By Manfredi Ricca
A first, superficial glance at the current economic landscape would not seem to leave much room for optimism when it comes to global luxury brands. Uncertainty is the dominant force in business as well as personal decisions. Mature economies are showing signs of further contractions. A GDP slowdown in developing markets is beginning to manifest itself as a consequence, with the engine of growth of recent years showing signs of uncertainty. Travel, a fundamental market for luxury, is expected to suffer in turn.
Such a context will inevitably bring serious challenges to global luxury brands. However, the changes we are witnessing stretch far beyond economic cycles. They encompass and reshape the ways in which we live, learn and choose as individuals.
From environmental concerns to a much deeper and wider sense of personal care, from a questioning of consumerism to issues about future resources for an aging global population, the underlying thread driving the luxury consumer's mindset these days appears to be a quest for depth and discernment in choices.
A look at other categories, from FMCG/CPG to the automotive sector, shows how this global social and cultural shift is forcing brands to reengineer themselves and adapt quickly to this changing mindset. Luxury brands are in a very different position. This gradual evolution in the culture of choice is more than cyclical goodwill, it is a historic and unprecedented opportunity.
"Whether their business model and brand paradigm is traditional luxury or meta-luxury, these global icons are best positioned to fulfill, or at least give voice to, people’s quest for unquestionable authenticity."
Out there is a world that is increasingly questioning the fundamental notion of value. In many ways, luxury brands express, by definition, the very notion of superior value. Whether their business model and brand paradigm is traditional luxury or meta-luxury, these global icons are best positioned to fulfill, or at least give voice to, people’s quest for unquestionable authenticity.
Out there is a world of individuals wanting to escape hundreds of meaningless daily messages to engage with profound, masterful storytelling, in a way which is captivating and involving. Cartier’s “L’Odyssée” short film, whose viewership has already exceeded the population of several EU states, is the quintessential example of what luxury brands can do to create relevance for new generations. Some of the most sophisticated social and digital strategies today come from brands such as Burberry. Luxury brands are uniquely positioned to combine engagement and effectiveness in messaging. Many are showing that they can use traditional channels to create mass desire while providing unique, one-of-a-kind customer journeys for high-net-worth individuals and ambassadors.
Out there is a world of of customers increasingly interested in the contribution of companies as corporate citizens. And here are brands with the credibility and influence to promote causes which range from education, championed by Gucci, or contemporary art, supported by Prada. It is particularly fitting for luxury brands to have a citizenship agenda, because they have shown they stem from, and reflect, cultural—and not only
Out there is a world where customer engagement is increasingly part of the business agenda. Luxury brands are leading the way in ensuring the retail experience is an integral component of their proposition, generating a sustainable return on capex and transforming point of sale into a selling point.
Out there, finally, is a world that questions the virtues of short-term performance versus long-term prosperity. In today’s volatile markets, smart companies are demonstrating how the right, handpicked line-up of traditional, large-size luxury brands and resilient meta-luxury brands can create an optimum balance of expected returns and risk control.
All this does not mean that life is going to be easy for the luxury sector in 2013. What it does mean is that few brands are better positioned to engage the desires and aspirations of the global consumer.