BRANDING MAGAZINE / august 2015

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BRANDING MAGAZINEAUGUST 2015

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brandingmagazine.com

LuxuryBranding

BRANDING MAGAZINE

Chuck KentWriter & Contributing Editorchuck@brandingmagazine.com

David BrbaklicCreative Directordavid@brandingmagazine.com

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The Branding Roundtable

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#14

Luxury Branding

“Some people think luxury is the

opposite of poverty. It is not. It is the

opposite of vulgarity.” So said Coco

Chanel, in a much different age.

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But what is luxury today, in a world that would be unrecognizable to the iconic

Chanel, and how do you go about creating and nurturing a successful, 21st cen-

tury luxury brand? That’s exactly what we explore this month with three brand-

ing experts:

Tom Adams, Global Head of Strategy, FutureBrand Worldwide

Erich Joachimsthaler, CEO, Vivaldi Partners Group

Sophie Maxwell, Futures Director, Pearlfisher

So step into your Prada’s, have the help pull the Bentley around and settle into

a hand-stitched leather seat to read all about brands can best serve up the luxe

life.

Chuck Kent

Contributing Editor and Moderator of The Branding Roundtable

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Sophie Maxwell, Pearlfisher

Firstly, the definition, or perception, of luxury – and what we now expect from luxury products and services - has changed immensely. Once solely elitist and accessible to the wealthy, there is now a far greater scope to luxu-ry. It has far more expressions informed by factors like changing cultural influences (East vs. West for example) and the bridge that now exists between the luxury and mass worlds.

Democratization and the growth of premiumization are driving the macro change we have seen, allowing luxu-ry products and experiences to become the aspiration of millions and, in turn, readily accessible to the masses. Despite the recession in Europe, there is now a broader desire for, and expectation of, luxury in our everyday lives and that has created the opportunity for a greater diver-sification for luxury brands - but it has also muddied the waters with what is and isn’t luxury. There is now a much more personal definition.

But, with premiumization now setting the benchmark for special, everyday, experiences, we are now witnessing the inevitable counter-trend of extreme luxury: recreat-ing the exclusivity that is lost if luxury becomes too af-fordable. This is evident across various sectors, where the price ceiling of super-luxury goods has risen great-

How do you define luxury, in the sense of what qualifies as a luxury brand?

Chuck Kent: ly to preserve their exclusivity. Extreme travel is a good example, where the search for exotic and unusual hol-idays answers the desire for experience-based luxury. As worldwide travel has become accessible to the many, those with the means want something that sets them apart and to experience moments available to the few.

We have been embracing these changes in the luxury world for a while now. And, moving forward, it’s about recognizing that luxury is no longer just about a specific brand or solely synonymous with material items. A new sensibility has emerged in the luxury world – one that is focused on the intangible and moves us away from overt, material things to more discreet and special experienc-es or connections built on time, value and experience. According to the Boston Consulting Group, experiential luxury accounts for almost 55% of the total luxury spend worldwide and has grown 50% faster than sales of luxury products.

Taking the above into account we need to change our mindset and recognize that while in the past luxury was previously about one ideal, we feel in the future it will be about many ideals.

Erich Joachimsthaler, Vivaldi Partners

Luxury brands have particular characteristics that dis-tinguish them from others – for instance, luxury brands are rare. I always like to say that ubiquity is the enemy of luxury. Luxury brands are hedonic, they are pleasure, they are about experiences. Luxury brands are a form of self-expression. Traditionally, they were aesthetes’ ex-pressions in some ways. Luxury brands should always command a high price – much higher than the actual value, not only for the aspirational but also for the emo-tional value, for the internal reward: “I can afford that.”

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“Ubiquity is the

enemy of luxury.

– Erich Joachimsthaler,

Vivaldi Partners

Tom Adams, FutureBrand

The core premise behind luxury brand appeal remains constant, but social forces introduce nuances that it pays us to heed.

In pure economic terms, a luxury brand is the name, symbol, design or other feature of a product or service that is defined primarily by its high price. Luxury brands play an important role in culture, to help people signal their wealth and status. Demand is correspondingly driv-en by the fact that they are more expensive than equiv-alent choices, to the point of positive price elasticity, whereby demand paradoxically goes up with price. This dynamic is neatly summed up by the term ‘conspicuous consumption’ introduced by social theorists in the late 19th century. It works in two different ways – signaling ‘who I am’ for the very wealthy, or ‘who I would like to be’, for the less affluent.

In addition to price, there are well-recognized charac-teristics of a luxury brand, identified by Dubois and oth-ers, including excellent quality, scarcity, aesthetics and polysensuality, heritage and superfluousness. Different brands exhibit these characteristics in different ways – from the family story of a great Champagne producer to the hand stitched leather trim in a Bentley.

Paradoxically however, the market for luxury brands is increasingly polarized into ‘mass affluent’ and ‘super rich’, and more people have access to previously out-of-reach goods and services. Recent research has demon-strated that as price goes up, brand prominence goes down – so the richer you are today, the subtler your sig-nals of wealth have to be. The logo literally gets smaller or disappears on your handbag, sunglasses or watch. So more than ever before, the ultimate task of luxury brand-ing goes beyond the explicit use of iconic symbols.

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The rise of the global ‘mass affluent’ demographic, particularly in China, India and Brazil arguably buoyed demand for luxury brands following the global financial crisis. ”- Tom Adams, FutureBrand

Who do you see, by both demography and attitude, as being the consumers who are really driving the luxury sector?

Chuck Kent:

Tom Adams, FutureBrand

We would argue that there is no luxury ‘sector’ – instead there are luxury brands in most consumer categories, and they tier their offers to suit either middle class or super rich price tolerances. The rise of the global ‘mass affluent’ demographic, particularly in China, India and Brazil arguably buoyed demand for luxury brands fol-lowing the global financial crisis, continuing to purchase more explicitly branded, entry level versions of Luis Vuit-ton, Chanel, Rolex and others. And there is now a global über luxury market for the multimillionaire and billion-aire consumer. They tend to look for quality, exclusivity, innovation, prestige, benchmark status, personalised service and money-is-no-object experiences, and signal their preference for less ‘mainstream’ luxury brands like Blancpain and Aman Resorts. So luxury is being driven by two tiers of consumers.

Sophie Maxwell, Pearlfisher

Building on the last question I think that today a great many more of us are potential luxury consumers - hap-pily for luxury brands. The gap between luxury and mass now has this ‘premiumization bridge’ and as a result we all desire and even expect some luxury in our daily life – seeking a new and emotional investment in products and brands because we identify with them, aesthetically and values-wise.

In terms of those really driving luxury we are seeing a new breed of hyper-connected luxury consumers - busy, time-strapped individuals that value functionality and convenience, but are unwilling to sacrifice quality. This isn’t about a particular demographic. It’s about a mind-set. But, perhaps most importantly, is how the consum-er is looking at all these new products, experiences and offers as the sum of the whole - and is looking for new connections from brands, thought leaders and experts to maximize the holistic offer and benefit. Audi’s car-pool-ing service for their consumers feels like it is targeted towards a younger audience (Gen X and Millennials) in this kind of way.

We are also seeing Luxury consumers that want the experience to be more reciprocal. We are increasingly developing a social and ethical conscience and this is informing our choices - we want luxury brands to give us the opportunity to be more philanthropic and socially conscious. This is about Luxury brands now creating a more emotional experience and adding a guilt-free ele-ment to our purchases.

There is a new and exciting generation of e-tailers, like lifestyle brand Everlane, enjoying an elevated – new lux-ury – status and success by adopting a new approach to opening up every aspect of its brand journey, and pro-moting a move towards sustainability and more ‘radi-cal transparency’. Everlane champions a new breed of straightforward and transparent consumerism and gives its customers the confidence to indulge in guilt-free luxury shopping. Another example has been created by The Ritz-Carlton in Washington D.C. The ‘Do Good, Feel Good’ package offers guests luxury perks in exchange for helping at a local community kitchen. The luxury ho-tel donates $100 per guest who signs up to the program.

Erich Joachimsthaler, Vivaldi Partners

In luxury, segmentation is dead. It is a carryover from the “Mad Men” marketing days when the key brand drivers were image, message, and communications that inter-rupted and annoyed consumers. Today’s luxury consum-er can be a middle-aged American or a young Chinese teenager. But the driving force of the luxury sector is now less about the spending power of a demographic, and more about social currency. Influencers, whether from the front row of a runway shows or bloggers on social media, create invaluable conversations for luxury brands. This allows them to get treated like top-spend-ing customers.

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“…there is no longer such a defined ‘language of luxury’ and instead luxury leads by imagination and originality to assert its status.”

– Sophie Maxwell, Pearlfisher

Does the presence of too many luxury brands – or too much segmenting of the market into Ultra premium, premium and “regular” luxury, etc. – create problems for effective luxury branding?

Chuck Kent:

Erich Joachimsthaler, Vivaldi Partners

There are too many luxury brands, especially in this day and age. Our research shows that consumers select only a very few brands to which they want to connect. The av-erage consumer has three to five brands they consider to be in the inner sanctum of brand relationships they have. Then they have another ten to fifteen brands they have one relationship with in some form, and beyond that today’s consumer is so stretched in terms of attention that they elect certain relationships and there are many, many brands that compete for that special relationship.

Tom Adams, FutureBrand

There is little confusion in the mind of the ultimate luxury consumer. We need always to bear in mind that demand for luxury is created by price – so the more affordable it becomes, the less a true ‘luxury’ brand it is. Otherwise it fails to do the status and wealth signaling that peo-ple choose it for, whether this signaling is aspirational or not. Arguably, the characteristics of luxury have re-mained the same, and many of them can be recreated by more mainstream ‘premium’ brands as raw materials, manufacturing processes and distribution have become more reliable and cheaper through automation and glob-al supply chains. Instead, it is the absolute thresholds for true luxury that have increased.

Blancpain offer a $1MM timepiece, the Bugatti Veyron is over $2MM, the Royal Penthouse Suite at the Hotel Pres-ident Wilson in Geneva is $83,000 per night and Hermès

holds the record for the world’s most expensive handbag at over $400,000. These are beyond the affordability of most people in the world, and exist to satisfy the need for the super-rich to signal that there is no limit to what they can afford. And there is a world of luxury beyond these mainstream products differentiated by extreme price that falls into the ‘Bespoke & Beyond’ category - the epitome of personalized, tailored and rarified. In this world, customization is key: from the choice of interior design in your 65m fast displacement Heesen Yacht to the cabin finish options on your Embraer Lineage 1000E private jet. These are the rules of contemporary luxury branding, and those that can afford them understand the difference.

Sophie Maxwell, Pearlfisher

Not necessarily. The market is already established and catering to different levels of premiumization while co-existing – even if the boundaries are blurred - with luxury. But we still want luxury to lead, to innovate and to tempt us - upholding desire is the key to luxury. However, the key thing to note is that luxury no longer follows such strict category rules or cues – there is no longer such a defined ‘language of luxury’ and instead luxury leads by imagination and originality to assert its status. This does, of course, mean that copying traditional and maybe more prescriptive luxury cues is no longer such an easy option for premium brands. Instead, those looking to master premiumization need to copy the luxury approach - re-turning to core values and quintessential beliefs to cre-ate ever more unique and individual expressions.

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What are the categories that most define luxury today?

Chuck Kent:

Sophie Maxwell, Pearlfisher

The new sense of experiential luxury is really gaining traction. The notion of ‘inclusive exclusivity’ has always been the driving force for luxury consumption. However, our constant connectivity and attachment to technology has driven us to seek out real life experiences (rather than items) that surprise and delight in new and vis-ceral ways. The food and hospitality sectors have really embraced this – answering this new desire with hidden rooms in restaurants, secret menus, personalized sub-scription services.

We are now more motivated by experiencing or ‘collect-ing’ luxury experiences and services, but also sharing them with our audiences across our various social net-works. These experiences are the intangible luxuries that allow us to create lasting, timeless impressions that can create enduring memories.

Erich Joachimsthaler, Vivaldi Partners

Luxury used to focus on goods as status symbols. The fo-cus is now shifting to travel. We don’t even need to “own” a luxury item or product in order to experience this any-more. Brands are now able to transcend specific cate-gories and connect with consumers on their own terms.

Tom Adams, FutureBrand

Luxury continues to be defined today by the jewelry, fra-grance and fashion & accessories categories, and by brands that make strong use of one or all of the follow-ing:

• Precious metals, jewels and exclusive materials – like the Hublot ‘BB’ 2 million Euro diamond encrusted watch.

• Exceptional quality and rare ingredients – like the use of Ostrich, alligator and other unusual leathers in hand-bag production for brands like Hermes, or rare plants like the Madagascan ylang ylang used in Annick Goutal Eau d’Hadrien perfume.

• Hand crafted or master crafted processes – like hand made John Lobb Alligator shoes for over £10,000.

“Luxury used to focus on goods as status symbols. The focus is now shifting to travel.”

- Erich Joachimsthaler, Vivaldi Partners

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“…the physical store is a chance for luxury brands to plunge their loyalists into a feeling of calm, time and space. – Tom Adams, FutureBrand

What do you see as the most important differentiators in luxury branding… design, quality, brand experience… other?

Chuck Kent: Tom Adams, FutureBrand

There are three key differentiators in contempo-rary luxury branding:

1. A rich digital experience – luxury brands were slow to bring their digital presence in line with the design quality of their products and other chan-nels. With luxury consumers more likely to re-search and even buy their goods online than ever before, digital is the first and most frequent point of luxury contact and needs to deliver the same exquisite attention to detail, quality and service standards and product demonstration as a phys-ical store.

2. Recognition beyond the logo – luxury brands are increasingly moving beyond their iconic sym-bols to more subtle points of reference like pat-terns, textures and silhouettes. Luxury consum-ers can identify products by their finish, styling or materials and are less inclined to overtly display a logo – particularly at the upper end of the income scale.

3. Retail temples – the physical store is a chance for luxury brands to plunge their loyalists into a feeling of calm, time and space, which are argu-ably the most precious commodities in the world today. The less pressure there is to ‘buy’ and the more a customer is made to feel that shopping is about leisure and personal attention, the more luxurious it will feel.

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Erich Joachimsthaler, Vivaldi Partners

Luxury has always had some traditional differentiators, and I think they will continue to be important. For ex-ample, source. Certain luxury brands come from certain places. LVMH is a French brand; part of LVMH is a French mystique, their culture. And Burberry may no longer be manufactured in the UK, but Burberry is British culture, it’s British-ness, it’s lifestyle.

Sophie Maxwell, Pearlfisher

One of the most notable traits that we are seeing in to-day’s luxury consumers is that they are increasingly be-coming educated curators. They are inspired by a story but are more confident to put together their own style. They build on and around a narrative about their chosen luxury brand or product through its heritage, the profile of the craft, the detail of the process and the occasion of the purchase. A big part of the new opportunity for luxury lies in stepping away from its previous iterations - and more obvious - communication to set new benchmarks in creativity, craft and idealism – surely some of its most important values – and embrace the opportunity for real open mindedness and existing in new guises to match the changing desires and motivations of its consumer.

But, as brands stretch beyond their original areas of ex-pertise and categories, the importance of using brand design to communicate a cohesive message is growing in importance and visibility. And it is great design that has

the potential to build brands into the kind of immerse worlds that really capture the imaginations of consum-ers. The constantly imaginative and surprising world created by Verve Clicquot is a pretty fabulous example of this.

It’s about establishing your vision and the starting point from which to evolve a seamless message and expression that builds desirability across all touch points. Burberry’s megastore - ‘Burberry World Live’ - was a game-chang-ing approach, successfully converging the physical and digital by mirroring the online experience in-store. Full length-screens switch to act as mirrors and many items are chipped with radio-frequency identification technol-ogy, meaning that multimedia content relevant to the product is triggered when an item is placed near a mir-ror. And this ground floor experience is vastly different to - but just as striking and important – the display of trench coats dating back to the early 1900s showcased on the first floor. Yes, it is another experiential approach – a driving, strategic mission of all today’s brands - but it is an integrated experience that plays to the art of the brand using the retail world as an exhibition showcase or gallery of its works but with the interactive, inclusive approach favored by today’s consumer.

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A Bain & Company study notes that “The luxury-goods industry in most markets is now driven by touristic spending… It requires thinking about the product offerings from a more global perspective…” Does this ring true with your current experience and, if so, what does achieving and executing against a global perspective look like in practice?

Chuck Kent: Sophie Maxwell, Pearlfisher

Absolutely. But, as brands increasingly aspire to global reach, there is also a growing recognition that not all desires are universal and that the same message does not necessarily translate seamlessly across cultures. Al-though brands are closer to having a global product offer than ever before – and a lot of fashion labels do – luxury markets are still at different levels of evolution and obvi-ously subject to changing financial circumstances.

A lot of expectation was placed on Russia and Asia, for example, to be leading markets for luxury brands, but brands here have been forced to now to reshape their strategies due to the reversal in fortune of these territo-ries. Added to this, we have a luxury consumer looking for this more personal and individual connection. As a result, brands are increasingly looking for ways to create luxury experiences that draw on their locality - finding ways to embed themselves into the local environment by understanding, adapting and appreciating the character and history of individual locations, weaving aspects of it into how the brand is shaped, experienced and under-stood. One example we think is an inspired approach is Pernod Ricard’s Our/Vodka - a vodka brand based on one recipe but produced differently based on the local ingre-dients sourced where it is made in eleven different cities across the globe. This allows each location’s distiller to give the vodka an individual, locally and culturally in-spired twist – and it is run by different tribes of people – for example, Fashion in Berlin and Skate in NYC.

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Tom Adams, FutureBrand

True luxury brands are universal in appeal and global in character. Just as affluent consumers move across bor-ders, so too does their signaling power – from airport lounges to 5-star restaurants, bars and professional set-tings. Arguably, however, whilst the brand itself needs to be consistent globally and recognizable by its symbols, colours and signature products – like the Hermès Birkin bag or the Porsche silhouette – there is space for local-ization of product to reflect culture and materials of the place. This is particularly important today because of the increasing relevance of craftsmanship in luxury goods, coupled with the growth of consumer preoccupation with provenance – or the ‘made in’ component of a product. Prada’s ‘Country of Origin’ labeling being one example, or the importance of collecting your new Porsche off the production line at Leipzig, and knowing that your Bentley was hand made in Crewe, England. Whilst luxury brand tourism has often driven by the desire to avoid counter-feiting, there is also great cachet in buying luxury brands from their ‘source’ in Paris or Milan or London. Within this, there is also an opportunity for niche and discovery luxury brands that only exist in a specific location, if they meet attributes of quality, scarcity, prestige and perfor-mance.

Erich Joachimsthaler, Vivaldi Partners

Luxury marketers need to adopt and accept digital as the new universal language of the industry. Global markets require a new approach to branding, product assort-ment, and building customer relationships. None of this will be based on traditional segmentation. In the past, sales assistants would know customers by name and be familiar with their preferences. Now, the organization as a whole needs to cater to the individual which has mas-sive implications for all systems and teams within the organization.

“…there is also a growing recognition that not all desires are universal and that the same message does not necessarily translate seamlessly across cultures.”– Tom Adams, FutureBrand

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Innovation is fairly well an obsession in most categories – what role does it play in luxury?

Erich Joachimsthaler, Vivaldi Partners

Most luxury brands need to wake up to the fact that con-sumer adoption of technology is going to disrupt their business, if it isn’t already. Most luxury brands have a simple narrative or story that supports their product like “Buy me, and you can attain a bit of an aspirational lifestyle. Perhaps you can even live like a celebrity.” It is a story of hope. Charles Revson, the founder of Revlon said, “We don’t sell perfume, we sell hope.” Yet, innova-tion will come from offering products and experiences, in addition to creating a story or narrative that weaves into the story that consumers are creating for themselves. This is why it is so important that luxury brands tran-sition from selling on aspiration to being a part of their consumers’ lives – which will be driven by data, technol-ogy and analytics.

Sophie Maxwell, Pearlfisher

Luxury, at its best, has historically been one of the most innovative categories of all – which can be forgotten when we see old-school representations of it. To create luxury at the highest levels, defining and differentiating and building on your established brand equity, is essen-tial in increasingly competitive categories. If this is done with excellence – by brands like Verve Cliquot with imag-inative and pleasure-driven experiences, Burberry with technology or by Hermes with sustainability and crafts-manship championed by Petit H - then you are taking centuries of craft, intrinsic originality and the heart and soul of the brand and reframing it to continue to set the benchmark for a hugely important part of our culture. In many cases, this approach is now allowing brands to extend far beyond their core expertise and innovate in new areas.

Chuck Kent: Luxury brands today need to build complete and immer-sive worlds for their consumers by introducing the unex-pected, adding rich layers to their lives and by exploring and reframing their desires. And this should result in a truly perceptive, creative and visionary brand and retail strategy with more emotional behavior and expressive brands, products and services in line with our contem-porary culture.

“…it is so important that luxury brands transition from selling on aspiration to being a part of their consumers’ lives – which will be driven by data, technology and analytics.”– Erich Joachimsthaeler, Vivaldi Partners

Tom Adams, FutureBrand

It might seem like a contradiction in terms to marry the novelty of innovation with brands that depend so much on tradition, heritage and craftsmanship for their success. But, instead of just being novelty, if we think of innovation as ‘commercializing inventions’ – there is a powerful role for new technologies, techniques and materials in luxury products and services as long as they reinforce the im-portant characteristics of luxury, from quality to scarcity or superfluousness.

For example, luxury aircraft and yachts depend on the most up-to-date materials and technology systems to drive fuel efficiency and comfort: features sold by their manufacturers as functions of quality and customization. Apple Watch is also arguably the beginning of Apple posi-tioning as a luxury brand and entering the global market for exquisitely crafted timepieces – marrying the cues of precious metals, precision finishing and elegance with digital display and a software ecosystem unavailable to its Swiss counterparts. There is also the potential for luxury brands to innovate in service experience as a way to reinforce their credentials, like the London Selfridges Fragrance Lab that matches a unique scent to your re-quirements.

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Digital doesn’t seem to be having a huge sales impact in luxury – just 5% of total global sales. Does it have other impact besides online sales, and do you see its importance growing in the future?

Tom Adams, FutureBrand

There is increasing evidence that digital channels are a primary source of research for luxury brand consumers around the world – particularly in important markets like China, Brazil and Russia. And that a small, but growing number of luxury consumers are buying products on-line, because of the convenience it offers. In this context, whilst physical retail is still the primary sales channel for luxury goods, there is some debate about when the decision to purchase is actually made. Luxury brands have realized this and in addition to evolving their retail strategy – focusing on storytelling and brand experience like the Harrods ‘Pradasphere’ – are also providing more video product display online: helping consumers to see the texture, size and quality of products virtually before they buy. This is going to be more and more important as consumers expect the convenience of instant omni-channel shopping experiences combined with rich, im-mersive product demonstration and interaction.

Chuck Kent:

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Sophie Maxwell, Pearlfisher

Yes, for this market, it’s about much more than just sales but not all brands are maybe at the point of being able to translate what the opportunity means for their brand. The initial doubt around luxury and tech was the fact that luxury is such a tactile and immersive experience, how could that ever be replicated on-line etcetera. But there are some amazing successes where people have rethought what it could mean for their brand or proposi-tion. Net-a-porter, for example, was a concept that was initially doubted and has gone on to massive global suc-cess. It is just taking time for us to re-adjust our expec-tations around what the luxury experience should be. We also need to remember that getting online is often our first port of call today, whatever the sector.

The online world of the future will allow us to build a world of luxury around the individual and could be said to offer the opportunity of an even more personal, inti-mate – and less intimidating – relationship. If you think about it the luxury world makes desire real, granting its audience ultimate control, allowing them to shape their world, imagine and then realize their dreams – and no-where is this more true than with the digital world in all its forms. It has the power to move the relationship from a distant to an ever more intimate, in-depth and dynamic connection.

Most importantly digital application should no longer be seen as the end point for a brand’s realization. It is an integral opportunity to form an even more personal con-nection with the brand, to help build and shape future identity and interactions and to maximize its potential for future creative and commercial success. Social-me-

dia is all about sharing knowledge, creating connection and offering the opportunity for co-creation – which is completely in line with the motivation of today’s luxury consumer. The new, and increasingly popular, fandoms could be a truly apposite way of engaging with both ex-isting customers and help draw affluent and aspiration-al fans to a brand’s channels and increase its follower base. Net-a-porter’s recently launched ‘Net-set’ is a great example of this, an online network of style tribes that differs from applications such as Instagram or Pin-terest because every single thing featured is shoppable and all based on the idea that social media has boosted women’s interest in what each other is wearing. A sim-ple but brilliant idea based on the brand’s core truth of fashion available through an accessible format. As Net-a-porter Founder, Natalie Massenet, says, ‘Digital inno-vation doesn’t stand still and neither do we’.

Erich Joachimsthaler, Vivaldi Partners

The perception that luxury customers solely prefer to shop in physical mono stores is changing. Think about how Tesla is successfully selling premium cars online. However, digital shouldn’t be assessed on its ability to drive sales. After all, it allows brands to deliver a new experience to the customer. The challenge for luxury brands lies in orchestrating those traditional and new communication channels to deliver one holistic brand. Burberry managed to do this by integrating their digi-tal platform with their value chain. This gave their cus-tomers the opportunity to become a part of the Burberry world. But Burberry is an exception. It is not a website or a social media campaign. It is a social or digital enter-prise through and through.

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Given the rising concerns about income inequality, and the next generation’s reported demand for greater purpose and meaning (in both the brands they buy and the work they do), do you see any potential for backlash against luxury brands? If so, what should luxury brands do?

Sophie Maxwell, Pearlfisher

This is a very prescient topic. As we are witnessing, the consumer perception of luxury is no longer based on price, heritage or reputation but a more intrinsic sense of worth. Essentially, we don’t believe that the traditional luxury brands need to totally reinvent themselves but it would appear that not all are yet fully embracing new ways to connect with their consumer or exhibit more mindful or good behavior. Some marked exceptions are Burberry, which has always demonstrated a belief in sustainable behavior where possible, and the aforemen-tioned Hermes with its Petit H range of unique products made from its precious off-cuts. The new generation – Stella McCartney and Everlane - have built this into their DNA from the get-go.

And, yes, luxury brands do need to reframe the defini-tion of the luxury experience in retail. Edited or curated retail is nothing new. However, the concept of selling a lifestyle and experience over product is continuing to be sharpened and refined. Physical retail spaces will evolve into the ultimate showcases of the brand. This is per-

Chuck Kent: haps nothing new when it comes to the high-end fashion brands but it is now being adopted by other luxury sec-tors. Last year’s ‘The sound of Porsche’ was a multi-sen-sory and interactive, pop-up experience designed as a modern-day record store and offering customers the chance to hear the story behind the brand identity and indulge in a virtual drive – a hospitality industry inspired selling environment to counter the ‘hard sell’ ambience of traditional automotive showrooms.

Erich Joachimsthaler, Vivaldi Partners

Each generation has its own ideals and lifestyles, but common truths and higher order goals remain constant. Luxury has always has been about showing status, re-warding yourself and indulging. Those core principles will remain; let’s not forget that the share of wealthy people is continually increasing. The good news is that many luxury brands, given their price premium, can still afford to produce domestically. Mass brands, on the oth-er hand, need to source from low wage economies. The good news for mass brands is that people still find it meaningful to buy local.

Tom Adams, FutureBrand

There will always be a role for conspicuous consump-tion in culture, regardless of changing economic condi-tions. But people may feel a pressure to signal ‘who I am’ (for the very wealthy, to peer groups who know the difference), or ‘who I would like to be’ more subtly than before, as broader cultural norms change around the word. That doesn’t entail a backlash, as long as luxury brands move with the times to address our preoccupa-tions with ethics, sustainability or the need to articulate ‘why’ they are here beyond profit. In a sense, they have always done so – by emphasizing the care, provenance and craftsmanship in their products. But we expect to see more concern with and use of sustainable materials, more supply chain transparency and more sensitivity to packaging waste, as well as a focus on the longevity they offer – like the fact that you never ‘own’ a Patek Philippe, but simply look after it for the next generation.

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Please share an example of a forward-thinking initiative the brands you work with are taking to move luxury branding into the future?

Erich Joachimsthaler, Vivaldi Partners

Vivaldi Partners Group’s client HUGO BOSS represents a great example how a luxury brand can redefine its in-teraction with consumers. We’re working with them on shifting loyalty from being a program to becoming a two-way phenomenon.

Tom Adams, FutureBrand

Nespresso is a great example of a global luxury brand that is attending to the imperatives towards

innovation and greater ethical and sustainable creden-tials. Its Nespresso Cube concept offers the ultimate in automated, personalized shopping, allowing the brand to appear in unexpected locations and provide the tai-lored experience that Nespresso loyalists have come to expect. Similarly, Nespresso’s ecolaboration initiative is part of the brand’s global commitment to taking respon-sibility for its ecological performance – from sustainable sourcing of coffee to pod recycling initiatives and the im-proved energy efficiency of its coffee machines.

Sophie Maxwell, Pearlfisher

One macro theme we have been looking at closely, and working with clients to develop for the last year, is that of technology facilitating ultimate personalization. And, al-though it will ultimately impact the mainstream, I’m sure it is perfect for luxury as it is inspired by the key luxury values of individuality, craft and detail but reframed by technological advances.

Chuck Kent: While our initiatives are currently under wraps as works in progress, brands like Geneu - the skincare brand based on London’s Bond Street - showcase this perfect-ly. The brand accesses its consumers DNA and stores it on a micro-chip – the first time this technology has been accessible – and then uses it to create products which are perfectly tailored to their consumers needs and so can be expected to achieve previously unachievable re-sults. And, at the end of the day, that typifies true luxury: achieving the unimagined and unexpected - raising the game to inspire from the very pinnacle of our desires - to give us the want we never even knew we wanted.

One macro theme we have been looking at closely, and working with clients to develop for the last year, is that of technology facilitating ultimate personalization.”Sophie Maxwell, Pearlfisher

“

BRANDING MAGAZINE / august 2015

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NEXT MONTHon The Branding Roundtable:

Destination Branding

Moderator:Chuck Kent

Director of Brand Content, Avenue & Contributing Editor, Branding Magazine

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