“Everybody agrees that the easiness, the boom, is gone and that brands will either become smaller or have to find some really thoughtful growth alternatives,” says Fabrice Paget, founder of the London-based Luxury Brand Agency. “In terms of geography, I don’t see where that will be because there’s no other country coming up to replace China in terms of growth. First you have to brace yourself to become smaller. Even at the very high-end, the mindset has changed. People are not necessarily arguing about price but they are looking to see they’re getting value for what they pay.”
Luxury Society asked Paget and nine other thought leaders, representing a range of disciplines and product categories, to answer one big question: What must luxury brands do to ensure they are evolving with the times?
A few themes emerged: Luxury is nothing if not rare. Technology does not undermine a high-end product or service, as was once believed. And a rich, one-on-one customer experience lies at the crux of the luxury equation.
Read their thoughtful suggestions below. And buckle up—2017 promises to be a wild ride.
Valerie Nowak, Tom Emrich, Thierry Collot
Valerie Nowak, global communications director, Piaget
“The key, in a nutshell, is content, experience and digitalization, all three combined. At the same time, we know that craftsmanship and knowhow remain essential. So it’s how we preserve these roots and how we can highlight the heritage of the luxury maison. Luxury has been quite late to join the digital world because at first there was a sort of fear that digital was not consistent with what luxury stands for in terms of exclusivity and knowhow and elegance, personalization, savoir faire... On the contrary, what we can see is that digital helps us to bring forth our roots and more easily highlight this specificity. Luxury is really about the one-of-a-kind experience, how you can attract a client as a unique human being, and digital is a very interesting new landscape to develop these kinds of relationships. Of course boutiques and craftsmanship remain important but through digital we can continue to develop desire and dreams and aspirations.”
Tom Emrich, founder, We Are Wearables
“Now is a great time to start to do R&D.; The biggest thing for any large brand is to start to play around now because technologies [such as virtual reality] are the next wave of computing, just like mobile computing was the next wave of desktop computing. You wouldn’t have a retail experience without a mobile experience. In the very near future, it’ll be the same for virtual reality and augmented reality. It bodes well for luxury brands to start learning and start testing, seeing what the opportunities are. Every brand needs to understand there are different flavors of virtual reality and eye where their target audience is and set their expectations around what their goals are.”
Thierry Collot, General Manager, Parmigiani Fleurier Americas
“What’s essential is to control output and make sure luxury remains luxury, that it doesn’t become overly available. The biggest mistake a lot of brands make is to produce up to their potential and because of that they are kind of killing the scarcity effect and making [their products] too readily available, either by over production or over distribution. To me, it’s really essential for luxury to be something people have to look for. That’s the biggest danger the luxury industry is facing right now and in the future. Distribution will evolve but no matter what, the availability of a luxury product has to stay very limited. If you think about it, a lot of brands with the potential of doing 100 [pieces] tend to do 110; in order to preserve the image of luxury, they should do 70. That’s the problem the industry is facing right now; it’s not luxury if it’s available everywhere.”
Rati Sahi Levesque, Fabrice Paget, Fiona Kruger
Rati Sahi Levesque, chief merchant, The RealReal
“Luxury brands need to find strategic ways to connect with a younger demographic and stay innovative. There are a number of ways to do this whether it be developing a new social concept or implementing new technology to make the experience easier and more accessible for today’s savvy shoppers. Right now we’re also seeing a unique trend of fashion brands changing up their creative directors to keep the brand fresh and drive constant buzz, which is another great way to stay relevant.”
Fabrice Paget, founder, Luxury Brand Agency
“Brands have to go back to being very strong on four things and they all start with S: story, skills, service, and substance. You have to have a very strong story for a client as to why I should pay money for your brand. Some brands will still be about status—a signal that you’ve arrived. But that’s probably only going to be a niche for specialized brands, like Rolex. Otherwise, you have to have a very compelling story and you have to get it out. Then you need to have some kind of craft or special skill beyond just having products that look good. I see at the high-end a return to ‘I want to find an artisan.’ So if I’m a brand, I have to show off my skills, to show I’m not a big organization and I’m not mass producing what I’m trying to sell you.
“And then the service—it has always been important but the idea that at the high end you have to have a trusting one-to-one relationship with a person. I will buy because I trust somebody somewhere to get me the best things that I want. And I think a lot of large brands have lost that—they’ve become high-end mass markets. At the high-end, people expect the service, and that’s probably very influenced by technology because you get today a level of service from Uber that was inaccessible for the mass market, so the service expectations are going to be there. There needs to be personal service. This will be a problem for brands with mass market retailing networks that have lost service; they’re just providing transaction points."
“And the last point is substance. If I’m a client, I’ll still spend money but I may be probing exactly what I’m getting for that money. What does my $50,000 piece of jewelry get me? I feel this is a great opportunity for startups, artisans and small brands to really start to grasp opportunities all over the world. And I think it’s going to be very difficult for the very large brands to adapt. Some will be able to weather it better because they may not be publicly traded or may not be leveraged too much, but it is possible that some will fall from a cliff.”
Fiona Krüger, founder, Fiona Krüger Timepieces
“I believe listening to consumers and being aware of who they are and how they’re finding out about your product is vital. The ‘stereotypical’ luxury consumer is changing rapidly—they’re getting younger, they’re into different things and they buy differently, too. Being aware of the importance of communication tools like social media is key, and also how to use them properly to interact with your consumers (i.e., content, content, content!). It’s never been easier to have a genuine direct relationship with clients from all over the world—why not make the most of it?
“Lastly I think being open to change is really important. If you can be dynamic and offer your clients something that is genuinely new whilst maintaining your brand identity, then you’ve cracked it. Luxury brands should be keeping their customers excited about what they do. Many of them have the luxury of having a great name and strong brand identity, so they should take chances to keep their clients excited about them and their products, and be ultra responsive to client feedback.”
Sally Morrison, Gannon Brousseau, Brook Hazelton, Milton Pedraza
Sally Morrison, director, sales and marketing, Gemfields
“The provenance of the product must be at the center of the brand conversation. The transparency of the pipeline and exposing the hands that touch the piece, the history of the piece—all that is very important. But there’s something else, too: The world that people live in now is very different; the way consumers look for information is very different. We have to be willing to find consumers where they are, as opposed to where we would like them to be.
“For somebody like me, who’s older and grew up with a different advertising model, it means not unlearning the things we know but being willing to learn new things and trusting people half one’s age to figure out how to reach consumers. I’m not an expert in digital marketing but I have to have people on my team who are, and I have to be able to trust them. I’m not the Snapchat generation but I have to figure out how to connect with people who are. We have to learn to communicate in very different ways. It means having a very 360 approach. This generation is very good at getting multiple bits of data from multiple sources and we have to be in all those places in addition to print and radio. We have to have nuanced conversations so it’s not repetitive. A great brand campaign is not taking a print ad and sticking it into a digital format, but doing something in parallel and built for that new format. We have to look at a more holistic way of communicating.”
Gannon Brousseau, vice president, Couture
“Ultimately, luxury brands need to continue to find creative ways to engage with consumers in a more effective way. Social media has proven to be a great platform for this and has broken down barriers that used to exist between a brand and their customer. By shattering that ivory tower mindset through strategic, on-going social media initiatives, I believe brands can create and maintain a dialogue with consumers across a diverse, socio-economic and geographical spectrum.”
Brook Hazelton, president, Americas, Christie’s
“Every luxury company needs to adapt to a more mobile and geographically diverse marketplace. At Christie’s, we believe this means having a robust digital strategy that is purpose-built for collectors and well-integrated with our core business model. Christie’s is very proud to be the only international auction house to offer our clients a seamless mix of traditional saleroom auctions and online-only sales, complemented by compelling digital content and easy mobile access. As a result, sales facilitated through online channels have already exceeded $100 million this year and accounted for 26 percent of new buyers to Christie’s during the first half of 2016. Our online-only sales consistently attract bidders from 20 to 30 different countries, far exceeding our geographic saleroom footprint. With online buyers up 60 percent and spend in digital sales up by 91 percent, we look forward to expanding these efforts with continued innovation in the dynamic digital field.”
Milton Pedraza, chief executive officer, Luxury Institute
“We see companies cutting back on training instead of spending. They should be transforming their sales associates into relationship builders and curators. They’re focused on client retention but they should be focused on associate retention because the associates are the ones who build the clients. There doesn’t seem to be anybody bridging that gap.”