luxury in crisis – should luxury brands be worried
Luxury is in an existential crisis. Market forces are driving a constant redefinition, and some would say a debasement of the category. Is luxury really changing, or have we merely lost our sense of what it really is, and always has been? And should luxury brands start to get worried? What do you think?
The Equus view
Some people claim that the only constant of the luxury brand category is the way it changes. We beg to differ.
Luxury has become an elusive concept. Much has been written about how the definition of it has changed over the years, to the point that the only constant of the category appears to be how renegotiable it is. As luxury icons like LV bags become increasingly affordable and ‘Masstige’ products crowd the so-called luxury space, a plethora of new definitions like ‘Metaluxury’ have been coined, as a way of distinguishing true luxury from its mass-market imitators.
On the opposite side of the debate, as high-street retailers like H&M collaborate with luxury designers to make luxury products more accessible, others trumpet the ‘democratization of luxury’ as if this is its new, more socially acceptable face. While one camp welcomes luxury’s newly minted democratic credentials, the other asks, if luxury has become this cheap, what does that say about the skills of those who spend a lifetime crafting traditional luxury products, and the values of the people who buy them?
Good question. In our view, luxury isn’t a label you can stick on a product regardless of its provenance, neither do any of its redefinitions represent a change in its fundamental essence. Yes, luxury brands have always had to move with the times, responding to the changing needs of customers. But beneath that mutating surface, true luxury brands have always been underpinned by a depth of enduring qualities, timeless values that never change. All of these timeless values have relevance for the debate.
So what are these enduring qualities and how can they help us assess what is happening in the category now, and where luxury might be moving in future?
The word ‘Luxury’ has its origins in the Latin word ‘Luxus’ meaning ‘extravagance’, or ‘sumptuous enjoyment’. In everyday usage it still has that association, being the state of mind created by the possession and enjoyment of a luxury product. But there is a difference between the feelings created by a luxury product and the intrinsic qualities of the product itself, and herein lies the confusion around the definition of luxury.
While luxury is often associated with the pursuit of enjoyment and status, the most enduring hallmarks of luxury products themselves are the processes and values which have shaped their creation. We would describe those hallmarks as excellence, history, authenticity, and customisation. To these hallmarks we would add another two, patronage and exclusivity, which are not intrinsic to the product itself but have a huge influence over the growth of the luxury brand, in the mind of consumers.
These six unchanging hallmarks are what we would call the DNA of luxury, and now we will briefly unpack each one in turn.
The DNA of Luxury
Excellence. One of the sources of the current dilution of the meaning of luxury is the overuse of the word ‘quality’ to define luxury brands. Quality might be good, but how do you define it? It is relative– there is no absolute standard of quality. It is also materials-focused and inanimate. Quality-based definitions of luxury issue in gold-leaf coated hamburgers skewered by diamond-encrusted toothpicks. There is no intrinsic design intelligence behind this concept of luxury. Neither is it enduring. Excellence on the other hand implies intelligence, intention and craftsmanship. It also implies a restless ambition to create the very best, and an enduring legacy. Excellence is about art, and is an end in itself. Many luxury brands came about as a result of the pursuit of excellence, for its own sake, and not first and foremost for profit. The pursuit of excellence lies at the very heart of the DNA of luxury.
All luxury brands have a history, a compelling story of who they are and where they came from. This is about the traditions, milestones and enduring principles that led to the development of the brand as it is now. But history isn’t necessarily about being old, nor is it about standing still and remaining the same – luxury brands can be comparatively young, and even if they’ve been around a long time, should always be evolving and progressing. They should be an ongoing story in which the traditions and lessons of the past shape the future of the brand, in the right way. So a sense of a luxury brand’s history is an essential part of its DNA. But this history is dynamic, and needs to be reinterpreted in each age in a way that matches the tastes and needs of a contemporary audience.
Connected with the notion of history is the authenticity that comes along with history. Authenticity is about a sense of rootedness in a particular time and place, with all the richness of local detail and customs that implies. Many luxury brands are defined by their countries of origin and cultural traditions, and that is what forms a big part of their brand story. It’s no accident that the top destination for mainland Chinese tourists is France, and French brands are a huge part of the reason they go there. French luxury brands have become part of the destination brand that is France, and the same could be said of Italian, Swiss, British and German brands too. Luxury customers are looking for authenticity and a sense of a culturally rooted tradition, even if the product is not necessarily ancient. And this idea of authenticity is heavily tied to a sense of place and culture.
For every craftsman there has to be a connoisseur. No luxury brand exists in a vacuum, indeed they could never have become what they are today without the customers who perceived their true value and paid good money to acquire them. Their patronage became an endorsement of those products, and their unique requirements and tastes went on to shape the evolution of those luxury products, as well. The link between jewelers and their patrons is an obvious case in point, but in some cases that patronage is made obvious. For example, there has been no greater link between patrons and the luxury products they bought than that between the Royal families of the world and their various suppliers. These royal endorsements have effectively become benchmarks of quality, as well as important fixtures in the overall brand story. And then there are the wealthy customers who endorse a luxury brand by using it, such as famous actors, models, politicians and sports personalities. In all cases their patronage is key to the success of these brands, and for this reason patronage has become another strand in the DNA of luxury.
For every patron there is some sort of personalisation. An abiding feature of luxury brands is also the most changeable: they are to one extent or another a bespoke product. Many of today’s more mass-produced ‘luxury’ products began life as bespoke items made for individual customers, such as the first trunks made by Louis Vuitton in the 19th century, or more recently, the legendary bag made by Hermes for Jane Birkin. Either individually or collectively, luxury products are tailored to the tastes and needs of a particular kind of customer. Hermes, for instance, provides a bespoke Sari collection in its growing India market. One of the consequences of the democratisation of luxury is an increasing trend back towards bespoke products, in order to restore the exclusivity and status normally associated with luxury. Which brings us to the sixth and final hallmark of luxury, exclusivity.
One result of the crafted nature of traditional luxury brands and the quality of the materials that go into their manufacture, is that they are usually time consuming and costly to produce, and often limited in their number. Consequently they are rare and extremely expensive. Limiting production is often a deliberate strategy, but for the most successful brands with the greatest reputation, demand always far exceeds supply, and therefore the price rises even more. Witness the Birkin bag, which even in its ‘standard’ spec has a waiting list of 3-6 months, and is therefore the most expensive handbag in the world. Which is one reason why it is such a status symbol. But what is intrinsic to luxury is its exclusivity, not the status it confers, and this exclusivity is driven largely by rarity.
Branding luxury – a way forward
So there we have it, the six DNA strands of luxury are excellence, history, authenticity, customisation, patronage and exclusivity. It is these hallmarks of luxury that give it its enduring appeal, a pedigree which is assuming a renewed importance today as ‘Masstige’ products dilute the category. And this renaissance isn’t just a reactionary return to a nostalgic past. The social media revolution is driving a much more discerning generation of luxury consumers, whose spending power and sophisticated taste make them hungry not just for craft-based quality and greater customisation, but also for a sense of authenticity, and for enduring values that they can identify with. So in a world where people assume that even luxury products have been produced cheaply in a factory in Asia, luxury brands need not just to return to their roots, but work harder than ever to demonstrate their quality credentials.
Which is where branding comes in. In our view, if luxury brands are to make the cut and connect with the new generation of wealthy luxurians, it is the above DNA strands that need to be identified, understood and promoted in the way they are branded. In short, they need to become more accessible not in terms of cost, but in terms of the way they tell their story and make themselves better understood. Which means considering how to build their brands in a consistent way across all the brand touch points, not least on social media.
In Part 2, we will be looking more closely at the future of luxury and identify several key trends in the way luxury brands are developing and being promoted, in order to stay ahead.
Don’t forget to read our last designer debate – design vs strategy.