Articles

Luxury Just Got A Whole Lot Smarter

From a distance many people pigeonhole luxury goods as “over-priced baubles for over-indulgent look at me’s”. As usual in retail, nothing is as simple or black and white as it appears on the surface. The science applied to Louis Vuitton that makes it the luxury brand benchmark is no less impressive than that which makes the Bugatti Veyron the fastest production car in the world.

Luxury in the 21st century is a very different beast than our historical perception.

Crudely speaking there are four broad customer segments in the luxury market. The “Bling Me’s” who seek the external validation that comes from standing out through over-adornment and ‘loud’ taste. “Brand Confidence Seekers” who seek the emotional reassurance that radiates from being a branded member of the club (standing-in). “Bragging Rights” which comes from a rationally based alliance with a brand that fits a contrived purpose. And “Feeling Special” which comes from a personal turn-on – experienced on both an emotional and rational level.

By far the growth is moving toward ‘Feeling Special’ and more and more luxury brands are discovering the meaning of ‘New-luxe’ for the 21st century to a customer who seeks to feel special on the inside from the choices they make on the outside.

Luxury customers are affected by sustainability issues; by community issues; and by economic issues. The opinions of their peer group are important to them and form inputs into their decision-making and personal opinion-making processes. They affect how they live. ‘New-luxe’ is an important part of these people being seen to make smart choices by their peers.

Increasingly these shoppers are demanding:- continual proof of quality; functionality; design and aesthetic; and features and benefits which last. Provenance – where it is made and how it is made – and the story behind the brand and the product, form an integral part of what they buy and the stories they on-tell to their peers.

‘New-luxe’ is not about a brand unthinkingly applied to any over-priced product in order to exploit a short-term margin opportunity.

It is about a clever connection to the less than 20% of shoppers who represent more than 40% of expenditure in almost every category of retail. It is about having the integrity to ensure there is a real story behind each and every product that underpins its value proposition to the shopper. And it is about creating a 360-degree experience for the customer that appeals to their determination to feel a turn-on on every level.

In a world which is rapidly learning that profit through volume and the commoditization of diminishing resources is not the answer to every question, many of the answers lie in what leaders in ‘New-luxe’ like Louis Vuitton can teach the rest of us.