701. Luxury fashion branding ; trends, tactics, techniques

http://blog.daum.net/sejong.ryu/702

 

Introduction

Who said fashion is not serious business?

‘The secret of successful fashion management is a complete blend of

Creative Genius and Business Management acumen, skill and

resourcefulness.’

Daniele de Winter, CEO, Daniele de Winter Cosmetics, Monaco

Anyone who thinks fashion is inconsequential and doesn’t deserve serious

attention must think again. Fashion is a strong force that has always played a

significant role in the evolution of mankind’s society. As far back as the

Egyptian, Greek and Roman Empires, fashion was a key social element that

reflected the society through apparel, accessories and cosmetics. Fashion also

had an influence on decisions regarding politics, economy, education and art.

In the ancient Roman Empire, the visual representation of fashion was so

ingrained within the society that the ruling government decreed the models

and colours of shoes worn by the members of each social class. Also during

the early years of industrialization, wealthy Americans and Asians travelled

to Europe to acquire luxury goods, boosting international trade and the expansion

of the global economy. In addition, the Grand Nobles of the Renaissance

period and the aristocrats of the past centuries all stamped their significance

and contribution to society’s evolution through fashion. The fashion tradition

remains prevalent today, albeit in a modern way.

Luxury fashion played a prominent role in the social and economic order

of previous centuries and continues to influence our modern societies,

economies and governments. The global luxury fashion sector is estimated to

be worth US$130 billion. The sector is one of the few industrial segments that

have remained a constant world economy contributor with an annual growth

rate of approximately 20 per cent. In addition, the industry has made noteworthy

contributions to national economies. The luxury fashion sector is the

fourth largest revenue generator in France; and one of the most prominent

sectors in Italy, Spain, the USA and the emerging markets of China and India.

The sector is currently one of the highest employers in France and Italy. In the

USA, the fashion apparel industry is the fastest growing sector, while several

Asian economies have witnessed a boom as a result of the entrance and

expansion of luxury brands in the region. The clothing and accessories retail

 

business is also among the fastest growing industries in several parts of the

world. Fashion has become so influential in the current global economy and

world affairs that the United Nations recently launched a program of fashion

shows, called ‘Catwalk the World’, as a platform for raising humanitarian aid.

Fashion is now also directly linked with film, music, literature, arts, sports

and lifestyle as never before. The contribution of fashion and its growing

influence has also permeated into other aspects of the business sector as has

never before been witnessed.

Despite the high influence of fashion in our society, its analysis from a

business strategy viewpoint lacks consensus and structure. This is perhaps a

result of the assumption that the intellectual analysis of fashion is an impossible

challenge. Or because fashion creativity and business intellect have

been viewed as two parallel lines with no meeting point. In luxury fashion,

where there’s a heavy emphasis on design and creativity, this perspective is

more underlined. Well, the days of these assumptions are gone because,

today, the business of fashion requires sophisticated management techniques

in addition to a high level of creativity and innovation. The rapid development

of the business strategy aspect of fashion management and its balancing

act with the creative world are some of the factors that prompted the writing

of this book on luxury branding.

The marketplace would be colourless without luxury brands. Luxury fashion

brands are unique, intriguing and special. This is not a biased statement

from someone who has an innate affinity for fashion branding. It is rather a

statement of the fact that luxury fashion provides a means to a lifestyle that is

triggered by deep psychological and emotional needs, which is expressed

through ingenious products.

A respected writer and branding expert recently told me that he believes

that luxury brands deceive customers by selling over-priced branded goods

that are produced at a fraction of their price tags. I disagree with this view

(excuse me, Mark). I subscribe to the apparent fact that luxury brands provide

a complete package of significant benefits to consumers, the social environment

and the global economy. When people purchase a luxury fashion item,

they don’t just buy the product but a complete parcel that comprises the product

and a set of intangible benefits that appeal to the emotional, social and

psychological levels of their being. It is quite challenging to find another

sector apart from luxury goods, that can claim an emotional connection with

their consumers to such an extent that the desire for a product increases as the

price tag increases.

Our society thrives on fashion as a form of identity and expression and a

source of progression. Fashion, especially luxury fashion, has seeped its way

into the lives of consumers, whether they’re wealthy or not. Luxury brands

have affected the way consumers think, act and live, both directly and indirectly.

Take a moment to reflect on this. When you make a choice of clothes,

shoes or other products related to your appearance and grooming, you are

 

making a statement choice based on how you want to appear to yourself and

to others. These choices may comprise of what makes you comfortable or

what provides you with a means to other forms of satisfaction like belonging

to a specific social group. Your choices might be based on brands or not, but

the underlying fact is that your choices are influenced by fashion. One thing

is certain, and that is the undisputable reality that fashion has become a

permanent part of our lives, including the lives of those that consciously

decide to distance themselves from fashion in order to avoid falling into the

‘victim’ bracket.

So why write about luxury fashion branding?

The luxury fashion industry is a global multi-billion dollar sector comprising

of a multitude of brands with high relevance. Among these are brands like

Louis Vuitton, Hermès and Gucci. They are also among the most valuable and

influential brands in the world. Despite the large size and income generation

of the global luxury fashion industry, the sector has witnessed a slow growth

in its strategic business direction. This is because for a long time luxury

brands were managed through traditional business methods where decisions

were made based on intuition and sometimes on a trial basis. These traditional

methods also featured a strong focus on product development and publicity

generation through conventional advertising methods. However, the rapid

development and complexity of the global business environment currently

requires modern and sophisticated business practices in luxury goods

management.

In a bid to find a synergy between its origins in tradition and the requirements

of modern business, the global luxury goods sector is currently undergoing

an important evolution and several management shifts. These changes

range from the use of business concepts such as brand equity and brand asset

valuation, to e-business; and the development of consolidations and private

equity financing. Also, several factors have contributed to the lowering of the

sector’s entry barrier, giving way to increased competition.

In addition to these, other aspects of the luxury market are also changing.

These include the expansion of the luxury consumer market to include a

broader mass market; competition from mass fashion brands; the reinterpretation

of the luxury concept by the consumer society; the emergence of new

luxury markets like China, Russia and India with new opportunities and

outlook; and the increase in the number of the world’s wealthy and changing

attitudes in their spending patterns.

The different evolutionary stages of the luxury market in several parts of

the world also create a challenge for luxury fashion brand management. For

example, the European luxury scene is in its mature stage and consumers in

this market approach luxury and fashion as concepts that can be adapted to

their lifestyles. This contrasts with US consumers who view luxury as a

means to a lifestyle because the US luxury market is still in its growth phase.

In the Middle East, where luxury fashion is in its full-bloom growth phase,

consumers acquire luxury goods to make a statement of their wealth and

Western know-how. Japanese consumers also have a similar attitude to

luxury fashion goods, albeit with a twist of affinity to specific French brands.

In the rest of Asia, the luxury scene is in its introductory phase while in

Africa the concept of luxury fashion is in its early introductory phase. Luxury

brands face the challenge of finding a balance in the requirements of each of

these markets through their products and service offerings and business

strategies.

Changes in the luxury goods sector and the consumer market have also

dispelled several old notions of luxury. The Internet has altered the way

luxury products are accessed and contributes to the changing consumer

psychology and perception of luxury. For example, the retail cliché that

assumes that buyers buy and sellers sell, is no longer valid. Buyers now sell

in addition to buying, through websites like ebay.com. Buyers can now also

borrow luxury goods from several companies like bagborroworsteal.com and

milaandeddie.com. These possibilities are creating new attitudes to luxury

and more challenges to managing luxury brands.

Further changes in the luxury fashion industry include rapid market

expansion and competition as a result of easier entry into the industry. Brands

can now be launched and achieve global awareness and credibility within a

short timeline of only five years. Also the increase in wealth and mobility of

luxury consumers and the emergence of new luxury markets is fuelling the

sector’s expansion. This has led to a shift in the focus of the luxury market

from ‘products’ to ‘consumers’ and the ‘competition’. The rife competitive

business environment calls for a strong concentration on developing cuttingedge

strategies through relentless innovation. The time has come for new

brands to act like old brands; for consumers to be reached through new media

like Internet Shopping and Mobile Shopping; and for luxury brands to represent

something substantial and valuable to customers through their brands’

offerings.

The branding aspect of luxury goods management is integral to a luxury

brand’s sustainability. The brand is the reason that consumers associate themselves

with a luxury company. It is what creates and sustains the attraction

and desire for products. The strong attachment that luxury consumers have to

brands, which often defies logic, is the result of branding. Brands are not

products and should not be managed like products. Brands are a complete

package that provides a source of identity for products. This identity becomes

a springboard for the associations and perceptions eventually developed in

the minds of consumers. This is what draws consumers to luxury brands and

remains their source of satisfaction.

Although Brand Management is the most influential business aspect, the

concept remains in its introductory phase in the luxury goods sector, despite

the fact that the ‘brand’ is the core competence of the industry. Luxury fashion

brands are yet to absorb the full implication of branding and its management

systems. In most cases, the brand is managed through the view of

product development and the brand portfolio is seen as the same as the product

portfolio. The sequence is often to first develop products and then make

branding decisions afterwards. This is a wrong approach. There’s no easier

way to say it. Branding decisions ought to be at the core of all the corporate

decisions that a luxury brand makes, including product development.

The journey of branding begins from crafting a clear brand concept and

brand identity and projecting it to the public through an equally clear brand

personality and brand image. What the public sees and interprets through the

brand image leads to a positioning of the brand in their minds through perceptions

and associations. This further leads to the allocation of a space for that

brand in their minds according to their sentiments towards the brand. This is

called the brand share and influences future purchase decisions and subsequently

brand loyalty.

The total branding concept (and not just the brand image) is the source of

a luxury fashion brand’s wealth. When the sum of all distinctive qualities of

a brand results in the continuous demand and commitment to the brand by

consumers, the brand is said to have high brand equity. The brand equity is

what translates to brand value, which is the financial gain that a luxury

company eventually accrues as a result of its brand strength. The brand equity

ought to be painstakingly managed and nurtured to retain its value-creation

ability. Brands are invaluable creators of wealth for companies and luxury

brands that aim to attain competitive edge ought to be fanatic about their

brand-strategy management. This is the most important tool the luxury fashion

sector has.

Developing and effectively managing a luxury brand is a painstakingly

long process. It requires a consistent integrated strategy, innovative techniques,

rigorous management control and constant auditing. This is the reason

that there are few existing brands that can claim true ‘luxury’ status. Although

several brands aim towards attaining a ‘luxury and prestige’ rank and every

talented designer aspires to creating their own luxury brand, only a few

brands eventually succeed. The successful brands are those that understand

the challenge of finding a balance between being timeless through a firm

brand concept and heritage; being current and relevant for the moment

through strong brand positioning; and being innovative in crafting a future,

all at the same time.

The aim of this book is not to tell you what you already know about fashion

branding and management, business strategy or the luxury goods market.

It rather provides you with highly relevant analytical information about the

luxury goods sector and, most importantly, a framework of business management

techniques that can be applied to the sector and beyond. It also reviews

strategies that can be used to interpret current and future market changes and

ways that luxury brands can be alert to face competitive challenges. The

information and business strategies presented in this book are the results of

both sound research and confirmed practice. They are sources of new

approaches towards the business of smartly bringing objects of desire into the

marketplace.