Coco Chanel once famously said “The best things in life are free. The second-best are very expensive.” Merriam Webster Dictionary has rightly defined Luxury as ‘an indulgence in something that provides pleasure, satisfaction, or ease’. The keyword in the definition being Indulgence. Luxury in its true sense is an indulgence, its a mindset that drives people to achieve more, do more, and live better. Overall, there no longer seems to be one standard definition that helps determine what is or is not luxury. For some, it could be a Rolls Royce Phantom, a beautifully done villa, for some it could be a sophisticated showerhead, and for some a credit card that opens up opportunities. However, all these have one thing in common. Indulgence.
Luxury is not something that can be described, it’s an experience and an emotion that only those who have experienced it can truly know what it means. And this meaning can be different for everyone. While for some, true luxury means the experience of driving a Mercedes or a BMW, or owning an expensive watch, for some it also means an amazing vacation in a luxury wellness resort that helps detox the mind, body, and soul.
Over the years, the term ‘luxury’ has been changing its exclusive “richness symbol” meaning in time. From artisanal, craftsmanship, limited production to mass-scale brand driven affordable luxury is the new norm. Today the word has a completely different annotation. While MTV had a huge cultural impact on Generation X and their choices, the always ‘connected’ millennials are informed of the latest trends across the world and hence change preferences quickly. As a result, ‘New luxury’ is evolving right before our eyes, and it has very little to do with the familiar concepts of luxury we grew up with. This new luxury – those sought after brands are eating away the market share of several traditional brands. These brands are so entrenched in the minds of the consumers that people choose to associate with their products rather than established luxury brands. As such, traditional values such as craftsmanship, artistry, cost, history, etc, while maybe still important are not the driving force behind product sales.
Internet, technology and social media are changing the industry as we know it. With sustainability, climate change, and recycling becoming the need of the hour, brands especially luxury brands are facing a serious identity crisis. Old luxury brands such as Louis Vuitton, Chanel, Hermès still destroy their unsold inventory to benefit from the duty back law in the US on unsold inventory which helps recoup the loss in sales, at the same time, it helps the brands avoid selling their inventory on lower prices hence maintaining the alure of highly exclusive pricing. Millennials, driven by strong values, who are self-conscious and aware, associate with brands that portray themselves to be more value-driven, responsible and sustainable further creating a divide between the latest generation and the luxury brands.
The changing dynamics are pushing the brands to rethink. While old luxury is still aspirational and plays heavily on its identity and ‘identifiability’. New luxury brands enhance their proposition by resonating with your values. Compared to the traditional luxury brands, younger brands such as Balenciaga, Air Jordan, and several others have been able to build their brand with a loyal fan following across the world. This is a new luxury where quality craftsmanship is important, however, it is about how the brand resonates with the Individual’s value system. Gucci’s declaration of moving away from fur is one such attempt by old luxury brands to stay relevant in a world where its consumers are losing touch with the brands. Zara’s jump in revenue in 2018 via discounts and online sales might have helped the company’s profitability in the short term, however, from a long term perspective, such discounts and online sales might just mean that the brand’s main fashion lines are not performing as well as the brand would like. As a luxury brand, the last thing the brand needs is to be associated as a luxury discount brand.
While the market is quickly changing, there are still ways wherein the luxury industry can stay relevant with millennials.
1. Mobile First Strategy Creation: Looking for millennials? Where’s the phone? Millennials and mobile phones are synonymous. Find one and you will find the other. Be it the website, social media, digital marketing, if its not mobile first, its a waste! Prada’s recent change in its digital strategy is proof that its time for others to follow.
2. Legacy is fine, what’s new?: Strong legacies helped old world luxury brands to survive and dominate the market for a very long time. But this won’t fly anymore. In the modern world, where new everything is in demand, what is the new that luxury brands can offer?
3. Become responsible, become sustainable: Want instant fandom? Become sustainable and responsible. Adoption of better technologies, streamlining of production, sales, marketing and overall reducing the carbon footprint would ensure customers back the brand with sales.
4. Adopt Newer Technologies Faster: Blockchain would streamline production & supply, eliminate counterfeits, AR would help optimize store inventory & supply, ‘phygital’ would increase sales. All of this and much more can be achieved with adoption in newer technologies.
5. What’s your messaging? Consumers don’t care anymore what brands have to say. They care more about what are the brands doing to make their lives better. Is this happening with sustainability and responsibly? What is the core message that luxury brands are giving out.
Those brands that are able to navigate through this and come out with key branding messages that millennials associate with are doing well and will continue to do so. Something that the luxury brands must take note and adapt to.