Luxury World: The Past, Present and Future of Luxury Brands

by Tungate, Mark

  At the end of that 2006 event Guy Salter, the deputy chairman of British luxury goods association Walpole, sounded a warning. He was convinced, he said, that there was ‘a new generation of high net worth individuals who don’t want the hassle of going to a store’. He added: ‘We have deluded ourselves that online is not relevant to our customers. But the specialist online retailers who have stepped into the breach have shown us how wrong we were.’

  LUXE MEETS WEB: A HESITANT ROMANCE

  Flash forward six months, to another conference in another hotel. June 2007 saw a select group of luxury industry professionals gathering at The Ritz in Paris. This time they had come together specifically to address the challenge of the web. Appropriately, speakers who attempted to demonstrate their theories by connecting to the internet live onstage discovered that the grand old hotel had a distinctly sluggish connection.

  While the luxury sector appeared to have made little progress in its tentative rapprochement with the online world, the conference was studded with useful sound bites. Marketing consultant Evelyne Resnick, who specializes in working with French wine producers, admonished elite brands for hugging the idea that their consumers – notionally older and less adventurous than regular shoppers – were still not online. ‘In France alone, research shows that 85 per cent of consumers earning more than €55,000 a year regularly surf the web. The figure is even higher than in the United States.’

  Despite this, said Resnick, a handful of French luxury brands had no online presence whatsoever. She cited the example of Pétrus, the legendary Bordeaux wine, whose lack of online presence had led an outside company to hijack the brand, resulting in a dreary unofficial site. ‘Luxury companies fear loss of control of their brands if they go online,’ said Resnick. ‘In fact, the opposite is the case. If you don’t establish an online presence, your consumers will do it for you.’

  Mainstream advertisers agree that, when it comes to brands and the web, consumers run the show. Blogs, forums, chat rooms and virtual networking sites crackle with conversations about consumption and service. This, of course, is exactly the kind of loss of control that luxury brands fear: the carefully polished facade must not be besmirched by the sticky finger marks of interlopers. But Syrine Fehri, a researcher specializing in the emerging area of ‘nethnography’ – the study of human behaviour online – said that there was little evidence of ‘aggressive or abusive behaviour’ within online communities, which tended to be ‘self-censoring’. Alexandre Wehrlin, who heads multimedia and interactive projects at luxury watch company Piaget, supported this view. He observed that a simple password system formed a natural psychological barrier, so that ‘only those who are committed to the brand make an effort to join the debate’. He added that the people who take part in such forums are ‘passionate consumers’ rather than those who seek to criticize or undermine the host brands.

  There were plenty of reasons why luxury brands should embrace online communities. One was that upmarket consumers were getting younger and felt far more comfortable in the digital environment. Pam Danziger, president of Unity Marketing, said as much on the firm’s website the very month the conference took place:

  Young affluents – roughly corresponding to the Generation X and Millennial generations – will play an increasingly important role in the target market for global luxury marketers over the next 10 to 20 years. This is true not just in the United States (with a median age of 36.5 years) or in the European countries (where the median age ranges around 40 years old), but in the developing luxury markets like Brazil (median age 28.2 years), India (24.9 years) and China (32.7 years), where the population as a whole is more youthful... Global luxury marketers have gotten used to the passions and nuances of the maturing Baby Boomers after so many years of targeting this generation... Now they have a new challenge to appeal to the young affluents who have different ideas about luxury and different priorities in how they spend their wealth. (Unitymarketingonline.com, June 25 2007.)

  Proof of the existence of this young, net-savvy generation of high-end consumers was readily available in the form of ASmallWorld.com. Launched in 2004 by former banker Erik Wachtmeister, the invitation-only networking site works much like a private members’ club for the elite. Once you’re ‘in’, you can be thrown out again for contacting members you don’t know, stalking the site’s celebrities or targeting members with aggressive sales pitches. Spamming, posting semi-porno-graphic movies and requesting friendships with beautiful strangers – all regular occurrences on other sites – are unknown. While the site isn’t quite as elite as it purports to be (even yours truly is a member), its users tend to be youngish, educated, wealthy and/or well connected.

  In terms of its attraction for luxury advertisers, ASW claims to offer access to ‘the world’s most valuable demographic’. Two years after its launch, the magazine Advertising Age stated that 85 per cent of the site’s members had a bachelor’s degree (40 per cent had a master’s), more than 30 per cent worked in banking and consulting, and 97 per cent lived in the world’s major cities (‘For this social-media net, it’s quality, not quantity of members’, 6 June 2006).

  At the time of writing, the site has more than 300,000 members in 200 countries (compared to the 140 million-odd global users of the highly egalitarian social networking site Facebook). Wachtmeister told The Guardian that he expected membership to grow ‘very, very carefully’ to a million members. To grow too large too fast would alienate members and, crucially, advertisers. While the owners of fast-moving consumer goods are interested in big numbers, luxury advertisers seek small yet relevant audiences. ‘If we employ the right methodology, we can grow to a million people and still be as exclusive as we are today,’ Wachtmeister insisted (‘Small world that may be getting too big’, 1 September 2008).

  For the time being, the site’s members still look pretty rich. This very day, items being offered for sale by members include a Porsche 997 GT3 (€97,000), a beachfront property (US $3.6 million) and a Falcon 900 jet (US $38.5 million), along with a trove of designer furniture, watches, clothes and handbags. Online discussions range from the serious (conflict in the Middle East) to the hedonist (seeking tips for the perfect weekend in Rio de Janeiro) to the practical (the best gym in Barcelona). Watch brand Tudor is advertising on the home page.

  And luxury brands are interested in ASW. In 2007, Rémy Martin advertised its Louis XIII cognac (some bottles of which sell for US $1,500) by placing banner ads, a microsite and sponsored editorial features on the site over a period of three months. It also created an exclusive tasting opportunity at a private gallery opening, spreading the word through members. ‘The campaign is an example of how advertisers are taking niche brands that once might not have garnered much in the way of marketing support into new digital channels,’ commented AdWeek (‘High end cognac gets social to woo jet set’, 14 August 2007).

  In March 2008, Mercedes Benz signed a partnership deal with ASW. The deal included a branded automotive forum, blogs and inclusion in the site’s events calendar. Mercedes would also sponsor the site’s fledgling internet TV channel – ASW TV – and become the first of the site’s brand partners to broadcast on it. Dr Olaf Göttgens, vice-president of brand communications for Mercedes, said that the partnership made ‘direct dialogue’ with consumers possible, as well as enabling the company to reach ‘a young, influential target group’. In May that same year, Cartier advertised its ‘Love by Cartier’ collection of products by creating interactive content for ASW.

  Back in June 2007, all this was some way off. As we stepped out to sip champagne on the terrace at the end of that early summer afternoon, I looked around. Bearing in mind that it took place in what was supposed to be the heart of the luxury industry, the digital branding event was nowhere near as crowded as it should have been. The message to elite brands was clear – but few of them had taken the time to listen to it.

  THE VUITTON CASE

  In the end, progress came from an unexpected quarter: Loui
s Vuitton. For years, the most visible face of the brand (apart, of course, from its increasingly extravagant flagship stores) had been advertising images of models and actresses dressed from head to toe in its products and sprawled across the pages of glossy magazines. While cost-effective, this was the most traditional of all luxury branding strategies. Suddenly, though, Vuitton engaged with the 21st century.

  Its first step, in January 2007, was to hire the global advertising agency Ogilvy & Mather. Luxury brands have traditionally fought shy of traditional advertising agencies, which are looked down on as the pedlars of fast-moving consumer goods. Instead, luxury firms tend to use internal ‘creative directors’ (in fashion circles, it’s usually the designer) who hand pick freelance photographers, stylists and makeup artists to interpret their vision. For Louis Vuitton, appointing a big advertising network like O&M – founded in the United States during the consumer boom of the 1950s – was an almost radical move.

  The first offspring of the union was rather disappointing: a print advertising campaign. Granted, it was a departure from the previous print work. The ‘star’ of the most talked-about ad was Mikhail Gorbachev, a Vuitton bag placed casually by his side as his limousine cruised past the remains of the Berlin Wall. Shot by Annie Liebowitz, the image was designed to remind consumers that Louis Vuitton was, above all, a maker of stylish luggage. ‘Journeys’ would be the theme of the new campaign. But while the choice of Gorbachev was startling, the ad was basically an interpretation of a strategy that was as old as the hills: celebrity endorsement. Other executions in the series showed Andre Agassi and Steffi Graf relaxing in a New York hotel room, a Vuitton bag lying nearby, and Catherine Deneuve sitting daintily on a Vuitton trunk in what appeared to be a movie-set railway station.

  The press liked the idea, though. The International Herald Tribune felt that the campaign reflected ‘a move by some luxury companies to connect with consumers on a more human level. In the past, many fashion houses and other luxury brands relied primarily on the so-called product-as-hero approach, featuring their products, perhaps accompanied by a model, in a stylized, static way.’ It pointed out that the participation of Gorbachev was designed to attract the attention of the growing Russian market. In the same piece, Ogilvy’s chief executive for Europe, the Middle East and Africa, Daniel Sicouri, said: ‘The product is just part of the story, a companion on the journey, not the hero’ (‘Luxury gets less flashy’, 29 July 2007).

  Louis Vuitton had accentuated its heritage and garnered a bit of press buzz. Its next step was far more interesting. O&M’s web arm, Ogilvy Interactive in Paris, asked celebrities to describe their favourite places. These narrations were illustrated with photography, sound and video on a new website called ‘Journeys’, accessed from the main Louis Vuitton site. Warm, emotional and stylishly executed, these online ‘collages’ were genuinely entertaining. They injected the sought-for ‘human factor’ into the Vuitton brand and made the consumer feel connected to the VIPs concerned. Who could resist travelling to Edinburgh with Sean Connery, San Francisco with Francis Ford Coppola or London with Keith Richards? The web execution of the ‘journeys’ campaign won a number of awards.

  Louis Vuitton now appears to be committed to building its brand in the digital world. As mentioned earlier, one of the trickiest challenges facing luxury companies is the power that has been conferred on consumers by the internet. We are all citizen journalists now. Whether brands want to engage in a dialogue with their potential clients or not, they can rest assured that consumers are already chatting and blogging about them – and not always in flattering terms. Rather than trying to shut out this background hum, Vuitton has decided to actively engage with the net generation – or ‘digital natives’ if you prefer. A full-time employee at its Paris headquarters is tasked with building relationships with virtual communities via blogs, Facebook, Twitter and other applications. The company is concerned that, although there are hundreds of ‘fan pages’ devoted to the brand on the net, not one of them is official.

  In June 2008, Vuitton harnessed the power of blogs to help launch its ‘soundwalk’ offering – which was an innovative idea in its own right. Sticking to the ‘journeys’ theme, Vuitton had asked three actresses to narrate a walk around their favourite cities. Users could then download the resulting MP3 files from the Vuitton site onto their iPods or similar devices and follow in the footsteps of the actresses. The first three ‘soundwalks’ were recorded by Gong Li (Beijing), Joan Chen (Shanghai) and Shu Qi (Hong Kong). Vuitton flew six of the world’s most influential bloggers to Hong Kong to test the soundwalk, equipping them with free iPods. There was a tacit agreement that the bloggers would post articles about the experience.

  Louis Vuitton is not the only luxury brand to have reached out to bloggers. In September 2007, Chanel invited 14 bloggers from around the world to visit Coco Chanel’s former apartment in Paris and its perfume laboratories in Neuilly. British participant Susanna Lau of the blog Style Bubble wrote approvingly: ‘This is an age old French brand who are moving forward with the times not just in their presence online (their websites, viral activity and multimedia footage) but by connecting with the people who start that dialogue online.’

  Taking bloggers on what was essentially a press trip was something of a gamble. Unlike glossy magazines, most bloggers do not live on luxury brands’ advertising dollars, so they are under no pressure to write glowing reports about them. In the luxury sector, bloggers now perform the inquiring, critical role that magazine journalists – who are in chains to their advertising departments – long ago relinquished. Luxury brands had wondered whether blogs – erratic, unpredictable and frequently amateurish – were the right environment for them. But they seemed to have accepted that the replacements for their ageing client base were all reading and/or writing these online journals.

  Cartier made another unexpected leap into the digital breach in the middle of 2008, following its earlier experiment with ASmallWorld.com. Once again promoting its Love by Cartier collection – which was aimed at younger consumers – it created its own profile page on the social networking site MySpace, which has a strong user base of music fans. The page included downloadable songs that had been composed specifically for Cartier by artists such as Lou Reed and Marion Cotillard. Given the luxury brands’ previously standoffish attitude towards the web, the statement from Cartier International’s communications director, Corinne Delattre, was positively jaw-dropping. ‘Today, the world is connected by a network. Blogs, group or individual websites are no longer the signs of a new era, but are an established reality for a whole new generation. As a large brand, we must be able to communicate to this new generation of adepts of the digital world – the MySpace community makes that possible’ (Brandrepublic.com, 27 June 2008).

  The digital space is changing fashion marketing, too. Rather than staging the traditional – and expensive – runway shows that play the role of live advertising spots before an audience of journalists and buyers, some fashion brands have chosen to show their collections in the form of slickly produced videos. These can often be accessed through their websites. The buyers and the press are then encouraged to go and look at the collections close up in the brands’ showrooms.

  They may be at the back of the crowd, but luxury brands have finally joined the digital revolution.

  13

  By royal appointment

  * * *

  ‘International customers see our Royal Warrant as a stamp of authentic British quality.’

  It’s not often that you read the word ‘marmalade’ in a book about luxury brands. But it was a jar of Frank Cooper’s Original Oxford Marmalade on a breakfast table that inspired this chapter. Being a voracious reader, I am the kind of person who might, in the absence of a newspaper, idly scan the text on the back of a cereal packet. Or, in this case, on the back of a jar of marmalade – which was when I was reminded that Frank Cooper’s is the holder of a Royal Warrant. At first it simply amused me to imagine the Queen e
ating toast and marmalade at roughly the same hour as myself. Did she spoon it directly on to the toast, or onto the side of her plate first? Or was she one of those people who just stuck her knife directly into the jar?

  Then I started to think about Royal Warrants in a broader sense. How did one get a warrant? How many companies had them? And what did the possession of one mean to the holders?

  A quick internet search turned up the telephone number of the Royal Warrant Holders’ Association in London, which led to a conversation with its secretary, Richard Peck. Along with only three other members of staff, working in a small office in Buckingham Place (that’s place, not palace), Richard coordinates the relationship between the Royal Family and the warrant holders. For the time being, there are about 850 Royal Warrant Holders working in many areas of trade and industry. My first question, then, is obvious: how do I join them?

  ‘You can’t,’ says Peck, crushingly. ‘Warrants are only granted to tradesmen. So that counts out bankers, chartered accountants, lawyers, architects and – I’m afraid – journalists.’ So while The Carphone Warehouse is allowed to sport the Queen’s coat of arms and the words ‘By Appointment to…’ on its stationery, I will never be able to do so.

  The warrants are a mark of recognition to those who have provided goods and services to the Queen, the Duke of Edinburgh or the Prince of Wales for more than five years. Warrants are reviewed every five years and can be revoked. ‘The grantor signs off each application personally and they take a very personal interest in the process,’ underlines Peck.