Luxury Brands: Sink or Redefine

Early in the year, Trendwatching released a report detailing how companies should proceed in certain areas. In terms of luxury brands, the suggestion was to step outside the box. Others predict a glum forecast but remain focused on providing a truly luxurious product to a select few.

BrandZ Top 100 report was recently published and assured that “even the luxury category has gained in brand value by 10 percent, affirming the deep and enduring claim that well-crafted items and brand heritage have on our imaginations and wallets.”

It’s almost an affirmation of the success of established luxury brands that have had years to solidify their place in the market. Yet it doesn’t suggest that the luxury brands who aren’t necessary heavy hitters perhaps need to shake things up to remain successful in the long term. Especially with emerging brands that hope to take a slice of the pie, these companies really need to consider how they will do so.

Trendwatching’s What’s going to click in 2009? article wrote that, “in 2009, you define what constitutes luxury,” (emphasis mine) it “will be whatever you want it to be.” The report points to the hospitality industry for an example:

Rough Luxe is a new London hotel with small, funky rooms, some of which share a bathroom, while also offering fine wines, plush bedlinen, carefully curated art, and top-notch personal service. From their site: “Rough Luxe is a new way of looking at luxury as part of time and not only part of an object of consumption. The Rough Luxe definition of luxury is: time for reflection, personal encounters with people, nature, architecture and environment as well as food and social and cultural experiences linked to geographic locations.”

Whatever your catch-phrase, tagline or trend coining, trendwatching reminds that “whatever angle you may go for, luxury in 2009 will comprise much, much more than ostentatiously flaunting wealth (which, by the way, will still enjoy considerable popularity among emerging middle classes around the world).” Their call to action is an exciting suggestion to “find the right (status) trigger for the right audience, then coin it and build on it.”

Knowledge@Wharton sees things a little differently after the recent Wharton Marketing Conference. “What’s now “in” for marketing luxury in this difficult era is pampering the wealthiest and most loyal customers with everything from monogrammed shirts to personal in-home visits” they said. Instead of revolutionizing the approach, they’re opting for aggressively pursuing those who can still afford luxuries and not reaching too far down the economic ladder. It’s a matter of potentially tarnishing your brand to slash prices in order to salvage those relationships. Instead, it’s all about customer service for those wealthiest few.

Panelist Cori Galpern, worldwide marketing and advertising director for Tom Ford International, speaks to this saying,  “I think what we’ll see because of the economic crisis is that you lose a certain amount of that aspiration customer. Somebody who will buy a couple pairs of shoes over the course of the year is making other choices. The core for a luxury brand is a customer with very considerable wealth.”

The article noted an interesting figure from Randy Kabat, executive vice president of marketing and advertising for Prada USA that “roughly 50% of the firm’s sales come from just 5% of its customers.” The question then becomes who will remain the wealthiest.

Ruth Mortimer of the Brand & Business Blog wrote about The Luxury Institute’s yearly report reminding us that “everything is cyclical and this is a time when those brands with the potential to last in the long term need to invest more than ever.” The Institute’s suggestions for luxury brands are to:

• infiltrate the web,
• return to value-added luxury,
• salvage reputation through philanthropy,
• genuinely embrace corporate accountability,
• find brand carriers to act as trusted advisers of selective indulgences,
• and finally, make trust, authentication, validation and certification important issues for any luxury brand.

Interesting how different yet the same these two perspectives can be compared to Trendwatching’s suggestion of redefining luxury.