The Death of Luxury
How relentless innovation and technology must be part of a luxury brand’s DNA in order for it to compete in a totally new landscape.
Originally published July 21 2015 on PSFK.com.
It goes without saying that luxury brands need to rethink their role in a rapidly changing marketplace. They are pincered by two forces: a new generation of buyers which prizes experience over ownership and a rise in technology services which outpaces almost any premium brand offering.
Buyers today are looking for experience to be woven into the product experience. They want brands to infiltrate every touch point with intuitive and contextual interaction — whether that’s during the purchase path or when the item is owned, cherished (and communicated with). Every time they touch a brand experience, they appreciate the type of personal attention that was once only provided by client service teams for top of the pyramid luxury customers. Now people say: ‘I have provided you with the data when I came to your site or when I swiped my credit card (or paid by thumb!), I expect you to understand who I am, how we’ve interacted before. I want that to be reflected in every interaction. I expect you to learn about me, customize around me and provide me with a feedback loop so I can steer you in the future.’
Another challenge to the sector is that, while luxury brands used to be associated with best-in-class service, the technology revolution fueled by innovation in Silicon Valley is changing consumer expectations. Customers of all levels know more about the whereabouts of their Uber than they do about the delivery of their latest fashion purchase. A new era of smart companies offer dynamic service offerings that mix algorithm,cognitive computing and a workforce of hyper-adaptive micro-staffers. Hands down, Airbnb provides better and more appropriate service than the Ritz Carlton. Bonobosbeats Helmut Lang, Tesla beats Daimler and Rent The Runway beats Chanel every time.
The good news is that there is opportunity for luxury brands, but also much risk and much work. On the positive side, the best luxury brands are already imbued with a sense of storytelling. Much of this is woven into the product itself — whether built on factory location, component origin or process. Sometimes the brand is connected to an owner or a lead designer. Often these stories don’t need to be made up by luxury brands, and in the past they were polished and delivered by a well-organized and controlling PR machine with incredible ties with an obedient publishing industry.
While magazines remain important, the power of influencers and just about every consumer is just as critical for premium services and products. Of course, brands are already taking steps to connect with their audiences in a one-on-one way but they are burdened by a structure that wasn’t constructed for this new world. Luxury brands still differentiate product from marketing while new era companies try to see communications, experiences, retail and physical product as a total and integrated consumer experience.
Many brands of the 20th century aren’t built to provide a level of experience or service that the consumer wants. Sure, there will always be room for an aloof uncommunicative brand — but the majority of tomorrow’s popular premium brands won’t act in the same way because they’ll be run and managed in a manner that connects them to their customers in a deep and emotional way.
Burberry points to a solution for many older brands. It was bought by financiers, effectively closed down and rebuilt from the ground up so that it can satisfy both a traditional buyer and the next generation. I visited the factory-style office in London a few years ago and learned how each floor filters down to a basement where there is a beehive of workers developing real-time social media interaction with its audiences.
One of the other major challenges most luxury brands need to deal with is connected to their embrace of technology. Should they partner with tech companies but suffer a lack of control of the ownership of the experience? Or should they create proprietary services that could quickly by outdated by the speed of progress? Or do they just go ‘analog’?
If we look at Tesla, maybe we see an answer. The car company offers a best-in-class product and service experience. Its systems are as important to the experience as its design features. If the U.S. brand can (continuously) fuse technology with design to make the most progressive product in the marketplace, so should any luxury brand that wants to be market leader.
Ask yourself: is your company the Tesla of your category? If you’re not, you are probably not really a luxury or even premium brand, just an expensive product.
Relentless innovation and technology will be built into the luxury brands of tomorrow. Without these ingredients, your company will be left to just making a well-crafted product, but not the type of sophisticated, living and intelligent brand that consumers will connect with for the rest of the century.
