purchase American brands because of the Bush administration.
- Two-thirds of the Germans said they were less likely to purchase U.S. brands because of American government policies, and 65 percent of them said they were less likely to purchase British products for that reason.
- In France, 64 percent said they were less likely to purchase American brands and 59 percent less likely to buy British because of the policies of the Bush and Blair administrations.
Nonetheless, those respondents apparently have yet to put their money where their mouths are: There is no evidence of a decline in sales of such brands as Coke and McDonald’s that can be linked to the political disaffection of their customers in the countries surveyed, Edelman reported.
And when it comes to fashion and luxury, consumers appear to be even more willing to tuck their political sentiments under their Burberry rain hats, or sweep them under their Ralph Lauren rugs. American and British fashion and beauty brands — particularly those playing in the luxury arena — claim to be a step further removed from political antipathy. Executives with companies from Estée Lauder and Ralph Lauren to Dunhill and Pringle said in interviews that political views matter little when it comes to fashion and luxury goods.
One reason for the disconnect between politics and pocketbook is that consumers fundamentally are selfish, observed Richard Hyman, chairman of Verdict Research, a retail consultancy here.
“There is no doubt it’s cool [in Europe] to be anti-American right now,” Hyman said. “Given the choice, maybe some [European consumers] will opt for the non-American product,” he acknowledged. “But it’s not happening on a significant scale. There are some people out there whose political views define their consumption patterns.” Yet, those people may long ago have chosen not to buy British or American products, Hyman added.
When most people shop for anything, Hyman noted, “They tend to be rather egocentric and put themselves first.” For instance, a Polo/Ralph Lauren spokesman in London related, “The negative impact of the Iraq war has had no direct affect on our business, as luxury products continue to sell well.” Polo/Ralph Lauren saw same-store sales in Europe surge 20 percent in the third quarter ended Dec. 27, and 30 percent in Europe overall, he said.
It’s not only a lifestyle concept like Lauren’s that’s keeping customers loyal. A spokeswoman for Tom Chapman, who owns the multibrand, London-based designer boutique Matches and who is the U.K. licensee for Diane von Furstenberg, said sales have not been hurt by anti-U.S. or anti-U.K. sentiment.
Nor have Estée Lauder’s sales in the U.K. been negatively impacted by anti-American sentiment, a company spokeswoman said. “Estée Lauder is not political,” she stated. “Sales outside the U.S. have been growing at a very healthy rate.” Indeed, in the second quarter ended Dec. 31, Estée Lauder’s sales in Europe, the Middle East and Africa — markets where anti-U.S. sentiment abounds — surged 34 percent to $587 million and grew 20 percent in local currencies.
In fact, fashion players said the weak dollar is a much bigger foe facing U.S. and U.K. fashion brands than any amount of anti-American or anti-British sentiment. “The only thing that stops our U.S. customers from buying seems to be the [weak] dollar,” said a spokeswoman for the British leather goods brand Tanner Krolle. “We haven’t had any politically linked feedback at all from our stores.”
Her opinion was seconded at Pringle. “I don’t think the Pringle customer is taking politics into account,” a spokeswoman for the Scottish fashion house commented. “Or they’re thinking, ‘They’re just Scottish anyway,’ so it doesn’t matter,” she posited. “The real issue is that since September 11th, there haven’t been as many American tourists and, on top of it, the dollar is so weak now.”