Thought Provoking: Are Luxury Brands Becoming “Masstige”

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The mega luxury brands of the world have to strike the perfect balance between exclusivity and their accessibility. There has always been an inverse relationship between accessibility and luxury. The less the accessibility, the more it is called luxurious.
Too maintain this too delicate of a balance, these brands develop iconic products, with extensive marketing campaigns, emitting a perceived exclusivity, and at the same time the production of less costly products such as perfumes, accessories and cosmetics to keep the business sustainable and profitable. After all real exclusivity and craftsmanship does not account as success and offers fewer opportunity for scale, these brands have not only become profitable due to selling products to a few high new worth consumers.
But, as Jean-Noël Kapferer, professor of marketing at HEC Paris, writes in Luxury: How Brands Can Grow Yet Remain Rare, “The more the luxury sector grows, the more this threatens the levers of the luxury dream and the sense of what luxury evokes: the notion of rarity and of access to a privileged life, to products of exception.”
However in recent years, there has been a shift from the uber luxury and inaccessibility to globalisation and digital media. The luxury industry is trying to survive the new age and strike the perfect balance to be highly desirable and highly commercial at the same time. 
Some of the key issues are:
  1. Digital media: In the world, where digital media has taken over the fashion industry, where Snapchat and instagram are the places to launch the latest marketing campaigns. Earlier aspiring class never had the access to it, but now everything is visually available online and open to the public. Luxury is no longer a rarity.“There is a lot of power left to [brands] in the way they distribute their merchandise through e-commerce platforms,” says Thomai Serdari, a professor of luxury marketing and branding at New York University. Hermès, for example, has never sold its iconic Birkin or Kelly bags online. Yet precious few fashion houses have been able to create e-commerce sites that truly match the brand experience they offer in their physical flagships, says Luca Solca, head of luxury goods at Exane BNP Paribas.  The key is to provide a similar experience online as a shopper feels when he visits the store. “The actual sale is just one aspect of the overall customer experience…the entire shopping experience must be a seamless journey in which customers feel luxury at every turn, from swiping through products on their iPad to unboxing their purchases.”
  2. An Overexpansion into Emerging Markets: In pursuit of growth, many of fashion’s luxury megabrands — notably Burberry, Gucci and Louis Vuitton — rapidly expanded their Chinese retail networks, opening stores sometimes, in second- and third-tier cities that, ultimately, lacked the customer base to support them. Over time, this damaged not only profitability, but brand equity, as the pace of retail expansion made it “untenable” to uphold customer experience, says Shukla, and consumers soon came to see many of fashion’s luxury megabrands as overexposed.There has to be a more cohesive strategy of brand expansion and where to really expose the brand and where to not.
  3. Off Price Retailing:  Luxury megabrands have not been shy about the opportunity, investing heavily in both their own outlet stores and partnerships with off-price retailers. In the UK, off-price specialist Bicester Village — home to brands including Dior, Fendi and Saint Laurent — draws more than 6.3 million visitors per year and is the country’s second most popular attraction amongst Chinese tourists. Meanwhile, Woodbury Common, an outlet centre about 50 miles from New York City, attracts more than 13 million shoppers each year to stores operated by brands including Céline, Balenciaga and Bottega Veneta. “Any off-price activity is eating into the brand equity,” agrees Solca, who says, in an ideal world, no luxury player would engage with the off-price sector at all.
    Limiting the way brands leverage off-price channels can help says Prokopec. The permanent collection should never be discounted.  The iconic items, around which a brand has built its story and reputation, should never be tainted by discounts.
    “Dior in Paris only have a few days of sale twice a year, but it is done in a separate location — never in their flagship store on Avenue Montaigne. They rent a separate space where you have the discounted experience, and the flagship is untouched.”
    Regaining Balance
    One of the strategies is to focus on changing the portfolio structure to be more exclusive, to regain the balance. Reducing the amount of entry level products and products with heavy detailing of the logo,there should be a focus on re-orienting perception around higher priced, iconic products with more subtle brand signifiers.
    Balancing exclusivity and accessibility “has always been the magic luxury formula,” says Ortelli. “It is the day to day life of a luxury company to make this solution work.”
    However the accessibility and buying power of the customers have increased, therefore there is always the risk of luxury becoming masstige.
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