CONSUMERS

Crisis eliminates aspirational buyers for luxury products

by

Oliver Petcu

|

This is the featured image caption
Credit: This is the featured image credit

Oliver Petcu, managing partner of CPP Management Consultants Ltd explores the demographic changes in the prevalent luxury shopper

Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.

PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.

In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”

The Fondation Cartier pour l’Art Contemparain building in Paris

Oliver Petcu, managing partner of CPP Management Consultants Ltd explores the demographic changes in the prevalent luxury shopper

Oliver Petcu, managing partner of CPP Management Consultants Ltd, explores the demographic changes in the prevalent luxury shopper

The booming sales of luxury brands in the years leading up to 2008, were much attributed to the aspirational consumers, defined as those who would buy on a loyal basis products from so-called ‘’second lines’’ or ‘’diffusion lines’’. Those were the success years of brands such as D&G;, Emporio Armani, Just Cavalli etc. The international crisis has brought about lower sales of these lines, in favor of the first lines, considered as prestige. An important factor which has negatively influenced sales of these ‘’second lines’’ is the fact that most of the merchandise is made in Asia, which has created an inferior perception.

The real winners of the crisis have been the brands such as Burberry or Coach which have established themselves as ‘’democratic, affordable luxury’’ brands. The lower price point of their products has attracted the former aspirational buyers of the second lines. This ’’affordable’’ luxury segment has thrived during the crisis, with double digit sales growth, also attracting the so called aspirational customer who used to buy less pricey items of luxury brands such as small leather accessories.

The post crisis core luxury consumer target is definitely buying less products and is looking at higher end items, valuing the quality of raw materials and finishes. Consumers are looking for unique, limited edition pieces, more than before the crisis. Less seasonal products are also preferred, when it comes to fabrics, styles and colors. An important segment of the former aspirational buyers’ target, especially in emerging markets, has been drawn during the crisis, to the so called ’’premium’’ perceived brands such as Guess, Gant, Lacoste, Tommy Hilfiger.

Marketing strategies of top luxury brands have also been altered during the crisis, the aspirational messages being mostly replaced by lifestyle messages. Particular attention should also be paid to the way luxury products are integrated into a complete lifestyle, for instance the new past times of consumers, who spend more and more time online and who dedicate an important part of their budgets to technology, buying the latest laptop, mobile phone, reading tablet etc. The way people travel has also changed and therefore, the need for the luxury brands to adapt to their new lifestyle. Creating limited editions for local stores have proven to be very successful, especially in key destinations such as St Tropez (Chanel pop up store), Portofino (Louis Vuitton bags collection), Shanghai (Prada limited edition collection).

Functionality and comfort are messages which are appealing more and more to consumers nowadays, adding to the sense of value consumers are seeking. Hence, the success of leading Italian luxury shoes manufacturer Tod’s, which, has seen its sales grow above expectations during the current crisis. Recently, the launch by luxury Spanish brand Loewe of a bag under the form of a basic grocery shopping bag made of high quality leather, has been greatly received.

It remains to be seen how the luxury brands will be able attract the consumers they lost during the crisis, especially for their apparel products. Sales of apparel for most major international luxury brands remain lower than accessories, in particular shoes and bags. An increasing number of traditional luxury consumers have adopted the mix and match trend and became regular customers of fast fashion brands while continuing to buy the accessories from the luxury brands, especially shoes and bags. Wearing an H&M; T-shirt with an Hermes Birkin bag is not only regarded as acceptable but as an integral part of modern culture. Niche brands, especially in fashion, are also likely to benefit, most of them selling at lower price points than established brands and producing limited range collections.

Oliver Petcu, managing partner of CPP Management Consultants Ltd

Oliver Petcu
Oliver Petcu

Managing Director / Senior Consultant

After several years of experience in Marketing & PR management in hospitality, banking and fashion, in 2004, I set up CPP Management Consultants Ltd, a consultancy practice specializing in luxury development (retail & hospitality) and covering Central and Eastern Europe, Russia & CIS, Turkey, U.A.E, Qatar, Egypt, Morocco, Nigeria, India, Indonesia, China, Colombia, Chile CPP acts as a liaison between major international luxury companies/brands and emerging markets (investors, retailers etc) My deep understanding of the emerging luxury markets and my extensive networking among top international luxury industry executives from all sectors have been securing a long term reputation for CPP. In January 2009, I set up CPP-LUXURY.COM – today, the leading global luxury business online platform uniquely covering all luxury sectors and addressing both HNWI consumers and luxury executives. An updated presentation of CPP-LUXURY.COM can be accessed here https://www.cpp-luxury.com/CPP-LUXURY_COM_presentation.pdf

CONSUMERS

Crisis eliminates aspirational buyers for luxury products

by

Oliver Petcu

|

This is the featured image caption
Credit : This is the featured image credit

Oliver Petcu, managing partner of CPP Management Consultants Ltd explores the demographic changes in the prevalent luxury shopper

Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.

PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.

In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”

The Fondation Cartier pour l’Art Contemparain building in Paris

Oliver Petcu, managing partner of CPP Management Consultants Ltd explores the demographic changes in the prevalent luxury shopper

Oliver Petcu, managing partner of CPP Management Consultants Ltd, explores the demographic changes in the prevalent luxury shopper

The booming sales of luxury brands in the years leading up to 2008, were much attributed to the aspirational consumers, defined as those who would buy on a loyal basis products from so-called ‘’second lines’’ or ‘’diffusion lines’’. Those were the success years of brands such as D&G;, Emporio Armani, Just Cavalli etc. The international crisis has brought about lower sales of these lines, in favor of the first lines, considered as prestige. An important factor which has negatively influenced sales of these ‘’second lines’’ is the fact that most of the merchandise is made in Asia, which has created an inferior perception.

The real winners of the crisis have been the brands such as Burberry or Coach which have established themselves as ‘’democratic, affordable luxury’’ brands. The lower price point of their products has attracted the former aspirational buyers of the second lines. This ’’affordable’’ luxury segment has thrived during the crisis, with double digit sales growth, also attracting the so called aspirational customer who used to buy less pricey items of luxury brands such as small leather accessories.

The post crisis core luxury consumer target is definitely buying less products and is looking at higher end items, valuing the quality of raw materials and finishes. Consumers are looking for unique, limited edition pieces, more than before the crisis. Less seasonal products are also preferred, when it comes to fabrics, styles and colors. An important segment of the former aspirational buyers’ target, especially in emerging markets, has been drawn during the crisis, to the so called ’’premium’’ perceived brands such as Guess, Gant, Lacoste, Tommy Hilfiger.

Marketing strategies of top luxury brands have also been altered during the crisis, the aspirational messages being mostly replaced by lifestyle messages. Particular attention should also be paid to the way luxury products are integrated into a complete lifestyle, for instance the new past times of consumers, who spend more and more time online and who dedicate an important part of their budgets to technology, buying the latest laptop, mobile phone, reading tablet etc. The way people travel has also changed and therefore, the need for the luxury brands to adapt to their new lifestyle. Creating limited editions for local stores have proven to be very successful, especially in key destinations such as St Tropez (Chanel pop up store), Portofino (Louis Vuitton bags collection), Shanghai (Prada limited edition collection).

Functionality and comfort are messages which are appealing more and more to consumers nowadays, adding to the sense of value consumers are seeking. Hence, the success of leading Italian luxury shoes manufacturer Tod’s, which, has seen its sales grow above expectations during the current crisis. Recently, the launch by luxury Spanish brand Loewe of a bag under the form of a basic grocery shopping bag made of high quality leather, has been greatly received.

It remains to be seen how the luxury brands will be able attract the consumers they lost during the crisis, especially for their apparel products. Sales of apparel for most major international luxury brands remain lower than accessories, in particular shoes and bags. An increasing number of traditional luxury consumers have adopted the mix and match trend and became regular customers of fast fashion brands while continuing to buy the accessories from the luxury brands, especially shoes and bags. Wearing an H&M; T-shirt with an Hermes Birkin bag is not only regarded as acceptable but as an integral part of modern culture. Niche brands, especially in fashion, are also likely to benefit, most of them selling at lower price points than established brands and producing limited range collections.

Oliver Petcu, managing partner of CPP Management Consultants Ltd

Oliver Petcu
Oliver Petcu

Managing Director / Senior Consultant

After several years of experience in Marketing & PR management in hospitality, banking and fashion, in 2004, I set up CPP Management Consultants Ltd, a consultancy practice specializing in luxury development (retail & hospitality) and covering Central and Eastern Europe, Russia & CIS, Turkey, U.A.E, Qatar, Egypt, Morocco, Nigeria, India, Indonesia, China, Colombia, Chile CPP acts as a liaison between major international luxury companies/brands and emerging markets (investors, retailers etc) My deep understanding of the emerging luxury markets and my extensive networking among top international luxury industry executives from all sectors have been securing a long term reputation for CPP. In January 2009, I set up CPP-LUXURY.COM – today, the leading global luxury business online platform uniquely covering all luxury sectors and addressing both HNWI consumers and luxury executives. An updated presentation of CPP-LUXURY.COM can be accessed here https://www.cpp-luxury.com/CPP-LUXURY_COM_presentation.pdf

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