So…What’s the deal with the Luxury Brands these days?!
I’ve been thinking a lot about needs vs wants during the pandemic we are experiencing. (Disclaimer: I know this may come off as a first world problem and that people have a lot of “Real” problems/ issues. This is not meant to downplay the hardships people face or what’s going on but rather my thoughts on the luxury goods and my passion)
Now, I know that buying luxury goods is a luxury in itself, but I do find that there are certain patterns and business practices that I am not sure would work during a pandemic or during an economic downturn so I just wanted to air that out. Here are my top three observations:
Luxury good brands, especially Chanel, that are desirable need to step up their e-commerce game. I know it’s about providing that exclusivity and not making it accessible, but when the stores shut down, there is no way for consumers to purchase unless they have specific sales associates they work with. Even then, the inventory is not easy to fully access or find, etc. Also, not everyone wants that fabulous boutique experience and there are many consumers who have the money to buy and they’d rather buy it in the comfort of their home so why not target that audience?
In fact, during this time, the pre-loved market/consignment stores are doing well because that’s how people are accessing luxury goods. Now, I love those sites and they provide great bargains and great value but it’s a shame that Chanel and others cannot keep up with this. They may be losing more business simply by not having their e-commerce game up.
Strong brands, decreased quality but still more consumers? It’s so interesting that both Louis Vuitton and Chanel decided to do another MAJOR price increase during one of the worst economic downturns. Now, you can find a lot of articles explaining why and their thought process behind it. You can interpret it however you want and justify it. But as a marketing professional, this definitely goes to prove that your branding matters. I’ve been hearing a lot from so many long-time luxury shoppers that quality, especially for Louis Vuitton’s classic canvas bags, has gone down. Regardless, people are still lining up to buy them. Chanel is still great with quality but it’s catching up with Hermes prices and they also lack inventory in the U.S. so unless you have the money to travel to Europe every year or every once in a while to buy your bags, you are left with not many choices but to go to the preloved market.
Again, this helps the preloved market/consignment stores because with every price increase, they can also increase prices and people who own bags can make profit. It’s so interesting. I understand that they want to make it more exclusive and luxury isn’t supposed to be that accessible and more valuable but the price increase during this time just seems so out of touch.
Finally, will these brands sustain their profitability if it weren’t for the Asian consumers? In the western countries, U.S. and European, there seems to be a stronger movement to purchase ethically and supporting sustainability. I live in Silicon Valley and I can tell you that there aren’t a lot of people who are big luxury lovers… maybe they don’t want to admit it or what not; but either way, they would rather shop online and want transparency from their brands/companies they want to buy from. However, in China, South Korea and other Asian markets, luxury bags like Louis Vuitton and Chanel are status symbols and a great way for “new money” people to show off their wealth. In fact, even during the pandemic, people lined up outside the Chanel boutique to buy the bags before the price increased in major cities like Seoul, South Korea.
At some point, these consumers’ habits may change and perhaps they realize it’s not about status symbols or showing what you can afford but it’s about appreciating the craftsmanship and the beauty of it. I personally love studying the history of these fashion houses and learning about how, what and why they were inspired to make these pieces and add them to my collection.
I am curious to see how the luxury brands will “pivot” their business model, if any! While I understand that exclusivity and lack of accessibility are part of building the allure of the luxury brand, these fashion houses should not ignore the new generation of consumers whose shopping habits and preferences may not match their decades-old business model. Only time will tell! I will be watching.
