Luxury Brands Have An Innovation Gap: Here’s The Fix

In the classic Annie Hall movie, Woody Allen’s character memorably said, “A relationship is like a shark. It has to constantly move forward or it dies.”  Brands are a lot like sharks. To avoid dying, they’ve got to keep moving forward and that means they must innovate.

For legacy luxury brands steeped in heritage, innovation presents a challenge. Too much change implemented too fast can threaten their winning calculus. That’s why so many luxury brands were slow to adapt to the ecommerce revolution. Hermès, Chanel, and Louis Vuitton aren’t about to mess with the formula that created their legacy and keeps them in the black.

All brands – even luxury brands – must adapt to change in the market, and innovation is the strategy that drives business growth and progress. Yet Unity Marketing’s latest survey among some 450 executives who work in the luxury industry found that innovation ranked number 10 out of 14 attributes that make luxury brands strong and resilient.

Topping the list were devotion to quality (71%), craftsmanship (63%), authenticity (62%), commitment to service (56%) and artistry/design (52%). Being innovative and forward-thinking wasn’t close at 32 percent. Regrettably, innovation is not top of the mind when it comes to luxury brands; however, it should be.

Even more troubling is where luxury insiders hope to find innovative new ideas. They are looking for innovation in all the same places, so what’s the chance they are going to find a truly innovative new idea? At the bottom on the list of the best places to discover innovative ideas: Building a formal innovation culture and tapping insights from formal market research and big data/AI.

Consumer psychologist Chris Gray, The Buycologist, explains this is a classic example of the cognitive bias called the “streetlight effect.” We have a built-in, natural cognitive bias to search for things where they are easiest to find, not where they are most likely to be.

Industry insiders are looking for innovation where its easy and where every one else is looking, instead of where real innovation is likely to be found. Luxury brands need to look beyond the proverbial streetlight to find innovative opportunities to advance their brands, and that takes visionary leadership.

“Near the bottom of the list are perhaps the greatest tools for divining the market: Big data/AI and creating an organizational structure to drive innovation,” observes Chandler Mount, Affluent Consumer Research Company. “Luxury companies must cultivate an innovation mindset in their organization through broad-yet-specific understanding to shape strategy and use all the tools available to power it forward, such as Big data and AI.”

Luxury companies must do more and do it differently from their competitive cohort. Most companies are doing basically the same thing: talking to their customers and looking at the news.  These are all good things, but the insights gleaned from these activities are largely anecdotal and don’t have research rigor or statistical validity. Big data analytics and professional market research provide that.

“The news is largely ‘bought & sold’ media through the coordinated workings of brands’ PR machines and the media partners that feed the results to their audience,” Mount says. “That nearly 70% of luxury companies are persistently scanning the news for insights suggests that many companies are making strategic decisions based on bad information, bad in the sense that B&S media is not necessarily true facts.”

Get this 30-page white paper with ideas and actionable strategies that will bridge the innovation gap for luxury brands.

Comments Off on Luxury Brands Have An Innovation Gap: Here’s The Fix