Luxury is no less immune to the impact of a global pandemic than any other sector. Indeed, the converse is true, a business built on experience, travel and discretionary consumption is always likely to suffer more. However it is important to recognise that, in many respects, although consumption has declined the desire absolutely has not. For those lucky enough to have maintained their income levels that desire has been switched closer to home with a boom in house refurbishment and an upgrade in tech and furnishings. Ski trips might be on hold this year but that money will simply be rolled into another vacation.
What HAS happened is a higher degree of scrutiny on purchases and some reflection on the true value. In many respects we get caught up in a spending loop. A 6 month break from our usual behaviours has resulted in a reevaluation - “Is this worth it ?”.
With that in mind here’s our thinking on the 8 important factors for luxury brands.
(1) Differentiation - be different or go home. Differentiation is absolutely vital and price cannot be the only thing that is different. When building the product proposition the question must be “Why ?” and not “Why not ?”. There has to be a lot of self-challenge before you enter a category. It’s the difference that provides the foundations for genuine growth. Newness is not enough. Never less than 3 points of difference and arguably never more than 5 - they have to be compelling, relatable and repeatable. Your customers must return to them when they advocate their purchase and loyalty.
(2) Create & Maintain Value - building value is critical, your product and brand must have a longevity. Enduring value way outpacing the original price. If you are finding that hard then you’re probably not in the luxury category. It also means there is a timeless quality to everything. Bought today or bought 30 years ago the relevancy and utility is indistinguishable.
(3) Golden Threads - the DNA that runs through every product and every touch point. Some threads are very visible and others less so. The consumer reward in being able to recognise those constants is what builds and maintains passion. The temptation to remove these from the product in the interests of cost must be avoided.
(4) Shun Celebrity - if there is a silver lining to this dreadful pandemic it has been the end of the corrosive obsession with celebrity endorsement. Paying large sums of money for some fleeting red carpet exposure for a brand never made any sense. Now is the time to cut them loose. If they are genuine lovers of the brand that’s different but we have surely gotten tired of a superficial relationship (the watch brands are very worst at this) which is of questionable value. Instead make your craftsmen and woman and customers the heroes.
(5) Ethics - sourcing, manufacturing, shipping. Customers want to know it all. The wrong answer is a roadblock to purchase. Now is the time to turn weaknesses into strengths. Bringing manufacturing closer to the point of consumption. Looking after staff and eliminating waste.
(6) The Retail Experience - social distancing makes experiences harder but no less important. And the experience relates as much to a digital purchase as one in store. The customer journey thought through to enlighten and entertain. Evaluate and test constantly.
(7) Local Audience - luxury brands pre-Covid had become ever more dependent on international shoppers and not the home market. This always seemed bizarre as consumers flew half way around the world to return laden with purchases they probably could have bought at home. Sure a degree of arbitrage is at work here but it has resulted in luxury retail almost freezing out a huge source of local business. It’s time to make a rapid adjustment to the demographic target. That might mean changing product mix and communications but brands have to wean themselves off travelling customers for the next 18 months - there might be some very positive surprises.
(8) Analogue Matters - with less face-to-face those brands who make the effort to engage at a distance with their customers and clients will always be remembered. The pandemic has weakened and broken the emotional ties between a customer and a brand. When the brand makes the effort to come to them it is appreciated. Digital has its role and analogue doesn’t replace it but the tactility of analogue is disruptive. It’s worth ending on an example. This past weekend British Airways mailed out their in-flight magazine, ‘Highlife’ to their most frequent flyers. We got one - wholly unexpected, once we had picked it off the mat, opened and ‘discovered’ we made a fresh pot of coffee and lost ourselves in it for almost an hour. Dream brand engagement.
Luxury is just as relevant as it has ever been - provide a reward and a justified purchase and the customer will respond but all the ingredients have to be there.
Good luck.
About Communicating Luxury
Since 2013 Communicating Luxury has been efficiently and effectively helping companies get the very best out of their brands. Our aim is to bring a fresh perspective, energize teams, provide actionable recommendations and delivery. Our Founder, Mark Izatt, has over 25 years’ experience within the luxury spirits, technology, goods, and service sectors.