Fostering loyalty in luxury consumers will require greater authenticity and more straight-talking.
LONDON — Although their spirits are considerably dampened, the most affluent fashion consumers still have money to spend – and the will to spend it. The difference now is that these more value-conscious shoppers are no longer responding to the usual sales pitch.
Pick up any fashion magazine and you are likely to find at least one article or advert encouraging readers to “invest” in this garment or that accessory. Time and again, the same old overtures are made by both purveyors and promoters of luxury fashion. Yet there is something fundamentally misleading about using of the term “investment” in relation to a sector driven by rapidly changing trends. How, then, did this notion become so ubiquitous within the fashion industry? And more importantly, how has it served and sabotaged us along the way?
Dr. Valerie Steele, Director of The Museum at FIT in New York City, recalls first hearing the term used in relation to fashion in the 1980s: “People were using it as a rationale to justify the price of an Armani suit, which at the time was considered very expensive.” As for the validity of that assertion, Dr. Steele’s response is unequivocal: “It is absolutely false. The value of expensive clothes almost always goes down the minute you walk out of the store with them.”
Kerry Taylor, former head of Sotheby’s fashion department in London and principal of Kerry Taylor Auctions, has similarly strong opinions on the subject. Ms. Taylor whose expertise in vintage fashion and textiles is highly sought after by museums, fashion houses and serious collectors the world over adamantly remarks: “Most designer clothing is so badly made today, I cannot see the investment value in it. I really can’t.” She attributes the devaluation of modern designer fashion to mass-production and over-licensing.
By contrast, designer garments produced in previous decades have stood the test of time in part thanks to the exceptional quality of the fabrics and skill of their construction. According to Taylor, a well-chosen, well-preserved vintage garment from an influential designer will not only hold, but increase in its value over time: “I have clients who purchase a beautiful vintage piece at auction and sell it a year later at a profit. These garments are in finite supply and highly sought after by museums, private collectors and fashion houses.” Even so, where vintage collecting is concerned, the primary consideration is rarely “investment” value in the classic sense. Tim Bent, a London dealer in antique trunks and cases, agrees: “In my experience, serious collectors are not purchasing for investment purposes but rather for their personal interest and enjoyment. Any potential financial gain is purely secondary.”
A Louis Vuitton vintage trunk at Bentleys Antiques, London
The use of the term “investment” in relation to modern designer fashion therefore seems more like a sleight of hand to make the purchase price seem less extravagant – a useful trick given the average price of a designer garment. It cleverly appeals to the logical side of our brain when in fact the purchase of most luxury items is emotional. Moreover, one senses that where fashion is concerned, “investment” is deployed to convey the idea of “value for money” rather than to define a placement likely to yield a return. While a timeless classic like a well-made trench coat may indeed yield good value when the purchase price is amortised over many years of wear, it’s highly unlikely to furnish a profit upon resale.
A misconception though it may be, this notion serves everyone’s interests – or so it did when customers were flush with cash. “Investment shopping” enabled consumers first to justify the purchase and afterwards to keep buyer’s remorse at bay. Luxury brands, many of whom aggressively expanded during the boom years beyond traditional luxury goods into fashion, could carry forward the perceived “investment” value of its core products to new categories that might not otherwise offer quite as much value for money.
Indeed, when brands who had built their reputations on finely-crafted luxury goods designed to withstand both wear and tear as well as seasonal trends branched out into the ephemeral world of apparel and accessories, they inevitably blurred the lines separating traditional luxury goods and trend-driven fashion items. The claim may be more implicit than explicit, but is essential to the brand message nonetheless. How else to justify the “investment-value” price tag of a trendy item certain to be outdated by next season?
Moreover, many brands capitalise on this misconception, indeed rely upon it, because their business model is premised on selling a precise mixture of top-end luxury, premium and “entry level” product categories. For instance, a hand-embroidered couture gown from a top fashion house is probably worthy of the term investment because it is likely to make its way one day to a museum or private collection. It has intrinsic value derived from both its uniqueness and the skill involved in producing it. But what about a ready-to-wear garment? Or a pair of sunglasses bearing the fashion house’s logo? Clearly, perpetuating the misconception is useful as it helps to sell lower-end product categories at hefty prices thanks in part to the vague suggestion of “investment” value. Mr. Bent agrees: “I can understand collecting such items as heirlooms because of their craftsmanship and their beauty. But tracking their financial value may yield disappointing results.”
As advantageous as this misconception might be, there is an inherent obvious danger: the effectiveness of the claim depends largely on consumers’ willingness to accept it at face value and not examine the fine print, something they seem less willing to do if the most recent financial results of many luxury houses are any indication. Dr. Steele notes emphatically: “Consumers are increasingly cynical about luxury fashion. They see through the marketing claims.”
Indeed, there may be early signs that this is precisely what is happening across the luxury sector. While sales of designer apparel have declined sharply, small leather goods and accessories from top luxury brands continue to defy the recession. Brands such as Hermès, long associated with uncompromising quality and tradition, seem to be faring better than others. Accounting in part for this may be that their products maintain their value over time exactly as promised, a fact confirmed by Ms. Taylor who attributes the unusually high resale value of Hermès bags to their limited supply and the enduring appeal of their design, unchanged for decades.
Clearly, the current economic crisis has had a sobering effect on consumers across all income brackets. While it may be too soon to tell what lasting impact the crisis will have on consumer behaviour at large, one senses that luxury consumers are already in search not only of greater value but of increased authenticity as well. While there is nothing wrong with luxury brands offering trendier pieces alongside timeless classics, in today’s value-conscious environment, the former need to be marketed differently and priced accordingly. Perpetuating a misconception that purposefully blurs the line between the two could be viewed cynically by consumers whose confidence has already been shaken. Luxury brands concerned with preserving customer loyalty should tread carefully, lest they find consumers no longer willing to listen.
Helene Le Blanc writes a blog at " target=“_blank” title=“http://www.theluxechronicles.com__”>www.theluxechronicles.com