The luxury category has always had to balance its inherent exclusivity with the fame-building needed to find more customers – Faris Yakob charts luxury’s attempts at bridging the divide.
The storied New York jeweler Tiffany & Co. is now one of the many ‘maisons’ [brand houses] of LVMH, its biggest ever acquisition. Tiffany struggled in recent years, diagnosed in 2017 by the Wall Street Journal as having a “mid-life crisis” because it had lost its cool. (Let’s ignore the irony of WSJ being an arbiter of cool).
Financial analysts agreed, and the shares slumped. The CEO, Frederic Cumenal, was replaced. Reed Krakoff (who had been creative director of Coach during its moment of cultural ascendance, before ubiquity saw its star fade) was made ‘Chief Artistic Officer’.
Krakoff masterminded a new marketing strategy to restore that delicate balance of salience and exclusivity, heritage and relevance that luxury brands rely on to maintain their enviable margins. Tiffany’s relaunched their brand with a film featuring Elle Fanning throwing peace signs on Instagram. The soundtrack was a remix of “Moon River,” (from the movie Breakfast at Tiffany’s) by rapper A$AP Ferg available on Spotify. It was almost too on-the-nose and didn’t save them from unsolicited takeover. New advertising wasn’t enough because there was an unresolved marketing problem. Tiffany’s positioned itself as luxury but 45% of its sales came from products that cost less than $500. A brand cannot be both luxury and within reach.
This challenge has characterized luxury marketing ever since M. Bernard Arnault of LVMH essentially created the modern industry by scaling small European craft houses.
Louis Vuitton is the world's most valuable luxury brand. M. Louis Vuitton Malletieir was a French designer who noticed that traditional luggage trunks had rounded tops [to help the rain slide off] that were a headache in the new age of steam and rail because you can't stack them. He invented, or popularized anyway, a flat top trunk for the modern world. It was very successful and widely imitated, so he came up with the ligature to stop people passing off on his reputation.
Under Arnault’s guidance, it has become a behemoth because it manages to cater both to older, traditional customers and younger generations. It frequently collaborates with celebrities and artists, helping its logo seem ubiquitous whilst maintaining prohibitively high prices for its products.
Luxury brands still evoke exclusivity to justify their prices. This is why they were historically reticent to move online. The inherently democratic space made them uncomfortable - it couldn’t be tightly controlled like a concept store.
Years ago, I worked on the launch of the first Prada fragrance and when we presented our approach in Milan including a digital component, Miuccia Prada recoiled in horror. Darling, she said, no one will ever ‘buy Prada on the Internet’. Ironically, she was a member of the communist party before taking over her father’s leather business: a possible inspiration for the brand’s utilitarian aesthetic.
Perfumes provide a simple solution to the ‘accessible exclusivity paradox’. They allow brands to target consumers years before they can buy couture in a way that doesn’t come with any image challenges. Burberry struggled for years after its trademark camel check became associated with a low-income social group pejoratively known as “chavs” in the UK.
Overexposing a luxury brand is a challenge and how the brand manages that is crucial. Burberry got caught up in the crossfire of a noxious class war and so shifted its marketing strategy, focusing less on its famous pattern, dramatically restricting distribution and developing new communications. Innovative ideas like the crowdsourced Art of the Trench that saw it dubbed "the industry leader when it comes to technological awareness” eventually returned luster to the brand over many years.
Cristal provides a cautionary counterpoint. When it became the drink of choice for rappers who name-checked the champagne in innumerable hits the brand manager was asked by The Economist what he thought of his new fans. "What can we do?" he replied, "We can't forbid people from buying it”. This PR disaster led to Jay-Z calling for a boycott and it being tainted as racist ever since.
Previously wary, luxury has begun to plough money into digital marketing. Kering, which owns Gucci, spent 50% of its media budget on digital in 2018. LVMH hired an Apple executive to be their Chief Digital Officer. This was inevitable considering the rise of an affluent consumer segment called HENRYs – high earners not yet rich – who have an appetite for luxury and are young enough to be extremely online. In 2017, Gucci's e-commerce sales rose by 86% and ‘millennials’ accounted for about 50% of revenue. Bain predicts that 25% of hard luxury (watches, jewelry) sales will be online by 2025.
Prada is now courting the next generation of fashionistas that have grown up with streetwear as high fashion. They have partnered with Adidas to make a version of the classic Superstar sneaker. To manage the ever-delicate balance and keep the brand exclusive, they are promoting them widely but only making 700 pairs. They come in a bespoke Bowling Bag [an iconic Prada product] for $3000 and will only be available online, so it looks like people are buying ‘Prada on the Internet’ after all.