Added Value Edits: Luxury in Europe

05 Aug 2015|jhall

Luxury has never been shaken to its foundations as it has in the past five years. With the advent of new players, the emergence of new centres of consumption and creation, and the onward march of technology – the concept of Luxury is being re-defined. Europe has traditionally been the epicenter of Luxury, and in this month’s edition of Edits, we focus on both the latest strategies and activation examples that bring these shifts to life in the capitals of the Old World.

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1. Luxury retail follows high flyers
New consumer behaviours are shifting the focus of retailers to airport locations where sales are expected to increase by 73% from 2013 to 2019 (The Economist). Louis Vuitton opened in Heathrow’s Terminal 5 in Dec 2014, joining Dior and Cartier. Travel retail has been growing at 12% per year since 2009, which is double the growth rate for the luxury goods market. The airport is also a democratic space that makes luxury retailers feel more accessible to those who may not frequent Sloane Square every day… Read Added Value’s analysis of the future of Duty Free and Travel Retail here.

2. Digitization of the luxury world
British brand Burberry revealed in its 2015 Q1 retail sales report that its digital platforms continue to “outperform”, driven by mobile sales. Digital is narrowing the gap between luxury brands and consumers, and is deemed particularly effective in seducing a younger audience: 68% of Millennials follow more than one luxury brand on social media. Burberry continues to pioneer the use of new technologies – it recently used Periscope, Twitter’s video streaming app, to broadcast its “London in L.A.” show, and posted on Snapchat from behind the scenes as everyone prepped for the show.

3. Subtle ‘codes’ instead of designer logos
The Millennial consumer is not impressed with designer logos splashed across handbags and clothing. A discreet design code such as the red sole of a Christian Louboutin shoe or the quilting on a Chanel handbag communicates the brand identity, while allowing the younger generation to make it their own. There is also the delight of feeling that one is “in the know” – this is a generation that has the tools to explore and curate their own identity and align themselves with brands that embody the way they want to feel.

4. Emerging Luxury codes in the hospitality industry
Hotel chains are adjusting their offer to align with the new definition of luxury. They are creating sub-brands to maintain an air of exclusivity, while borrowing design cues from boutique hotels to offer a more unique experience. Starwood Hotels & Resorts has over 1,200 venues, and recently announced that it will open four new luxury hotels in Europe under its “Luxury Collection” brand. Marriott Hotels partnered with hotelier Ian Schrager to create the Edition brand, which now has 4 hotels globally with plans for 6 more to come in the next 2 years.

5. Couture brand opens the doors to its ateliers
The recently launched documentary, Dior & I, gives an exquisite look into the secret world of haute couture. Viewers follow new creative director Raf Simons as he starts his tenure and is tasked with putting on his first Paris haute couture show in just 8 weeks. The cameras capture his first meeting with the seamstresses, his creative process, and his emotions as he feels the pressure. This is a great example of a traditional luxury brand exposing its underbelly in a way that renews your admiration and appreciation for the art of luxury fashion.

6. London’s V&A Museum predicts the future of luxury
A new exhibition has opened at the Victoria & Albert museum in London that aims to challenge the way we think about luxury and how it will evolve in the future. Over 100 objects highlight the exacting standards and expertise that goes into the production of luxury goods, while a watch with no dial encourages visitors to think about the luxury of space and time. The future of luxury is depicted by a vending machine filled with DNA samples that hints at a future where keeping hold of your DNA will be a new luxury afforded to the few.

7. The first luxury smartwatch for LVMH
Swiss watchmaker Tag Heuer is working with Google and Intel to create a smartwatch that will rival the Apple Watch. The watch is due to retail at just over $1,500, against Apple’s top price of $10,000-$17,000 for the Edition range, and will have 40 hours battery life (against Apple’s 18 hours). Due for release in fall 2015, Jean-Claude Biver, President of the LVMH Watch Division, believes Apple Watch advertising will help sales of their smartwatch because the ads put a spotlight on luxury and consumers could be more likely to upgrade to classic luxury brands.

8. The high cost of counterfeiting
In Europe, counterfeit fashion leads to losses of approx. $8 billion in value (World Customs Organizations), and it is thought that this could further increase due to E-commerce. This is getting in the way of growth in the luxury fashion industry. Italy in particular is rife with counterfeits – just last month, 410 websites selling fake luxury clothing and accessories (including the Prada brand) were shut down, and in 2014, 3 billion euros of illegal goods were seized by police.

Get in touch if you’d like to hear how Added Value can help you think about strategic marketing that works.

Written by Jonathan Hall, President North America Consulting, Added Value
Follow Jonathan on Twitter @HallCJonathan

 

Image source: Burberry

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