There is no doubt that 2020 has been a year of reset. It has also marked a reset for luxury brands. Having outperformed all other sectors in Interbrand’s Best Global Brands study for two years running, some estimates say that luxury could contract up to 35 percent. However, the leading brands in this sector proved resilient through the last economic recession, and there are signs of them doing so again.
Coming out of the last economic crisis, we were writing up our research into what ultimately emerged as 'Meta-luxury: brands and the culture of excellence.' Luxury then was defined as ‘time’ or ‘space’ – definitions that seem to have even more resonance now. A crisis is always a catalyst for a re-evaluation of what we value and why, and for new forms of creativity in response. Our conversations through the lenses of brand leaders, investors, and valuers have shown the imperative of brands in demonstrating empathy, agility, presence and affinity in the context of what consumers value now.
In a year dominated by exponential growth in Apple, Amazon and Microsoft, and with Instagram (no.19), YouTube (No.30) and Zoom (No.100) making their first appearances in the table, the sustained presence of Louis Vuitton, holding its position at No. 17 is all the more telling of brand resilience. Hermès is another exception as the only luxury brand to hold its value through the crisis.
A fluent e-commerce and channel strategy have been crucial to brands holding strong through the crisis. It’s also a reminder that it is far from the exclusive domain of the digitally native brands. Combine it with the sheer strength of a brand that has sustained value and loyalty over the past decade (almost trebling revenues in the process), and Hermès tells a story in the timeless appeal of a quieter luxury brand, whose e-commerce has been booming. “Even as it has been roiled by covid-19, its market capitalisation has risen this year to €78 billion, while big competitors have shrunk.”
Brands are exploring new ways to be present and relevant to consumers, from the new theatre emerging in digital fashion shows, to marrying the online playbook with the emotions of the in-store experience and selling ceremony. Burberry is investing in new forms of social economics, as it opens its first social retail store in Shenzhen, in partnership with Tencent. It’s an experiment in a hyper-connected, consumer experience, revolving around gaming, e-commerce and social media. As projections of Chinese demand for luxury goods are set at as much as 30 percent growth this year,