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- 7 Dec 2012
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Why Lifestyle Extensions May Not Be Right For All Luxury Brands

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Missoni debuted its home collection in 1983, featuring its iconic patterned textiles


Thomas Tochtermann & Linda Dauriz of McKinsey & Co. warn luxury executives not to rush the growth of a brand by expanding too fast into lifestyle

Everyone has a sense of what constitutes luxury, yet defining the concept of “lifestyle” is a lot more difficult.

We wanted to look at how luxury players can gauge the lifestyle potential of their brands and how they can reap the benefits without diluting their heritage along the way. Just like luxurious products themselves, luxury lifestyle brands become more valuable over time if you take good care of them.

Real luxury lifestyle must be rooted in authenticity. If luxury brands stray too far from their roots, they will be reduced to little more than faded labels.

Authenticity is the most important consideration when communicating luxury lifestyle. A senior executive at one of the world’s most renowned fashion houses put it this way: “Lifestyle is the result of what we do, not the purpose.”


 We wanted to look at how luxury players can gauge the lifestyle potential of their brands 


Conducting the report…

We drew from three sources of information:

1. Street interviews conducted in London, Paris, Milan and Munich in April 2012. Questions focused on respondents’ understanding of “lifestyle in luxury” and their expectations from a luxury lifestyle brand.

2. A survey, launched on the website of the Financial Times Business of Luxury Summit 2012, that was targeted toward the participants of the Summit, i.e., executives active in the luxury industry. Seventy participants of the conference completed the survey in April 2012.

3. In-depth interviews of senior executives from 20 luxury good companies, including fashion houses such as Roberto Cavalli, makers of leathers good like Hermes and jewellers such as Harry Winston.


 We found little agreement on what exactly “lifestyle” and “lifestyle in luxury” mean 


Unsurprisingly we confirmed…

Several successful, world-renowned brands were mentioned most often as luxury lifestyle brands par excellence: Hermes, Ralph Lauren, Louis Vuitton and Armani, in that order. These brands have done a superior job of building a story around their brands, engaging narratives in which their products are just one part.

The iconic images of Louis Vuitton’s “Spirit of Travel” campaign, for instance, are the epitome of luxury lifestyle. The photos of Keith Richards lounging in his hotel room with a branded custom guitar case by his side, and Zinedine Zidane playing a game of table soccer with his Louis Vuitton trolley barely visible in the distance both attach a sense of inspired living to Louis Vuitton’s products.

Hermes has done a great job of evolving its luxury lifestyle ethos to new regions. Two years the company launched Shang Xia with the Chinese designer Jiang Qiong Er. This spin-off brand aspires to project a modern lifestyle onto the authentic values of Chinese tradition and culture. “The idea is…to create a Chinese Hermes,” said chief executive Patrick Thomas in a public statement.

As you might expect, we also found little agreement on what exactly “lifestyle” and “lifestyle in luxury” mean. Some say they mean a “set of attitudes and values” or specific “consumption habits.” Others use evocative words like “mythology” and “sensory appeal.” Still others say it’s a whole lot of hocus-pocus. “It’s just brand names. That’s all,” said one respondent. “It’s marketing,” chimed another.


 Of the 20 luxury companies we interviewed, almost half had abandoned product categories they had entered 


Most surprisingly we found…

We were amazed to find that 70 percent of the executives at the luxury goods companies we talked to said they regard their brands as “lifestyle luxury.”

This is a surprising finding because successfully infusing this concept into your brand is no easy task. Many that have aimed high and moved fast have failed, gambling away more brand equity than they would ever be able to recapture in additional revenues.

Of the 20 luxury companies we interviewed, almost half had abandoned product categories they had entered. The biggest risk inherent to moving luxury into lifestyle is a dilution of the brand. “Those who are not credible will fail, as consumers will recognize it,” a senior executive said in one of our interviews.

Take the case of Michael Kors, an apparel brand that first started selling its resort collection in 1981 through wholesale. In the 1990s the brand expanded into other categories by way of licensing agreements. But Kors lost control of the central identity of his brand and the business went awry.

In 1993, the company filed for bankruptcy. The brand has since come back, thanks initially to a quiet focus on core products and then a new infusion of capital and Michael Kors’ stint on “Project Runway.”


 70% of the executives at the luxury goods companies we talked to said they regard their brands as “lifestyle luxury 


If we were to conduct this study in 12 months time…

We actually believe that our findings won’t change: lifestyle luxury is a valuable proposition. The very recent example of The-Miu-Miu in London is yet more proof that lifestyle is gaining in importance. The store is a members-only club for women that features exclusive collections, moderated talks and an on-site restaurant.

What may change is that the digital world may give brand owners the ability to more easily build images and perceptions about a brand, and to do so at a lower cost than the offline world. This may become a temptation for many brands, but it also creates a risk of brand identity dilution. Lifestyle luxury needs to be built carefully.


 Moving into unrelated product categories too early creates unnecessary complexity and may even damage the brand 


If readers remember only one thing it should be…

Don’t rush the growth of your brand by expanding too fast into lifestyle. Moving into unrelated product categories too early creates unnecessary complexity and may even damage the brand – without adding substantial revenue, let alone profit. And it’s important to remain true to your roots, steering clear of the hot air that so easily gives rise to a mirage.

The Carolina Herrera brand, for example, has successfully established itself as a lifestyle player, but it deliberately restricts touch point and category coverage to those areas closest to its core – evening wear and festive, yet timeless elegance. A mindful development of lifestyle will be most beneficial for the long term.





Luxury Society invites our readers to discover McKinsey’s full Luxury Lifestyle: Business Beyond Buzzwords Report and contact authors Thomas Tochtermann or Linda Dauriz for more information regarding the research


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McKinsey & Company is a global management consulting firm, trusted advisor to the world’s leading businesses, governments, and institutions.

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