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Why Luxury Brands are Stepping Off the Pedestal

Luxury isn’t the hallowed ground it once was—but that doesn’t mean it isn’t thriving.

Houses that once outfitted royals and aristocrats now court tens of millions of followers on social media, collaborate with graffiti artists and sell $800 sneakers alongside their $20,000 gowns. The image of exclusivity and aloofness that long lured status-seeking shoppers into the boutiques of Chanel, Louis Vuitton and Christian Dior has given way to a warmer, more accessible approach that invites everyone to participate (even if only by commenting on an Instagram post or buying a tube of lipstick).

At an investor day in June hosted by its parent company Kering, Gucci CEO Marco Bizzarri laid out his vision for the brand, calling luxury’s carefully cultivated air of exclusivity “a complete fake.”

“Today, what is going to win is of inclusivity of the brand in all the aspects: shops, advertising, communication and people, especially,” he said, describing a retail philosophy unlike that of most of the brand’s peers. He’s tired, he said, of “the business in luxury where people look at you at a distance. They hardly open the door. I want people to touch and to feel the product, to have people that are selling with a proper and genuine smile, because, again, this creates innovation and creativity, even at [the] shop level.”

So far, this rather radical shift is translating into significant sales: Gucci’s revenues were up 44 percent on a comparable basis in the first half of 2018 after posting similar growth last year. Online sales more than doubled.

With the rise of luxury e-commerce players like Yoox Net-A-Porter, Matches Fashion and Farfetch (whose blockbuster IPO recently pushed its valuation north of $8 billion), high fashion has had to reevaluate the way it looks at the internet. Digital was long considered by many to be anathema to the luxury experience in part because it was open to all.

“It all of a sudden eliminates the idea of scarcity, because it makes it seem like all products are available to all people,” said Matt Jeffers, managing director at Accenture Strategy. And yet today, it’s impossible to ignore for any that hope to remain relevant.

“It’s the dilemma facing all of the luxury houses at the moment: How do they continue to manage their pretty stellar revenue growth over the last few years whilst maintaining that element of scarcity?” he added.

Exclusivity today, then, is all in the product rather than the attitude: Only a lucky few may be able to get their hands on a Louis Vuitton x Supreme fanny pack (going resale price: $5,300), but the fact that such an item exists in the first place shows the French fashion house wants to bring the cult skate brand’s audience of streetwear aficionados—many of them young people of color—into the fold.

“I think luxury was very scripted at a certain point,” said Claudia Marchetti, founder and president of Marchetti Consulting, and a former executive in customer experience at both Chanel and Christian Dior. “Luxury is not scripted anymore. Luxury does remain polished in its approach. Luxury does remain formal to a certain extent, but some brands have done an excellent job in breaking down the barriers that come with certain logos.”

In stores, this can mean rethinking the old method of keeping products behind glass cases and out of arm’s reach, as Gucci has begun to do. Sales associates can communicate with clients through WhatsApp or text message in addition to email, phone or (for top VIPs) at-home concierge. Dior’s clienteling system is particularly exceptional, Jeffers said, allowing sales associates to pick up and maintain relationships with clients anywhere through digital tools.

At department stores—even those synonymous with a certain gilded grandeur—experimentation and collaboration are essential today to draw shoppers inside and away from their laptops. “You want people to feel they would be missing something if they didn’t come through the doors,” said Linda Fargo, Bergdorf Goodman senior vice president and women’s fashion director. “You have to create curiosity. Tease desire. Entertain and inspire. We are spicing and peppering the store with new concepts, which are surprising even us.”

To that end, the retailer has launched projects like Linda’s at Bergdorf Goodman, an “alter-ego fantasy closet” that turned traditional merchandising on its head; an installation with pop artist Ashley Longshore, so popular that it led to a takeover of one of the store’s restaurants; and Noir, its most recent, a multisensory and multi-platform tribute to the color black. What these all have in common is they can be experienced by anyone, whether or not they leave with a new handbag or dress.

Of course, much of the business is moving online, too: Parent company Neiman Marcus reported that e-commerce accounted for about 35 percent of the group’s sales last quarter. Nearly all of the top luxury brands are represented on BergdorfGoodman.com—Saint Laurent, Tom Ford, Valentino, Alexander McQueen—except for two notable holdouts. The landing pages for Chanel and Dior feature runway images and instructions for shoppers to call or visit the store, rather than product listings and “add to cart” functionality.

This should come as no surprise as neither brand offers e-commerce on its own site either, apart from fragrance and cosmetics. “It’s a very big struggle for brands like that today, because how do you really take the client experience that is supposed to be incredibly personalized, unique and genuine and translate that onto e-commerce?” Marchetti said.

Often, the answer is you can’t, she said. “An e-commerce site is never going to ignite the five senses. And when we’re selling luxury, that’s what it does—it ignites senses that are quite emotional.”

This tried-and-true formula still has staying power: Chanel recently reported full-year earnings for the first time in its 108-year history, revealing that it brought in $9.62 billion in 2017, an 11 percent jump over the prior year.

Importantly, these brands do excel elsewhere in the digital world. On social media, Chanel and Dior ranked second and third, respectively, in terms of earned media value for the first half of 2018, according to digital marketing and analytics company Tribe Dynamics. On their Instagram feeds, runway snaps and campaign images share space with beauty videos and shots featuring sunglasses and small leather goods.

“What we’ve seen is that brands are using different entry points of their portfolio to look at that early-funnel conversation with customers, and then grow those relationships over time,” said Brit McCorquodale, SVP of revenue at Tribe Dynamics. “So if I can be interested in a pair of loafers, a T-shirt or a lipstick right now, maybe in two or three years I can move up in my relationship with that brand and into the portfolio on the higher end.”

There also can be other benefits in speaking to a younger audience, even if they may not have enough disposable income to afford luxury products themselves.

“One of the trends we have noticed that is really solid is that young millennials influence their boomer parents in product purchase as much as a parents influence the millennial,” said Milton Pedraza, founder and CEO of the Luxury Institute, a research and training firm. “So there’s this virtuous cycle of referral recommendation. So, you know, a daughter might say, ‘Mom, you really should own one of these handbags.’ And the mom will say, ‘Hey, as you mature, you will want to own Chanel.'”

To cultivate this kind of social media influence, however, brands need to embrace the idea of forming relationships with influencers who might be outside their traditional comfort zone, McCorquodale said. Gucci’s top ambassadors, for instance, are an eclectic crowd: There’s Jeffree Star, the perennially controversial YouTube makeup guru who eclipsed the rest of the list, generating $12.3 million in earned media value for the brand during the first half of 2018; Bhad Bhabie, the 15-year-old rapper who rose to fame by way of a viral Dr. Phil clip ($2.5 million); and Rocky Barnes, a Los Angeles fashion blogger ($1.9 million), among others.

It’s not what you might expect, but clearly it’s working—and Gucci, at nearly 100 years old, is betting the strategy has longevity.

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