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Genuine is the Key Word When it Comes to Generating Value

Posted by: Interbrand on Wednesday, June 9 2010 02:15 PM

Interview with Jean-Baptiste Danet, CEO Interbrand Europe
Published in La Tribune, May 31 2010

(Lire en français ici.)

Over the past few years, the luxury category has been influenced by a phenomenon called “accessible luxury.” How has this affected the luxury world?

“Accessible luxury” is an oxymoron enabling those brands with a weaker heritage and less anchorage in the tradition of luxury to proclaim themselves as icon brands.

This phenomenon has shrouded the luxury sector in a cloud of contradictions, made even denser by the economic crisis. It has shown how it is possible to either focus on dreams or on reality—but never simultaneously on both.

How have the luxury brands reacted to this?
Some luxury brands, like Ferrari, have chosen to control their growth and even limit production in order to maintain their legendary status. Others, like Armani, have deliberately adopted a volume strategy and endeavored to enlarge their customer base, thereby relinquishing the traditional notion of luxury. These two contrasting strategies have both paid off. It is important to highlight that the way in which consumers have reacted to the crisis proves that luxury is not a category a company can decide to enter. Rather, luxury is born of product excellence. Myths are based on reality, not the contrary. Today, it would seem that “genuine” has become “the exception.”

Is this why some brands have returned to their origins over the past few months? 
Genuine is the key factor of demand and therefore the factor that generates value. Those brands that have surfed on the “luxury for all” trend are no longer considered to be luxury brands per se. Well-established, historical brands have had to focus on their prestige/past glory—on what has made them legendary. Louis Vuitton has strengthened its “traditional” luxury status, notably with a well-inspired and successful advertising campaign highlighting its savoir-faire.

For other brands, demand for perfection and excellence has enabled them to reconstitute a coherent positioning. This is, for example, the case with Hermès (see video below), which has always clearly expressed its positioning based on craftsmanship and the pursuit of the highest quality for its perfectly structured product catalogue.

This endeavor to be genuine has also had an impact on distribution modes. All top brands—Gucci, Prada, Burberry, as well as Vuitton—have invested in expanding and/or realigning their distribution network. When it comes to preserving or communicating a brand image, sales outlets are just as crucial as the products themselves.

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