ATLANTA: Luxury brands are exploring a range of untapped opportunities, from diversification of product portfolios to raising awareness among the newly wealthy, a group found to be less familiar with high-end brands than expected.
The American Affluence Research Center polled a sample of 327 respondents drawn from the 11.4m US households with a minimum of $800,000 net worth, assessing their brand ownership/experience during the past five years, brand familiarity/knowledge, and measuring perceptions for 17 specific luxury brands.
It discovered that when combining ownership/experience with familiarity/knowledge, the total for each brand was generally in the range of low-50s percentage to mid-60s percentage of the affluent. So almost half of the affluent surveyed had no experience or familiarity with most of the luxury brands.
The AARC suggested this was a result of the majority of millionaires being self-made and having grown up in households with little knowledge of luxury brands. There was, it argued, an "opportunity or need to 'educate' the affluent about the features, appeals, and value of luxury products and brands". Brands could not assume such consumers recognized or accepted these concepts, it added.
In addition, significant proportions believed the luxury brands considered were overrated, the peak being 44% for Louis Vuitton. Just four of the 17 brands scored less than 20% on this metric. For each brand, the negative perception of "overrated" was lowest among those who had experienced the brand and highest among those who admit they lacked knowledge or familiarity with the brand.
Separately, market researcher Euromonitor International noted that leading players in the luxury industry were looking for ways to diversify product portfolios. Examples included Marc Jacobs opening a store in New York City selling only cosmetics and fragrances, while Tom Ford is soon to release a men's cosmetics line.
Euromonitor International also highlighted a move by soft luxury good makers into hard luxury goods, with, for example, Versace and Louis Vuitton creating jewellery and timepieces.
A different angle on diversification came from Scott Galloway, a professor at NYU's Stern School of Business, who suggested that in the next few years Apple was aiming to be the world's dominant luxury fashion brand, which was why it had recruited Angela Ahrendts from Burberry.
He told Bloomberg Television that Apple already had all the features of a lifestyle or luxury brand and wanted to be linked into global wealth trends rather than being tied to yearly product launches and upgrades.
Data sourced from American Affluence Research Center, Euromonitor International, Bloomberg TV; additional content by Warc staff