How luxury brands are redefining retail branding
Lately, we’ve seen record-breaking value-growth for the luxury segment. This isn’t simply down to a thriving economy, it’s because luxury brands have a high sense of self-awareness, they express themselves in distinctive ways and make themselves visible amongst the pretenders.
Strong brands hit you right in the feels
Like many markets, the luxury marketplace is becoming more complex. Changes in the way we buy, global competition and technology are forcing manufacturers to rely more heavily on their brands. The brand is the emotive connection that anticipates the needs of consumers in relevant ways. Brands become essential through providing a more emotional connection, providing innovative solutions, and distinguishing themselves from competition - ultimately building value.
See how stores use design to counter online competition.
This is easier said than done, especially when shopping barely resembles the way we shopped, five or ten years ago. Today, brands need to be present online, especially on mobile, and offline in traditional stores, because the consumer could be in any of these places, or in several, simultaneously. The customer could be at home, shopping, (using Alexa or Siri), creating a list items that will likely be fulfilled, by algorithm, or paid search. Unless brands cut through to the consumer in a more meaningful way, they will fail to get the attention they deserve.
"A brand is the emotional link that solves any need of you as a consumer in relation to what the brand can offer."
In this blog, we'll look into brand-building in the luxury market which has experienced a steady increase over the last couple of years, particularly in retail. Thanks to smart brand managers balancing the right mix of online and offline experiences to take retail up to a new level.
Let's take a look at some brands that have succeeded by turning challenges into advantages. They have achieved this by working purposefully with the product and target group and by creating unique experiences for a discerning audience.
Brandz Top 100 Most Valuable Global Brands Report 2018 shows that the 20 companies that grow fastest on the list are companies that break with the existing in a way that creates a strong brand experience. Investing time and money in a brand in an insecure market creates more security and leads to better bottom line results. This gives the players the opportunity to operate with a higher price, but still be popular with customers. According to the same report, the value in the retail segment increased by 35% last year. This makes this segment the fastest growing category for the second year in a row. This is not least due to the fact that the value of these brands has reached a historically high level, and because the category has corrected itself in relation to the insecurity in the market. In the luxury segment, products with bolder designs and more colors have been introduced, which has coincided with customers' need for an escape from reality and a desire to be unique. With its clear distinctive character, Gucci has taken the lead in the Brandz Luxury Top 10. They have had a value increase of as much as 66%, making them one of the Brandz Top 20 Risers - and one of the fastest growing brands in any industry.
Here some further figures to prove the picture:
Louis Vuitton: 2018 vs 2017 + 41%
Hermès: Merkevareverdi 2018 vs 2017 + 20%
Gucci: 2018 vs 2017 + 66%
Dior: 2018 vs 2017 + 54%
Why this exceptional rise in brand value?
Rebound of China
China’s journey to urbanization and prosperity has led to accomplishments that exceeded any country in the world. CEO Vladimir Djurovic of Labbrand in Shanghai, said: “Sales during China’s Singles Day is nearly three times as much as Black Friday and Cyber Monday combined. However, viewing these developments merely as interesting anecdotes means we risk missing the bigger picture. Similar to the influence of the UK during the Industrial Revolution, China will lead the changes both in technology and in consumer behavior in the Digital era."
Luxury hurries as fast fashion goes premium
In the fashion space we are witnessing an inversion of trends between luxury and mass market players. Fast fashion players like H&M, for example, are introducing more premium focused collections, indicating a shift toward more long-term planning for those upmarket collections. Conversely, luxury brands are looking for ways to introduce newness more frequently without applying that sentiment across their entire ranges. Historically, luxury brands have operated around a bi-annual calendar with two major drops per year. Yet we are now seeing them create smaller ranges that stimulate the market at regular intervals, helping them to stay front-of- mind between big seasonal drops. Gucci is a good example of a brand that is exploiting this strategy, by creating capsule collections in collaboration with artists and other creative personalities to generate interest more often.
Iconic meets ironic as luxury adopts streetwear
Iconic met ironic in Burberry’s collaboration with streetwear designer Gosha Rubchinsky, who reinterpreted the brand’s classic plaid in fanciful, tradition-defying ways. In an augmented reality development with Apple’s ARKit, Burberry users can enhance their own social media images with Burberry-inspired artwork. Whilst, Prada created throw-back collections that evoked the 90s, which continue to be at the center of a nostalgia trend they're on.
Young consumers redefine luxury, and find niche brands
The luxury consumer is getting younger.millennialsare driving the trends, influencing up and down, generationally. They are redefining what they consider luxury, and it’s less about the traditional brands and more about the niche brands that they’ve discovered. They aren’t necessarily expensive but have rarity in other ways. In the US, these young people are getting to wealth faster and they’re much more ethnically diverse. They often buy into the experience around the product. The classic brands are responding in many ways, certainly by perfecting their e-commerce presence.
Introducing fresh talent
In haute couture,we’ve actually seen an unprecedentedturnover in chief designer positions,in the last couple of years. Balenciaga may have started it off in 2015 by naming Demna Gvasalia, the Vetements designer, as artistic director. And the latest in the haute couture appointment, being Virgil Abloh bringing his crowds and his cool to Louis Vuitton menswear this March, while still taking care of his ultracool brand Off-White.
Brands balance timely offerings and timelessness
In the luxury world today, we see classic brands areembracingan edgier point of view. This bolder, more modern, aesthetic helps to reach new affluent consumers, who are younger, more diverse, and more globally-connected. At the same time, those same brands must transmit their rich heritage,to maintain the interest and loyalty of their core customers. To balance timeless and timely, we see brands playing with limited-edition collaborations usinghip and avant-garde designers. Theypartner with unexpected muses such as social influencers,to develop content and collections. Immersive digital experiences are also important, to help new audiences feel part of the brand’s legacy - and its future.
So what does the future look like for retailers?
Brands need strategies to ensure consumers request them by name. In today’s cross-screen, multi-device, ‘always-on’ world, media, content and technology, both consistently and simultaneously overlap. Often competing in their ability, to determine the most impactful points of influence,for successful persuasion. So many things are fighting for consumer attention, that the purchase journey has become a very crowded path. For marketers to really make meaningful connections with potential customers, the focus has to move toward the new tools of persuasion; the platforms that smart, voice-activated devices plug into. As we come to accept new tech-driven behaviours, such as talking to our devices to trigger a response, ‘OK Google’. Or posing questions to inanimate objects, ‘What’s the weather like today Siri?’ Even completing transactions without a physical interaction, via Amazon Prime or simply your mobile. Ultimately, we will begin to see the evolution, from singular-purpose cylinder devices, to voice being embedded into all aspects of our life, and across every touch points including: Home pods, clothing racks, kitchen appliances etc.
So, it comes as no surprise that technology is moving from individually smart, to collectively intelligent. Leveraging the power of these larger platforms, to drive a seamless experience for consumers. As a result, this has altered how we position our questions, introducing a level of emotion the response chain has not experienced before. With more competition entering the marketplace from major players, conversational interfaces powered by AI will become the new communication tools,for marketers to leverage in their interaction with consumers.
Returning to luxury brands again, Gucci has already tried this out with huge success. With its vibrant patterns and colours, Gucci captured the moment and influenced the category. Ubiquitous at red carpet galas, Gucci was endorsed by celebrities and the beneficiary of much buzz on social media.
An unusual and popular social media influencer, Lil Miquela, who happens to be a computer-generated avatar has been seen wearing Gucci and other luxury brands to several occasions...and fans love it!
On a final note, technology for technology’s sake is a never a good idea. Whilst we continue to be inspired by its potential, we must remember what goes around comes around. The sale of traditional books has started to outshine digital once more. Digital native brands are now opening on the high-street. And fashion magazines, are back in fashion.
Source
Kantar Millward Brown, 2018 BrandZ™ Top 100 Most Valuable Global Brands
