- Luxury brands, like every other industry, are affected by socio-economic, political, environmental, and technological changes. In the same way, luxury brands need to adapt to these changes in order to survive and thrive in the ever-changing global market.Such changes may be abrupt and unprecedented such as natural disasters, recessions, and crises like the COVID-19 pandemic. They can also be brought about by the shifting times such as generational value shifts and technological advancement. Whatever the case, changes always bring a shift in consumers’ perception of value. Luxury brands should be ready to identify those shifting values and positioned to act accordingly.
How can luxury brands adapt to these changes?
The COVID-19 pandemic has affected a lot of industries globally. Fear of infection, limited mobility due to quarantines, and priority on safety and necessities have changed consumer behavior drastically. During crises like this, people are deferring non-essential purchases.
The luxury sector also felt the impact. Lockdowns on several parts of China restricted travel between the mainland and Hong Kong–the world’s largest luxury market is affected. Malls are empty, stores are closed, and in Italy, some people are willing to trade their apartments for protective gear.
The travel industry also came to a standstill, and a lot of conventions were canceled. Hotels lost profits due to canceled bookings.
More people are working remotely, and staying at home sped up the dramatic shift to the digital economy, which has lasting effects on brands, supply chains, and consumer demands and preferences.
Of course, this isn’t the first hurdle the luxury market has endured. In 2008, a recession hit a lot of industries, and luxury brands that were unprepared did not survive.
Here are some strategies that luxury brands who stood the test of time did right.
- Added Luxury Value Building
The strongest brands that created enough value managed to weather several turbulent times in the past. Luxury is all about extreme value creation, the highest value component a brand could provide called added luxury value (ALV). ALV is driven by intangible factors that go beyond the features of your product.
This is what separates Rolex from Timex watches. While Timex watches probably have more functional features aside from telling time, Rolex watches give the wearer an aura of superiority. Wear one, and people see you as someone who knows his/her priorities, is sensible, and makes wise decisions. That’s the added luxury value the brand brings–it serves as a status symbol, and it has made Rolex a successful luxury brand.
Most luxury brands fall into the trap of just providing expensive products with good aesthetic value. However, value creation goes beyond the product and craftsmanship. While quality is definitely essential, what consumers essentially value is the heritage, ethos, and position of the brand.
It takes continuous research and efforts to create more value for a luxury brand.
- Brand Storytelling
Another strategy that successful luxury brands apply is putting the brand before anything else. Telling a compelling story to reinforce cultural and social values, focusing on precise and insight-driven contexts create meaningful value for customers.
A lot of luxury brands appeal to older generations (Boomers and GenXers) because, during their time, association with big brands increases their personal status in society. It was all about brand awareness and product execution, and it worked–in the past. However, in order to continue thriving, luxury brands need to capture the attention of the younger generations.
Due to the technological revolution, the age of information brought transparency in consumer markets. For Millennial and GenZ consumers, value is all about brand purpose and positioning, social currency, and authenticity. They already know what they want from a product, but they would rather transact with a brand that makes their purchase meaningful.
Brand storytelling is all about the emotional connection to your customers, but there must be a logical connection between the story and the influencer. Brand positioning must also be done from the perspective of the customer–the power has shifted from brand to consumer.
A perfect example would be the Fenty makeup line. There are a lot of established brands that sell foundation, but Fenty appealed to its customers by adding social currency to its products. Fenty provides an excellent quality foundation that comes in more shades to cater to a wider range of complexions, making it a brand that advocates equality and inclusivity. Of course, the brand story establishes more authenticity because its influencer (and owner), Rihanna, experienced first-hand the difficulty of finding a foundation to match her skin complexion. This kind of brand purpose and positioning resonated well in its target market.
- Customer Relations
Maintaining close relationships with your customers is the glue that holds a band together. Your most valuable input for value creation, branding, marketing, and ideas for new products come from your consumers. It is their change in views and values, their behavior, and their patronage that can make or break your business. Providing top-notch customer service and experience is the key to your business’s success.
Offer inspired products, redefine classic lines, and introduce new collaborations. Continue innovating to sustain different value shifts, such as health and eco-friendly sustainability, emotional wellbeing, and financial wellness. Make luxury a journey for your customers and not just a destination.
- Fortify Digital Branding
Keep up with the technological revolution by utilizing sophisticated tools that measure digital ROI, provide real-time insights, and content validation and creation with AI-powered tools in your digital branding. Provide customers with highly personalized and automated digital marketing journeys.
Digital Marketing Strategies for Luxury Brands
Website design: Combine aesthetic, UX, and functionality
Most luxury brands have stylish websites but have poor user experience and functionality. Optimize the digital customer journey and experience by improving all three.
Brand storytelling is delivered through content. Utilize visual content strategies such as videos and graphics, especially for social networks. Highlight the brand heritage with attainable, intuitive, and immersive storytelling. Create inspirational and relevant content that reinforces status and educates your customers.
SEO, paid ads, list building
You can never go wrong with the classics in digital marketing. Utilize SEO, paid ads like Google and Facebook Ads, and continue building your email list.
Build a sense of exclusivity
Make your customers feel special. Providing a sense of exclusivity in your online platforms enhances the prestige and sense of belonging to the luxury brand.
The convergence of online and in-store experience
Consistency is key for luxury brands. Put elements of the in-store experience on your websites and other online platforms, and let the unique online experiences carry over to your brick-and-mortar stores.
Traditional strategies that worked for luxury brands in the past
- Cost rationalization: Reducing expenses, slowing or delaying expansion, and reigning in spending are sensible reactions during turbulent times. This includes pausing hiring, reducing the number of collections and its sizes, and rationalizing media spending. Brands like Dolce & Gabbana and Burberry survived the 2008 recession through these strategies.
- Globalization: Some brands, like Prada, saw the 2008 crisis as an opportunity to touch new customer bases by expanding in other countries.
- Diversification: Horizontal expansion also works, by providing a wider range of products (like Louis Vuitton), exploring lower price options to provide larger accessibility (Coach), and exploring new avenues to reach customers.
- Holding true: some brands can resist crises by staying true to their heritage, like Bottega Vanetta.
- Up-scaling: some brands resist crises by reinforcing their luxury status, as Christian Dior did. The idea is, the cream of the super-rich are relatively unaffected, and making them the new target market ensures continuous revenue.
Despite the different strategies and reactions to the same hurdle, these brands manage to survive. This only proves that the luxury sector is diverse, and brand success and survival lies in understanding your business and your target market.
Additional tips for luxury brand survival
- Act fast: Every crisis is an opportunity for agile brands to strengthen their customer relations, and improve value creation.
- Constantly evaluate: Consumer trends rise and fall so quickly nowadays. Constant evaluation helps you see gaps and fix them. It also provides a wealth of data to ensure content, ideas, and actions remain current and relevant.
- Prepare for the future: Anticipate growth opportunities and start preparing now.
- Serve and reward in the present: Ensure customer loyalty by surprising and delighting them continuously.
Brands need to identify gaps in their purpose and positioning, in their ability to inspire customers, and provide excellent service.
Consistency is important when it comes to luxury brands, but one thing business leaders need to remember is consistency does not mean stagnation. You can successfully grow and change with the times by remaining true to your brand heritage and core values. At the end of the day, your customers value the kind of consistency that lies more on authenticity, rather than stubbornly resisting change.