Business Tips: Branding Luxury Goods

A long long time ago, luxury goods were simply better goods. They were better made, better quality, included better service etc. This was a huge insight into buying behaviours and one that generated billions in revenue over the years.

One of the triumphs of the Industrial Revolution was that others figured out how to make things just as well as the 'luxury' brands could.

Then came the shift; the label on the item, the brand, became at least as important as what was made. The brand is a signifier to those around you. A way of demonstrating good taste and a membership in the elite.

People pay extra for luxury goods partly for the privilege of paying extra. Akin to the price of admission to an exclusive club. For a very long time, a sale on luxury goods made no sense, because the fact that it was not on sale was precisely what made it a luxury good.

It is this selling of the logo, of Gucci or Chanel or Tag Heuer that made the last fifty years of luxury production such an extraordinary opportunity. Add to this a growing cadre of the newly wealthy, eager for a badge to show that they had arrived, and it is nearly perfect.

Feed the masses this aspirational brand, maintain the value of the logo and you actually get paid a premium for making the thing cost more. 

And then, the outlet stores showed up and previously exclusive designer brands such as Ralph Lauren danced the line between mass and class, selling logos big and small, at all price points.

When anyone can make a nice polo shirt, which nice polo shirt should you pay extra for? And a new generation of value-based retailers has taken this even further. There is still plenty of money being spent on the expensive, but the concentration of brand impact is diluting and quickly.

Here is what has shifted recently: In the post-industrial connection economy, we can value networks more than we value stuff. We would rather be invited to the right conferences than wear expensive shoes. Logos are becoming worth less. They are easier to copy and not as valuable a signifier as they were.

And yet...

And yet elites of all shapes and sizes still desire a way to demonstrate their inclusion in certain groups. Groups that aren't open to all. Groups that brandish their exclusivity.

And human beings still seek out the best of something, the item that carries with it the magic of a well-trained hand, of a bespoke origin and of the nostalgia for that something special we long to remember.

The luxury industry will not disappear, but without a doubt, it is changing. When you consider your luxury brand charging more is one tactic, but it might not be the only one.

Let me know what you think.........