The latest news cycle has revealed chasms growing in the land of luxury:
- In late July, LVMH, home of storied Louis Vuitton brand, reported that first half 2016 sales of its flagship fashion and leather luxury goods segment dropped .8% from same period last year.
- Then, on the cusp of NY Fashion Week, Tim Gunn took the fashion industry to task for ignoring the needs, desires, sizing and plentiful dollars of real women, in favor of 6 ft. tall, size 0 ‘glamazons’ in an op-ed piece for the Washington Post.
- On September 12 the Wall Street Journal reported the ‘latest sign of persistent weakness in the luxury-watch sector, which accelerated earlier this year,’ on news that Swiss watch exports have declined drastically in 2016.
- Bloomberg followed with news of that “Gloom Descends on Luxury-Goods Industry” as Hermes cut its 2016 growth forecast and Richemont announced first half earnings expected to decline by 45%.
- And Fast Company just published a ‘long read’ investigation into the decline of such stalwart American luxury brands as Tommy Hilfiger, Calvin Klein, Coach, Michael Kors, and Donna Karan, with a look at how new emerging brands, like DSTLD, Everlane, Cuyana, AHAlife, 1Atelier, and Vineyard Vines, have captured attention of the next generation luxury customer. The fall of Ralph Lauren’s title as luxury leader in the U.S. gets special emphasis.
That Ralph Lauren brand has lost its luxe is no news to me, after a recent shopping experience. I ordered an empire waist dress from the company, which was delivered without a side seam zipper. Admittedly, it wasn’t a dress from its high-end range, but it wasn’t cheap either and I ordered it online, so I wasn’t aware this essential detail was missing.
Every woman knows that a zipper is an absolutely essential detail, dare I say luxury, for getting into and fitting in this style of dress. But the company chose to cut corners and save manufacturing costs at the expense of customer comfort and satisfaction. That killed the Ralph Lauren brand for me.
The essential problem for luxury brands today is that they have forgotten that the customer, not the brand, its designers and its executive team, are the final arbiters of what luxury is. They’ve opted for beautiful, aspirational luxury branding, the ‘smoke and mirrors’ of marketing.
They tell a luxury story that fits their image and ideal, not one designed and focused on the customer. But now the internet has pulled the curtain back and exposed the ugly underbelly of these luxury brands, and it’s not pretty. The reality doesn’t live up to the image and today that is a fatal, brand-killing flaw.
So what’s a luxury brand to do?
Luxury brands need to calibrate around the customer, their needs and desires, and recognize that the affluent customers they target have the power and ability to buy what they want, when they want it and are willing to pay when the value is there. But often today the value is being forsaken, all the while the prices keep going up and up. Here’s my prescription:
Research your brand’s customer and target customer
I know most luxury brands believe they do plenty of market research, including ‘big data’ dives and social media ‘listening.’ But no survey or structured data analysis can substitute from asking your customers, and those you aim for, what your brand means to them, what your brand’s luxury value is and how they want it expressed and delivered.
This requires qualitative market research, not surveys, which are best conducted by trained and experienced qualitative market researchers. Such research can be focus groups, in-depth interviews, in-home and in-store interviews and ethnography, but the answers to what your brand means and what luxury your brand delivers ultimately must come straight from the ‘horse’s mouth’ – and that’s the customer.
Develop system for communications from the shop floor
A much overlooked and ignored resource for gathering the point of view of the customer is right under your nose: the sales associates who every day rub shoulders with the customer. What they hear, what they know, and what the customers are telling them needs to communicated up the chain of command.
Clearly luxury brand executives are most comfortable with top down communication, but they need to pave a path for bottom up communications too. The sales staff, while their primary focus is selling, are an incredibly valuable resource for customer insights. Use them and listen to them.
Be prepared to tell new stories of luxury
At its core, luxury is a state of mind, not a brand or a price point. Market research can reveal new insights about what your brand means, and the voice of the customer communicated by the sales associates can add understanding about what you are doing right, and wrong, for the customer. But those insights won’t help if you’re not ready to put the findings into action. It may require telling new stories, in new ways to your now and future customers.
Too many old luxury brands are trapped in their traditions and wedded to their old stories that simply don’t mean that much to today’s younger, more informed and educated affluent consumer. It’s why emerging new luxe brands, like Shinola, Everlane, Warby Parker and RH, are finding a ready audience for their new style of luxury and taking share from the established players.
This doesn’t necessarily mean you have to forsake the qualities and values that made your heritage luxury brand great, but you need to keep examining its roots, pruning and shaping the strategies and the messaging to keep your luxury brand vital and relevant.
Today too many luxury brands focus on new marketing and messaging tactics, while ignoring the strategic shifts that need to be made for today’s luxury market. And that requires putting the customer front and center. Give them the luxury they really want, need and desire and forget about the luxury you always gave them and think that they still want.
Inspiration for luxury brands, both new and old
The luxury market is at the pinnacle of discretionary spending but today the affluent are choosing to forego extra spending and hold onto their plentiful cash. The next generation of affluents, called HENRYs (high-earners-not-rich-yet), are signaling caution about trading up to luxury. That means brands that aspire to grab their attention and capture some of their discretionary spending must make a compelling case why their brand is worth it. It requires telling the story of luxury in a brand new way in tune with the values of these consumers.
The challenge and opportunity for luxury brands in 2017 is to align their brand with the new consumer psychology of affluents. Luxury brands need to recognize that in the minds of today’s affluent consumers, the definition of luxury is shifting. The old ideas of luxury have given way to new ways of interpreting and participating in a luxury lifestyle.
This new trend report, Brand Stories that Sell to HENRYs, reveals how to connect your brand with the emerging young HENRY customers through storytelling.
The key challenge for luxury brands and the young HENRYs is not about how they connect – internet marketing tactics are a given – but rather on how to create new and compelling reasons why their brands are meaningful and important to this digitally-empowered generation.
This new report will show you how. It delves into the values of HENRYs and the kind of brand storytelling that will sell to the next generation’s affluents. It draws examples from many of the new luxury style brands that are finding success with HENRY, such as Shinola, Warby Parker, Apple, FitBit, Everlane, Suitsupply, Canada Goose, Toms and many others that deliver a luxury experience to a new generation of affluents.