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THE POINT: Luxury brands must re-ink boundaries between Absolute and Prestige offerings, deepen core equity and innovate from this renewed clarity. Now.
LUXURY’S 2010 INNOVATION COLLECTION
Even the gilded are feeling gutted.
Bernstein Research forecasts a 15 percent drop in luxury-goods sales for 2009. Christian Lacroix recently filed for bankruptcy. Burberry Group reduced staff. And a flaunting it culture has been replaced with frugality chic.
Though it’s tempting to just go fret under the Frette, now is the moment for luxury companies to trade in wistful dreams for tangible, growth-sparking innovation plans that build competitive advantage.
CHOOSE SIDES
While Kumbaya works as a spiritual ethos, it fails as a luxury strategy. Innovating for renewed growth starts with sharpening the segmentation that’s blurred over the past decade, and once again being clear about where your brand really belongs.
Bain & Company defines ‘absolute’ luxury brands like Chanel, Hermès and YSL as elitist, with pedigree appeal to the world’s wealthy. Prestige brands – think Coach, Ralph Lauren, Donna Karan – are for a wider, achieving audience. Both categories have abundant assets from which to build; but success in today’s climate demands re-inking the boundaries, and being disciplined about innovating within them.
What this means for your business depends on which side of the divide you live on.
Absolute luxury brands: Stop the misguided search for sexy and leverage the sexy that’s right under your nose: your craftsmanship, your people and your story.
Prestige brands: Be proud grown-ups instead of playing little sister to absolute luxury. Serve up what’s sui generis special about you: your modernity, your style and your energy.
ABSOLUTE LUXURY’S ROADMAP: DON’T RECRUIT. RE-ENGAGE.
Narrow & Deep is the New Black
Broad footprints and stratified brand architectures, peppered with less expensive branded goods for wider audiences, carry a real risk of alienating your well-heeled core clientele at the moment when you need them most. Take a cue from the restaurant world. Tourists come in good times, and leave in bad ones. Making your loyal locals feel like special insiders is what carries you through times like these.
Move forward by deepening a refocused portfolio. Draw distinctions in high relief. And do it without snobbery. Cater to the customers who have always been – and will be – able to afford your wares. Innovation that radiates tradition, legacy, intrinsic quality and enduring values will re-engage your core, and remind them why they always loved you.
Innovate at the Core, Not the Edges
Here, innovation needs to not only make the cash register sing, but also remedy the recent sins of luxury companies over-extending their product reach, and even pushing beyond the realm of their business. The hasty shuttering of the Chanel Mobile Art Tour after its Central Park opening speaks not only to unfortunate timing, but to how far removed it was from the brand’s core. Such innovations should be shelved in favor of genuine storytelling – the exclusive territory of heritage-rich Absolutes.
Chanel, for instance, has a great story, exquisite products and a great protagonist in its founder. It should innovate from those assets. Don’t give us overblown art. Bring us a new 1940’s handbag representing what Coco Chanel herself would have worn during the tough times of German occupation, filled with only the necessities a woman needs to survive: lipstick, perfume and courage. An innovation like this exemplifies Absolute luxury’s new sweet spot: timely yet timeless, value with values, focused solely on the brand and its history, re-creating a time and place with relevance and meaning to what luxury customers are feeling today.
Absolute Future
This disciplined mindset does not preclude absolute brands from catapulting your clientele into an optimistic future. Defining the new pinnacle of modern craftsmanship is well within the Absolutes’ remit, and a move like deploying sublime new techno-fabrics that sense and adjust to shifting temperatures and humidity would merely be a new manifestation of an atelier obsessed with the details of greatness, while offering catalytic permission to renew wardrobe investment spending by currently inert customers.
Birthrights Reasserted
Absolutes have let mass brands hijack the cues and conversation of luxury. The days of sharing that equity must end.
Luxury brands are about tradition, craftsmanship and obsessive care. At Boucheron, France’s fine jeweler of desire, workers must apprentice for 14 years before they qualify to apply. So please, Absolutes, make your knowledge, your painstaking process and your people a defining thread of your innovation and how you celebrate it.
And more than ever before, where a luxury company creates is crucial. Absolute luxury brands aren’t made in China. Hermès has a two-year waiting list for a Birkin bag. Hermès could produce these bags in China to meet the demand, but they don’t. Hermès hews to its heritage–keeping its status intact and customers waiting happily. Selima Optique, a luxury eyewear retailer, has resisted cheaper components from China. The designer refuses to compromise the shine and finish she demands.
Sublime Service
These unrelenting standards also must extend to service – before, during and after the sale.
The Wall Street Journal reported on a “new solicitousness” at luxury boutiques that have wisely dropped the snooty sales approach. Vivre’s Eva Jeanbart Lorenzotti concurs with this return to etiquette, noting that the manner in which a company cultivates relationships is of greater importance than the actual product. The biggest wins will go to those that go even further to innovate in service.
Why wouldn’t Hermes want to offer a service contract to have that Birkin placed in a humidor and re-conditioned each year, creating new revenue streams un-reliant on consumers making the leap to buy new stuff, while taking reverence for the integrity and craftsmanship of their products, and their relationships with consumers to new heights?
Caring, courteous cultivation is not only the new CRM, it’s a winning value proposition in a moment when Absolute luxury needs one.
PRESTIGE BRAND ROADMAP: EMBRACE ADULTHOOD, BUT INNOVATE FROM THRILLING POSSIBILITY.
Pride in What You Are
Prestige brands, you have arrived [albeit in a recession.] As the French say Majeur et Vacciné, you’re of age and vaccinated. Let your brand be a grown-up and stand on its own value proposition, without envious upward looks at the Absolutes.
A Coach handbag is a stylish, prestige purchase, not a Louis Vuitton wannabe. Coach is not absolute luxury, and that’s a good thing. Don’t fight it, revel in it as your unique offer of authenticity, a source of freedom and an innovation catalyst.
Freedom and Energy
Having worked hard at establishing an adult identity for a willing customer, Prestige brands are now free to exploit their relative youth by inventing the next generation of memorable products for a world longing for a shot of adrenaline.
You’re in the best position to provide that thrill of the new. As consumers cut overall spending, we’re already seeing a growing appetite for “that one thing” that energizes our spirits. Hot pink trenches were a great example seen this past spring.
Socialize Service
As the industry’s “young adults”, you should be luxury’s groundbreakers in social networking. But too many Prestige brands just aren’t there yet and need to lean in hard and fast.
The Internet remains underutilized as what it really is: the world’s shopping mall. For Prestige, this is about making the leap from the false comfort of having some e-commerce presence, to pioneering and leveraging untapped vectors like social shopping dynamics in digital sphere.
Gilt.com has built a powerful business around the individualistic desire to score scarce sample sale goods. Why not create virtual dressing rooms where friends gather to help put together a total look for a customer – complete with IM debates on which separates, which shoes, which color, which accessories – framing the interaction around what sorts of items to buy, not whether to buy.
The Power of Partnership
Social energy of a more commercial variety can stoke your product development efforts. You’re less bound by legacy, as are plenty of similarly nimble potential partners. Incite cross-category collaborations to ignite growth.
Imagine Marc Jacobs canoodling with Nokia to create man-bags and handbags with incorporated telephony – your bag could not only fit your phone, but find it and vice versa.
It’s all about internalizing the present and daring to have your own voice and vision.
BE A STRONG, CLEAR FORCE
Amid the current confusion, Absolute luxury and Prestige brands alike have an opportunity to refocus, regroup and lead with renewed clarity. You know you need it. So do your customers.
Innovating for a recession begins with remembering who you are, and feeds growth through bold new initiatives born of that clarity. Making decisive, innovative moves also puts control back in your hands. Far better than being moved by today’s merciless market forces or gazing at tea leaves.
You can set yourself on the path to growth right now. See your current assets as the fertile soil they are. Start planting new seeds and tending to that ground like never before. The harvest may take some time, but it will be bountiful indeed.