As we head into the holiday shopping season, two recently published articles on separate but related topics should give luxury brands and high-end retailers much to ponder. The first is an article published in the Wall Street Journal about "shopper's guilt" and the role it plays in buying decisions. The second is an article published in the weekend section of the Financial Times about the growing perception among wealthy consumers that there is little rational connection between the value of many luxury items and their price tag. The two together form a potentially toxic brew that brands and retailers need to address quickly and convincingly.
A good place to start would be for both luxury brands and high-end retailers to acknowledge (to themselves at least) that they've behaved rather badly towards consumers generally and towards their best customers especially. It used to be that a luxury item was something worth buying and preserving for years and years. They were supposed to be timeless and durable and therefore worth paying their considerable cost. During the boom years, many luxury brands readily affixed their logos to all manner of merchandise and slapped on a price-tag that reflected their greed more than the item's actual value. Retailers were all too happy to play along.
When the scales finally fell from consumers' eyes, it shattered the trust many had placed in their favorite brands and retailers. It has left luxury consumers feeling rather cynical about the industry in general and certain brands in particular. Brix Smith-Start, owner of London boutique Start, summed it up best in the FT piece when she said:
“There were a few designers – I’m not naming names – who were creaming it for a while,” she says. “Nine hundred pounds is just too much for a blouse, I don’t care if it’s spun from gold. It’s just too much – unless you’re a sultan’s wife or very rich, but that’s a very small percentage of the world – even smaller now.”
Indeed. While Smith-Start's statement pertains to the fashion industry, it is relevant to many luxury brands as well who during the height of the boom acted more like fashion brands than luxury brands turning out ever more products at a vertiginous pace and expecting consumers to keep buying.
Moreover, while price adjustments may be a start, they are hardly enough by themselves to undo the damage done. As most luxury industry professionals know, price is but one variable in the complicated luxury equation. Rather, brands and retailers need to understand that the only real way to counter the corrosive effect of consumer cynicism is to re-earn consumers' trust. In other words, they need to reclaim the high-ground. Consumers across every income bracket are in search of greater authenticity. It is precisely on those terms that luxury brands need to re-engage with them.
The Luxe Chronicles