Luxury brands are hitting the street, literally. Street-inspired fashion is popping up all across the luxury spectrum. It has created such pairings as Gucci and Dapper Dan, Louis Vuitton and Supreme, Ralph Lauren and Palace, Fendi and Fila and Chanel and Pharrell Williams. Most of these are limited-edition collaborations, but LVMH brought on Virgil Abloh, of Off-White fame, as men’s design director and just launched a Maison under pop-icon Rhianna.
Looking at these brands’ streetwear offerings, I wonder where “my” luxury brands are. But that is exactly the point. Luxury streetwear is for the next generation, not mine. What confuses me, and quite frankly turns me off as a customer of these iconic luxury brands, doesn’t seem to be doing the same thing to the younger generation.
Passing Fad or Long-Term Trend?
While estimates of the streetwear market size are sketchy, Statista estimated it approached $200 billion globally in 2015, which was a year or two ahead of its time when streetwear began to hit luxury runways. Chances are it has more than doubled since that time.
As for the luxury segment, Bain and Altagamma in their Spring 2018 luxury update credited streetwear with driving dynamic growth for the personal luxury market in 2017, but oddly it gets no mention in the current report. Perhaps the trend has passed; more likely, it’s gone mainstream, and so is not worth calling out.
Demand for streetwear has also opened new e-commerce opportunities to pedal its wares, both mainstream and luxury. Fashionista reported investors have ponied up nearly $200 million into online streetwear marketplaces including Goat, Grailed, StockX, Stadium Goods, Hypebeast and Highsnobiety. And Fast Company announced Supreme was the first streetwear brand to reach unicorn status in 2017 when The Carlyle Group acquired a 50 percent stake in the company.
What Does Streetwear Mean for Luxury Brands?
To get a perspective on streetwear’s long-term impact on the luxury market, I sat down with Dr. Martina Olbertova, founder of Meaning.Global, and arguably the world’s authority on brand meaning. Her company defines its mission: “We explore the shifting cultural meanings in society to help you understand and navigate the world and create cultural relevance.”
As a class of goods, luxury streetwear is first and foremost a signpost in shifting cultural meaning both within the culture at large and in luxury brands’ internal corporate culture. Olbertova doesn’t see the adoption and expression of streetwear aesthetics as threatening the integrity of luxury brands. Rather, she sees the danger in luxury brands adopting streetwear’s here-today, gone-tomorrow focus and becoming irrelevant.
“Streetwear will not kill the luxury market, but the luxury market will kill itself if it starts operating and behaving like streetwear,” she says. Having just published a study on redefining the meaning of luxury, Olbertova believes luxury brands have much to learn from streetwear.
To its young customers, streetwear represents a tangible expression of meaning, who use it to express their individuality. “It capitalizes on the cultural zeitgeist. In other words, it’s both customer and culturally relevant. It has a clear sense of meaning in the here and now.”
Luxury brands need to mimic how streetwear has imbued its expression with deep cultural meaning relevant to its target customer, but not copy its motives or methods. “The solution isn’t about mimicking streetwear, but developing a new culturally-relevant meaning of luxury in the future, just like streetwear is culturally relevant to people today,” she says.
Imitation may be the sincerest form of flattery, but luxury brands can’t imitate streetwear’s focus on utility and its “see-now, buy-now” formula. In pursuit of growth, luxury brands are pivoting away from creating lasting value through deep cultural meaning to become more like high-street’s utility brands – “Consumed with trends, short production cycles, and fast consumption ending up buried in meaningless,” explains Olbertova.
Efficiency or Effectiveness?
Olbertova sees the danger in luxury brands’ obsession with streetwear resulting in a shift away from effectiveness toward efficiency. “Effectiveness and efficiency are two vastly different concepts,” she explains. “Efficiency is all about minimizing costs and finding new cost-effective channels to achieve similar results.” Lasting value is sacrificed in favor of that efficiency.
Effectiveness, on the other hand, is about maximizing value, which is what luxury brands need to aim for. “It is about imagination, creativity and ingenuity and human capacity to create new value and deliver it in unexpected ways,” she says. Luxury brands are first and foremost value creators. Olbertova reflects, “the strategy is opposite to the high-street model. It’s not about efficiency, it is about effectiveness. You have to create value in order to deliver value and get results.”
As luxury brands strive for efficiency, they put their very essence at risk by eroding value, rather than creating it. She calls on luxury brands to add more real and lasting value to customers, not “borrow codes from streetwear in a desperate effort to appear cool, current and on trend.”
Restoring Luxury Brands’ Meaning
“The core problem here actually isn’t about streetwear at all, it is about what streetwear represents to luxury brands. That is the issue,” Olbertova shares. They should mimic the streetwear model only in so far as it delivers the means for customers to express their individuality by tapping underlying themes in the culture.
Luxury brands are threatened by losing sight of the deeper meanings, themes and forms of individual expression their customers desire. “They should adapt and lead from their unique essence to add more value,” she continues.
“Luxury brands should aspire to create a new more competitive model to deliver unique value to their customers and use streetwear as an inspiration for boosting their own relevance, not to replicate their success via imitation.”
Olbertova gives luxury brands a call to action to get back to what made them great in the first place and project that forward, not undermine value creation by caving to what is popular now, but not tomorrow.
“Luxury brands have always been the champions of long-term value, where the idea of longevity has been one of their key pillars to justify the increased price. Luxury costs more because it means more,”
Olbertova concludes, “Meaning decides whether the brand thrives or plummets. Brands need to rise above the clutter and define new ways to express their unique essence – which is tied to their brand value – to attract new and existing customers in culturally relevant ways.”
Will streetwear be the end of luxury as we know it? Yes, I am afraid it well could be. A bi-furcated brand aiming high and low risks losing its meaning to all its constituents. As much as luxury brands need to bring in the next generation of customers, if they increasingly talk the language of the “street,” they risk losing their core customers who likely don’t understand it. Appropriating casual streetwear imagery threatens the sophisticated positioning these brands have worked so hard and long to cultivate.
The bottom line? Streetwear is a distraction causing luxury brands to take their eyes off what they need to focus on: creating lasting value through deep meaning.
Streetwear is marketing, pure and simple, intended to drive sales today. It is not about building lasting value of a brand tomorrow. And as we all should realize, the chief value of luxury brands to its customers and stakeholders is in that equity, not marketing.
An edited version of this article first appeared in The Robin Report.