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Luxury | Luxury tops categories in brand value growth

Luxury | Luxury tops categories in brand value growth

Brands become more accessible but remain aspirational

Although the number of people able to purchase luxury products remained limited, social media expanded the opportunity for more people to appreciate luxury brands. Becoming more accessible in attitude, if not price, luxury topped all categories in brand value appreciation in the 2019 BrandZ Global Top 100, rising 29 percent, after a 28 percent rise a year ago.

This shift in the ongoing tension between exclusivity and accessibility appealed to two audiences.

Older, traditional customers wanted to feel connected to luxury’s increasingly youthful and inclusive spirit. And younger, potential customers wanted to feel connected to luxury brands, even if they could afford only a symbolic, entry-point item—at least for now.

In addition, people unable to afford a luxury item had the option of renting one or possibly buying one for less money in the burgeoning resale market. Previously disparaged, resale purchases now conferred a badge of smart shopping.  Meanwhile, younger customers influenced luxury design and marketing, as brands increasingly relied on digital channels to communicate.

With the use of technology, the brands democratized customer centricity. In the past, customer centricity meant being in the rolodex of a salesperson in a favorite store. Today, customer centricity means being in a database that indicates the preferred style, size, and method of delivery, even to the office in discrete packaging.

Despite the slowdown in China’s economic growth, Chinese consumers remained a reliable driver of luxury category growth. Several brands, including Saint Laurent/Yves Saint Laurent, Chanel, and Gucci have effectively appealed to Chinese Millennials. The category experienced disruptions, however, from niche brands like Jacquemus, a French brand with edgy new styles, and from street demonstrations in Paris, home to six of the BrandZ Luxury Top 10.

Wider access

Luxury brands gained access to wider audiences by being present on Instagram. Some of the brands claim over 20 million followers. Saint Laurent/Yves Saint Laurent, which led the BrandZ Luxury Top 10 in year-on-year value increase, 45 percent, promoted its men’s cologne called “Y” with an Instagram campaign aimed at fashion-forward Millennial men.

Many luxury brands, particularly Gucci, made themselves more relatable by featuring models from diverse backgrounds, improving their websites, and opening innovative physical locations. Gucci opened a bookshop store in New York’s Soho to connect the brand with artists and a creative neighborhood.

The streetwear trend continued, with brands interpreting hip hop clothing for luxury customers. Louis Vuitton, which introduced streetwear to luxury with its Supreme collection, introduced the Off-White collection by designer Virgil Abloh.

In China, Hermès was among the luxury brands reaching younger consumers on the short-video site Douyin (known as TikTok outside of China). The luxury brands on Douyin or Little Red Book, an Instagram equivalent, presented relevant content, such as a video of a hop-hop artist, not a standard ad.

Brands also were available to wider audiences on sites like Net-a-Porter or Farfetched, which have worked to refine the experience of buying luxury online with more high-touch and sophisticated logistics.

To appeal to younger customers, who are buying less jewelry than earlier generations, Tiffany opened a pop-up vending location in London and a café. Tiffany has also sponsored concerts. The trend of young people marrying later directly impacts Tiffany, which has always done a big business in engagement and wedding rings.

Updating brands

Burberry changed its positioning, shifting from a luxury fashion heritage to a more fashion-forward statement. The brand has communicated the change with a re-designed, simplified more modern logo, and it generated buzz with 24-hour flash sales, particularly in China, its largest market. The brand is also attempting to premiumize, targeting selected influencers on Instagram.

Gucci, which refreshed the brand several years ago, has improved significantly in several BrandZ metrics, including being trusted by consumers and being seen as Creative and Meaningfully Different. The brand continued to appeal to younger customers with its bold designs. At the same time, the brand opened Gucci Garden in Florence, a location for experiencing the brand, with a restaurant and museum of the Gucci collection.

Louis Vuitton updated its heritage in travel by collaborating with Google on the Tambour Horizon smartwatch, with includes a feature for storing transportation and hotel information. It also includes a directory of hotels, restaurants, and selected tourist destinations worldwide. Having established a clear and fluent brand imprint, Louis Vuitton receives high scores from consumers for its design credentials, according to BrandZ research,

In contrast, other exclusive brands, such as Chanel and Cartier, maintained consistency with their brand heritage. Introducing classics, such as the boy bag and boy watch, along with limited and exclusive items, Chanel mostly sustained the aesthetic established over 30 years by Karl Lagerfeld, the designer who died early in 2019. Consumers view the Chanel brand as especially sexy and desirable, according to BrandZ research.

Dior changed its beauty offering at the low and top end and created in-store beauty boutiques that included fragrance lines. Dior brand equity was particularly strong in China and the US, according to BrandZ data. Dior did a particular good job communicating its brand heritage. Dior Heritage, the brands archive museum, moved into a new physical space in Paris called One Dior.

Logos and values

Consumers have an increasingly ambivalent relationship with luxury. They still covet nice things, but they are somewhat uncomfortable about being seen to be too avaricious. Logos have been a reliable barometer of consumer feelings toward luxury.

Some brands displayed logo discretely on their expensive ranges and more boldly on their entry items. Gucci’s ostentatious designs broadcast the brand without a logo, at least to insiders. Its red and green stripes connect the brand with its heritage. Some other brands, like Burberry, have dialed back their logos.

Luxury brands took political stands, such as Gucci’s advocacy for gun control and its elimination of fur from its collection. For some customers, a brand’s association with a cause makes a self-indulgent purchase more permissible.

Brand Building Action Points

  1. Be accessible but exclusive

Attitude is still important in luxury. But the attitude is changing from haughty to welcoming. Price still restricts the ownership of luxury to the privileged. But the opportunity to appreciate luxury is available to more people. Making the brand, if not all its products, accessible is the right thing to do, and makes good business sense.

  1. Be in the right channels

It is important to communicate using the right channels, especially to reach new, younger customers. In the West, luxury brands are typically on Instagram. In China, they are on WeChat or TikTok, known for its short video content. It also important to present the right message, which may not be a traditional brand ad, but rather content that is relevant to the audience and appropriate to the channel.

  1. Extend the luxury experience

The luxury experience should not end at the door of the store. The brand experience needs to find expression online, during delivery, throughout the operation, at every touch point.

  1. Expand online shopping

Personal shopping is still important to serve high-value customers, but it no longer means meeting them in a physical store, necessarily. Online social selling and personal shopping are becoming important growth drivers.

BrandZ Analysis