by Rebecca (first featured in Interbrand’s Retail Sector report for BGB 2019)
What is Luxury now?
Luxury brands were born of pioneers and rulebreakers. Their dominance of this year’s study has been driven by a new self-disruption, emerging as game-changers in innovation and collaboration.
How does a luxury brand lead culture, recasting customer expectation in endlessly inventive new ways across ever more fluid generations and markets? Our Best Global Brands report has analysed this for twenty years and our 2019 data shows a continuation and an acceleration of this aptitude. Legacy brands are pivoting from luxury as deeply exclusive, to more dynamically inclusive. New brands are emerging to define new categories and business models. And all in the restless pursuit of consumers who now ask to access luxury on their own terms.
EVERYBODY WANTS IT
Consider Gucci: Armed with a powerful leadership duo, unleashing a new sense of creativity and innovation, connecting to a new audience, its strategy of prioritising young and future consumers to drive growth could be classed as iconic. It paid off, with 18- to 35-year-olds contributing to an 85% growth in the luxury goods market last year. Gucci leapt ahead of the customer expectation curve with a maximalist creative vision and its irresistible reinvention of iconic products. They’re at the very edges of the now and the next with everything they do, even experimenting with digital games and gamification. Relevance is one thing. Maintaining it another. By tapping into concepts of fluidity for Gen Z, and by incorporating a ‘millennial shadow committee’ into its direction planning, Gucci put young people at the very heart of its business. The upshot? Gucci got its cool back. And it is the fastest growing luxury brand on our Best Global Brands list by some margin, growing 23% on last year.
More broadly in luxury, hyper-personal and hyper-local are proving the operating practices of success, as human to human connection takes on exponential new levels. Having been the pioneers of bespoke, luxury brands are now reinventing it with new levels of relevance. Openness, collaboration and co-creation have proven to be gamechangers across the industry, and the brands that are excelling are those who obsess about learning from their customers.
At Burberry, this season marked the dawn of a new ambition of deeper consumer connection. Having been the pioneer of moves in technology and digital, the global British luxury brand is making bolder moves here again with their employee app R World and messaging service R Message. They are indexing harder on the brand strength factors of Relevance and Responsiveness.
As Mark Morris, Senior Vice President of Digital Commerce at Burberry tells us “Within a creative industry, all of your focus is on better customer experience – it’s deploying the best of tech in the service of the best of human experiences.”
NOBODY OWNS IT
Access over ownership is growing in luxury as the sharing economy proliferates. Privately-held Rent the Runway is the leader in the subscription fashion space, and was valued at $1 billion during its latest funding round. Fashion freedom meets wardrobe flexibility and a smaller clothing footprint. Subscription models are rising fast in our Best Global Brands, accounting for well over a third of the total value of the top 100 brands, and are seen as one of the holy grails in pivoting and future-proofing a business. That holy grail, however, is not without its challenges. Rent the Runway was, only recently, forced to put a temporary close on new subscriptions due to the pressure that had built up on its operations. It’s a telling reminder of the relentless imperative of the contiguity of brand and business.
In Japan, there is a thriving demand for luxury goods. It also boasts one of the world’s most sophisticated beauty markets. And now buying used make-up is becoming popular among a small but growing segment of Japan’s Millennials. The phenomenon speaks volumes about the demographic's consumer psyche, which is simultaneously brand-loving, highly demanding, exacting of brand quality, and increasingly frugal. Enter resale platform, Mercari. The used beauty trend isn’t unique to Japan. On West Coast-based Glambot in the US, shoppers can find Giorgio Armani’s Chinese New Year highlighter palette with “80 percent fill” remaining for $44.50 instead of the original $89. Peer-to-peer shopping app Depop, Lithuanian Vinted and Reddit also provide platforms and forums for users to buy used cosmetics. In China, shoppers can pay $4 for 15 minutes in shareable makeup booths found in malls across the country.
BUT HOW LONG CAN WE SUSTAIN IT?
The calls to action raging across the world on climate change and commitments to human change for good, are reaching further and deeper into the fashion industry. Brands who are absent and silent in their actions on sustainability, on diversity and inclusion, are noticed – and will, increasingly, be called out. As Natasha Franck, CEO & Founder, Eon, the leading digital identity company for fashion and apparel retail says: “Customers’ values are impacting their purchasing decisions, driving them to purchase less, purchase more responsibly, and participate in new circular and sustainable business models – including reuse, resale and rental. Brands are responding to that demand by providing transparency and investing in circular economy programs which increase a product’s use and its materials’ reuse, to power a sustainable product lifecycle. That transition, though, is challenging.” It’s time to call time on ourselves, as ever more conscious consumers, as we call time on brands to be more conscious creators.
To read other inspiring articles from the Retail Sector Report, below is a link to Interbrand’s Best Global Brands website: