Louis Vuitton Spring Summer 2013 Campaign
It was another mammoth year of IPO’s, leadership changes, M&A; activity, global expansion, technological innovation and change in the luxury industry. Here we present the five key trends that defined the industry for us in 2013.
“ Wealth centres are shifting from the west to the east & middle class affluence is exploding ”
The luxury industry has never catered to such a diverse range of consumers, who expect brand experiences on an individual level, regardless of their wealth, age, culture or location.
Wealth centres are shifting from the west to the east (and also to the south) and middle class affluence is exploding around the globe. With such shifts, one commonly accepted – and inherently western – interpretation of luxury is no longer sufficient to attract and engage such a diverse consumer group.
European luxury brands have dabbled in creating localized products, but what they have noted, is that the reason many of these non-European clients buy into European luxury brands is precisely because of their European sensibilities and aesthetics.
Instead we are witnessing the rise of domestic luxury brands, as European brands return focus to their own provenance and heritage. Whether it be smaller local players (Okapi, Toujouri, Fischer Voyage) or brands backed by large European conglomerates (Shanghai Tang, Shang Xia, Queelin), authenticity has emerged as key for these new-market brands.
The clear message in all of this is that luxury is no longer just ‘Made in Europe’ for western tastes, but that personal interpretations of luxury – based on values, culture and beliefs – will play a far more important role in consumption in the future.
Hermès $1.9 million Birkin Bag
Now that the luxury industry speaks to such a wide range of consumers, the wealthiest clients are looking for exceptional ways to differentiate themselves from the pack. In the luxury goods industry, this is the creation of unique and outstanding products using the most exotic skins and most precious stones.
In 2013, Hermes released four Birkin Bags made of gold and diamonds, designed by Pierre Hardy, which took over two years from concept to realisation. Each was audaciously priced at $1.9 million. Ferrari revealed plans for LaFerrari, the most expensive production car to ever be built, which will retail for $1.4 million.
Lancôme has partnered with Baccarat and musical machinery crafters Reuge, to create La Vie Est Belle L’Edition Féérique, which will sell at Selfridges for €50,000. The bottle of perfume is housed inside a handcrafted crystal music box, which plays from 144 Baccarat crystal notes, underneath a chandelier with 133 drops and 48 tubes of crystal. Only 15 will be released.
Luxury brands are increasingly devoting focus and resources to products and services for their top tier clientele. According to Ledbury’s Global Luxury CEO Survey, 95% of their C-Suite respondents revealed that business with their VIP customers is growing. 86% indicated that increasing their focus on higher end products and top-tier customers, as well as raising prices, is a focus.
“ The wealthiest luxury clients are looking for exceptional ways to differentiate themselves from the pack ”
2013 was the year that personalisation and mass customisation became a reality in the luxury goods industry, again for the widest range of consumers yet.
Brands such as Bottega Veneta and Louis Vuitton have long since offered clients the opportunity to have their initials imprinted on their leathergoods and luggage, yet Vuitton took this idea one step further with the rollout of Haute Maroquinerie to several key Maison concept stores.
During the process, clients work with in-house experts to decide on the handbag style, colour, leather and finish – up to 80,000 combinations – which is then sent to the label’s workshops in Asnières, Paris, taking between six months and a year to be made. Prices range between €5,000 and €15,000.
The trend was also consistent across menswear offerings, with houses such as Brioni, Tod’s, Alexander McQueen, Gucci and Salvatore Ferragamo launching mass-customisation programs for men’s shoes, shirting and in some cases, suiting. With prices starting for as low as €200 for a customised shirt, the cost-based barriers to entry became lower and lower.
Indeed, truly bespoke products tend to remain a luxury for those with the deepest pockets. But what has changed, is that now a much wider base of consumers have access to personalisation, consumer expectations are being raised across all board.
We can expect that luxury will become more and more individual, for all segments of consumers, than we had perhaps ever thought possible.
Louis Vuitton’s Haute Maroquinerie
As products move towards the exceptional, physical retail moves further towards the experience. After rapid expansion in far flung locations, luxury brands are slowing down store openings and reinvigorating their approach to brick-and-mortar stores.
By incorporating a mix of art galleries, brand museums, cafés, florists and various lifestyle extensions into traditional boutiques, luxury brands are luring consumers into their ‘universe’, not necessarily to buy products but to ‘touch’ their brands.
Louis Vuitton’s Maison concept is a fitting example of destination retail, particularly in the case of Rome. The French heritage brand restored the city’s first Cinema, showcasing their full collection for men and women, amongst a private cinema and a library dedicated to books about film.
At Burberry we witnessed the debut of their first digitally integrated retail offering, where the architecture of the store was based on the site map of their online flagship. RFID tags fitted into garments enabled mirrors to switch into digital screens, which then displayed product details and craftsmanship stories.
Luxury auto brands are also re-imagining the typical showroom model, in favour of technologically integrated inner city locations. BMW, Audi and Lexus have opened digitally enabled ‘destinations’ in central London, Paris and Tokyo, in some cases, without physical vehicles to showcase.
“ As products move towards the exceptional, physical retail moves further towards the experience ”
Though he shows no signs of slowing down his activities as Chairman of LVMH, Bernard Arnault has somewhat strategically appointed his son, Antoine, as Chairman of Loro Piana and CEO of Berluti, as his daughter, Delphine, steps into the role of Executive Vice President of Louis Vuitton and launches the first LVMH Prize for new fashion designers.
At Richemont, South African billionaire Johann Rupert has announced that he will take a 12-month sabbatical from his role as Chairman, after installing Berard Fornas and Richard Lepeu as joint-CEO’s earlier this year. He has bolstered his senior executive committee and installed younger managers to head some of the group’s largest brands.
We are witnessing succession planning beyond preparing the next generation of luxury leaders, as conglomerates begin to map the next generation of luxury brands. Growth for heritage brands is stabilising and luxury consumers are younger and younger. Resultantly, conglomerates are looking to new designers to balance their portfolios and lead future expansion.
In 2013 Kering and LVMH made minority and majority investments, in young fashion designers such as Christopher Kane, Nicholas Kirkwood, Joseph Altuzzara and J.W. Anderson. LVMH also debuted its first program committed to nurturing new fashion talent, in the form of a grant and mentoring scheme, where LVMH creative directors will assist winners with business advice and assistance.
Burberry’s Regent Street Flagship
You will have to stay tuned for our official predictions for 2014, drawing on the wisdom of various industry experts. But what we can say is that on a general note, we expect the luxury industry – and the luxury experience – to become far more personalised, individual and all encompassing than ever before in 2014.
And also, we expect that the idea of luxury – as previously determined by Western tastes and attitudes – will continue to augment as the industry caters to new cultures, beliefs, religions and regions. Bringing to it, new brands, new products, new services and hopefully, another exciting twelve months of innovation and change.
To further investigate the industry year by year on Luxury Society, we invite your to explore the related materials as follows:
- 2013 Luxury Industry Predictions from the Experts
- 8 Trends That Defined The Luxury Industry in 2012
- 10 Most Read Luxury Society Articles of 2012