The Luxury Market – marketing or reality?
Recently the Victoria and Albert Museum had an exhibition called “What is Luxury?”
This is what they said about it in their literature:
“It interrogates how luxury is made and understood. Luxury has a long history of controversy. More recently, the increase in prominence and growth of luxury brands against the backdrop of social inequality has raised new questions about what the term means to people today. Changes in culture and communication have also stimulated interest in less tangible forms of luxury, such as the desire for space and time.”
What was most striking in the exhibition was its emphasis on craftsmanship and innovation. That aspiration normally associated with luxury marketing had, here, more to do with aspiring to excellence of production. Quite simply this was a view of luxury viewed through the watchmaker’s lens rather than through poring over the entrepreneur’s spreadsheet. This was about classical harmony not fashionable hip hop.
At their roots most luxury goods are worth what you pay for them because they are special, crafted, scarce and desirable. Luxury is consumed in sips and nibbles not like fast food. This especially applies to classic brands that always outlast the rollercoaster that is fashion.
Whilst the V&A exhibition displays some exotic products including a 17th century Venetian Chasuble, a Hermes saddle and beautiful combs made from human hair by Studio Swine it doesn’t answer the question it poses in a particularly useful way. Coco Chanel said luxury was not the opposite of poverty but the opposite of vulgarity which is better but in a commercial world luxury is unashamedly a descriptor that spells out premium pricing.
And this is especially the case in the USA where “de-luxe” was coined by Henry Ford. America is the birthplace of marketing and big, especially of big money; America where trends become unstoppable movements. In Europe as the V&A showed it’s how it’s made that matters; in America it’s how it’s marketed that counts.
The USA accounts for ¼ of the £223 billion global luxury goods market and is the driver for promoting it. Interestingly it’s the young millennials – there are over 5 million of them who are millionaires – who are shaping the style and content of this market. Not least they are driving the double digit growth the sector has enjoyed since the recession.
But if the long term future lies with Asia Pacific – despite a current slowdown in China – Europe remains the fashion heartland for quality luxury goods. Just look at the importance of France, Italy and the UK as luxury goods markets. Unsurprisingly LVMH, Hermes and Prada are the vast, iconic and European brands that dominate the global market.
The top markets for luxury goods are currently:
The most important characteristic of the market has been the power of the brand. Consider that astonishing ergonomically created saddle in the V&A Exhibition. What blew people away was 60% wonderment at the leather, stitching and design all of which were so extraordinary and 40% the lustre of the Hermes brand.
When people buy luxury brands, the brand itself provides a reassurance of history, provenance and quality but there’s something more complex than that. Owning a luxury brand shows other people that you can afford it and that you are a discriminating shopper. It defines you in a very positive way through associating you with that wonderful luxury word – “lustre”.
Increasingly more brands will strive to have the premium mark of luxury. Increasingly quality matters to anyone who can afford it – and more and more can. Not just products adorned with an ad man’s slick label but a quality mark which defines design, craftsmanship and a history of and a passion for excellence. And this trend is accelerated by the values of Generations Y and Z – the Millennials – who believe in owning less but owning better – this is the generation that is convinced one pair of Prada jeans beats three pairs from Levis.
So, returning to the question, what is luxury?
Luxury is why retailers are sourcing products made with brilliant craftsmanship which have a quality story to tell and a provenance that is exciting and authentic so they can then charge a premium for the experience of the brand narrative as well as the quality and craftsmanship that they are selling you.
Luxury is the profit future for the business world. But the “luxury label” itself is beginning to feel rather old fashioned. For “luxury” now read “top quality” and you get closer to where the modern consumer is gazing. This sector isn’t controversial. Its success is, however, inevitable.Back to all articles.