The Luxury Dilemma: Discount To Survive?
Last week, in our Digital Luxury Digest, we included a MediaPost article highlighting Cindy Gallop’s presentation at LuxuryLab’s Innovation Forum. Gallop is the founder and CEO of IfWeRantheWorld and marketer and consultant for Coca-Cola, Ray-Ban and Polaroid. According to the MediaPost article she said luxury brands, “must be elitist, empathetic, immediate, social and youthful in order to succeed.” And called new luxury, a return to true luxury. To see Gallop’s complete presentation, check out FORA.tv.
A return to true luxury is a return to the qualities that made a product luxe in the first place. In other words, luxury’s biggest mistake is to try and reach the masses. Right now, it is tempting to discount and lower price points. Consumers have less money to spend thus brands are losing profits, but it is important to not lose sight of the long-term ramifications. Most luxury brands have spent decades creating a specific image and luxe reputation that appeals to consumers looking for a higher-end product. Making your product accessible to the masses with huge discounts and lower-end lines could turn off affluent consumers.
On the flip side, a lot of brands are seeing big results by doing just the opposite of this advice. For example, Coach Inc reported higher-than-expected quarterly earnings, which they achieved with the help of their lower-priced Poppy line. And when Jimmy Choo’s line for H&M debuted this week, Choo fanatics lined up and stock flew off the shelf. So are these brands making the right moves by adapting to a changing economic climate or is this just a bit of short-term success that will cause these brands huge long-term problems?
