Following up on my recent post about luxury companies going online, the Economist has posted an interesting article on luxury companies going online. Some companies, like Tiffany & Co., are doing quite well with their online sales, while others, like Fabergé, are taking more of a ‘wait and see’ approach. These companies say they are reluctant to put their goods for sale online because the experience isn’t the same. Says the author:

Luxury executives explain that the internet is too impersonal for their products, which need the human touch. Allowing anyone to buy online can mean a loss of cachet. Luxury firms like to dazzle customers with plush stores and sleek ads, so that they think only about beauty and not at all about price. The web, by contrast, shines a clear light on price. “That’s the last thing I want people to think about,” wails an executive from the watch industry.

Still, luxury firms are going online in greater numbers because their customers increasingly want the convenience of ordering online. I don’t think it’s impossible for luxury companies to offer a unique, exclusive experience through the online channel. It just needs to be well planned and thought out, and needs to appeal to the different ways that individuals look at the world and consume luxury. A website that appeals to a Lambda woman in one way and a Theta man in another could be quite successful.

Photo by Erin Blatzer

Publishing houses are increasingly attempting to turn some of their first edition books into exclusive (and expensive) collector’s items. Taschen, the Los Angeles-based publisher, and luxury publisher Kraken Opus are among a handful of publishers who are publishing books in unusual formats with unusual features for exceptional prices. One example is a book about Indian cricket star Sachin Tendulkar. Published by Kraken Opus, the limited edition of ten copies ($75,000 each) includes a special page made from paper pulp mixed with a pint of Tendulkar’s blood.

Taschen has found such demand for some of its collector’s edition books that it has raised prices for some books it has already released. Its Helmut Newton photography book, titled “Sumo,” now costs $15,000, up from $1,500 when it came out in 1999.

These beautiful books appeal to Theta personalities, for whom a well selected book can make them feel like the true ‘them’, as well as Lambda personalities–for them a special, exclusive book can make them feel exceptional. In either case, how the individual interprets the book determines its value for him or her.

I came across an interesting press release from the International Diamond Manufacturers Association (IDMA) this week calling for the international diamond manufacturing community to restructure diamond financing. They are worried because while demand for rough diamonds remains greater than the rough supply, the same cannot be said for consumer demand for polished diamonds, particularly in the US.

Stores are closing or having a hard time turning a profit, and the focus is on lower prices and lower quality. The supply of diamonds going to retailers will decrease, but for now consumers have not yet returned to retail stores. Nevertheless IDMA are calling for retailers to pay their suppliers fair prices, necessitating keeping their prices up for consumers. Said Moti Ganz, the president of IDMA:

“Consumers can still buy three pieces of diamond jewelry for the price of one Louis Vuitton bag. The price of diamonds today should be at least 200 percent more than their price in the 1990s. Just look where gold and platinum are and look where we are!”

Should we ask ourselves why the price of diamonds has not kept pace? Actually that’s the wrong question–there is no direct link between the price of rough diamonds (based on the internal considerations of the diamond industry) and the price of polished diamonds (dictated by the consumer of diamonds and diamond jewellery, a population that was forgotten by the industry).

In my view, luxury retailers must first understand why someone goes out and buys a diamond in the first place. In my PhD research, I found that luxury shoppers are looking to express themselves and connect with how they see the world. The better a retailer can help the luxury purchaser understand her goals and connect authentically to her values and personal qualities, the more successful the retailer will be. Walking out of the store, the lucky woman or man should feel empowered, special and unique, respected and feeling free.

Providing the right service doesn’t come easily. A jeweller should be able to detect first who the client is. A Theta woman seeks diamond to help her be ‘truly her’ in a world where most things are temporary and dependent on social setting and circumstance. A Lambda woman wants a diamond that helps her to be unique and genuine; her diamond is unlike any other diamond on the planet, an individual selection that will make her exceptional. As for price, do not underestimate yourself. If you fell confused, the only reason is that the offer of the diamond was not done correctly. When the luxury customer is presented with the right offer, he or she knows exactly what the value of it should be.

Following these values for many years we found that we can properly help the luxury customer, and together with our colleagues we were very successful doing so in the last 25 years. However, the diamond industry failed in respecting the need for luxury and tries to turn the luxury consumer into a diamond dealer when the effort should be done in the other direction.

We hope that we have enough practical knowledge to start offering the luxury consumer what he or she wants. We are aware that this practical knowledge is in the hands of very few people, yet the entire world could appreciate this freedom of expression and choice. Recently we started an initiative that will bring our message to the luxury customer and enable him or her to properly purchase his or her special and unique diamond that can fit only her or him. We will need your help to check our luxury hypotheses and to see whether what we say is really convincing you. In the coming days we will address you again and ask you to be our ambassadors to help us spread our important luxury message. Stay tuned!

According to this article in the New York Times today, several large luxury brands (including Marc Jacobs, Jimmy Choo, Hugo Boss, Vince, Lancôme, St. John, Theory, Kiehl’s, Lilly Pulitzer, Donna Karan and La Perla) have recently started or are about to start selling their wares online directly to consumers. While online retailing is a tried and true channel for many retailers, these luxury companies hesitated because they felt that the web couldn’t provide a similar experience to their stores, but the recession has made them more willing to try new things. Operating a website can be significantly less expensive than operating a storefront, and it can also cut out the department store middlemen who collect the difference between a good’s invoice price and retail price.

The most interesting part of this article is the repeated emphasis of luxury goods companies like Lacoste saying that they will never, ever discount the goods they sell through their online stores. These companies certainly don’t want to devalue their brands, but at the same time, they should be aware that the recession has made many shoppers more price-conscious and only willing to buy when they find discounts. According to a recent article in USA Today:

For others, it’s about buying luxury goods only when they’re on sale — or at a steep discount. Nearly three in four wealthy women say they’ll only purchase luxuries if they can get a good deal, reports a recent survey by AgencySacks, a branding firm that consults for some of the nation’s top luxury brands.

If for many people part of consuming luxury becomes the hunt for the deal, companies that refuse to discount may have to change their strategy.

Photo by Bludgeoner86.

Last August a team of diamond thieves stole 1,500 diamonds (in 43 jewelry pieces) worth £40 million from Graff Diamonds on New Bond Street in London. This week four of the thieves were found guilty of carrying out the raid, but the diamonds still haven’t been recovered. The two gunmen who had entered Graff Diamonds had handed off a black bag containing the stolen pieces to a motorcycle rider in a concealing helmet, who rode for two blocks then disappeared on foot in Green Park.

There isn’t much hope for finding the gems any time soon. Ivy Cutler, a diamond grader at the Gemological Institute of America, said

“I have spoken with Scotland Yard and the Flying Squad and we have them marked in our system. Sometimes pieces come back very quickly, sometimes it takes years. The criminals involved in this are extremely clever, unfortunately. I think they have probably changed hands many times and possibly been moved between countries. We can only hope the diamonds eventually turn up when an innocent buyer asks for their authenticity to be checked.”

The stolen diamonds were all certified and should be recognizable, but it’s possible that the diamonds have now been recut or falsely recertified. It will be interesting to see if any reappear, or if Graff would publicise their reappearance — my guess is probably not on both counts.

More and more luxury companies are creating mobile phone applications to sell their wares and expose their brand–Tiffany & Co. just released their engagement ring finder iPhone app earlier this month, joining Chanel, Net-a-Porter, and many others. Van Cleef & Arpels has also joined the fray, but their app is different from other apps I’ve seen.

Their app, A Day in Paris (the newest version of which just came out this week), doesn’t directly sell Van Cleef & Arpels jewelry — it provides users with “a variety of poetic strolls to guide you in Paris … revealing the most poetic places chosen by the private Van Cleef & Arpels’ blogger community”. The app also has “a new thematic menu to browse the categories of poetic places: arts & culture, gastronomy, shopping, poetic places” and encourages users  “to discover [Paris's] selective and poetic places and share those magical places with their Foursquare contacts and of course on Facebook if they so choose.”

Providing a positive experience affiliated with the brand (but not directly selling to consumers) is an interesting strategy, and I believe that it sets Van Cleef & Arpels apart. Have a look at the app in action here:

Earlier this month Maserati, Steinway Lyngdorf (who sell high-end audio products), and Paris-based men’s grooming products maker Hommage set up a temporary showcase  of their luxury products at Sean (P. Diddy) Combs’ Fifth Avenue clothing store in New York to coincide with the latest NBA draft, in the hopes of appealing to young basketball players who would soon be earning large NBA salaries.

Traditionally luxury goods companies have affiliated themselves with sports like polo, tennis and golf — basketball is a new area. But these companies’ presence at the draft signifies an interesting observation, according to Thomas Van Riper of Forbes:

Tying luxury promotions to sporting events is a new wrinkle, experts say, designed to grow awareness among the masses while acknowledging that many of today’s wealthy consumers are of the self-made, new money class that grew up in modest surroundings. It’s a description that fits many basketball fans.

The products themselves on offer seemed very Lambda to me — the $145,000 Maserati Gran Turismo and $188,000 Steinway Lyngdorf audio system are quite exceptional and would appeal to someone who wants to stand out. It will be interesting to see whether these sorts of events are successful for the companies involved, and whether they become a staple of the drafts for basketball and other well-compensated professional sports.

A luxury company must vigilantly protect its brand to ensure that it remains in control of its image. A company like Gucci certainly wouldn’t want other parties to misappropriate its trademark or the look of its products in counterfeit goods. But what happens when your company’s name is the same as someone else’s, and this person, while related to your founder, wants to set up a completely different company?

Gucci is attempting to answer just this question at the moment. Elisabetta Gucci, great-granddaughter of founder Guccio Gucci, and artistic director of an Italian interiors and accessories company, recently announced that she is putting her name on a luxury hotel that plans to open in Dubai next year, with the hope of starting a chain of hotels. The fashion house has issued a statement clarifying that it has nothing to do with Ms. Gucci’s plans, and said “”If necessary, Gucci will take any needful step to protect its rights.”

It’s an interesting conundrum. Elisabetta Gucci can say that she isn’t trying to take advantage of her famous heritage, but in my opinion, if that were the case, the hotel could have chosen a different name (though in that case we probably wouldn’t have heard about it). So there’s certainly publicity value in her name, whether or not she actively tries to dissociate herself from Gucci the company. We’ll have to see how much Elisabetta Gucci’s hotel matches the fashion house’s aesthetic, and whether the fashion house will make good on its threat if the two are similar.

Photo by Kai on Flickr.

Diamonds from Marange fields in Zimbabwe have been all over the news of late. Diamonds from Zimbabwe are not currently certified by the Kimberley Process (which works to stop the trade in diamonds that finance conflict), and the Zimbabwean military has been accused of seizing control of these fields and organizing smuggling operations. There’s currently an export ban on Zimbabwean diamonds because they aren’t certified conflict-free, and this week the ban was upheld by Kimberley Process members, but Zimbabwe is now considering exporting diamonds anyway.

It’s a difficult situation, because if these diamonds were sourced ethically and formally allowed to be exported, they could greatly benefit Zimbabwe’s economy and put its diamond production efforts on par with Botswana. And while it appears that efforts are being made to improve the situation, Kimberley Process members weren’t confident that the sourcing of the diamonds met its standards because the fields remain under control of the Zimbabwean military, which is accused of committing human rights abuses in addition to smuggling the diamonds out of Zimbabwe.

A subgroup of the Kimberley Process is meeting next month to try to reach a compromise on Zimbabwe; we’ll have to wait and see if this impasse can be resolved.

Women have been flocking to see the latest Sex and the City film. While the reviews haven’t been that positive, this article by Cynthia Sliwa on the JCK Blog makes the jewelry look quite appealing. While I think that Sliwa’s statement that ‘there’s no more romantic gift than jewelry’ works for many people, it must be noted that people interpret things in different ways, and what one person thinks is the most romantic thing in the world another person might find off-putting.

The whole Sex and the City series is quite interesting to look at in terms of Theta and Lambda. As the women portrayed in the series are stylish urbanites who are the best of friends, many women want to emulate them and match their styles. In this way, Sex and the City fans fit into the Theta worldview, where they seek affiliation and unity, looking to contextualize themselves within a larger group of women with the tastes and styles of the four Sex and the City protagonists.

Yet a Lambda worldview prevails in this new film: Carrie, the main character, received a unique diamond-studded black diamond from her husband Big, who says that he gave her such a unique ring because there’s no one else like her. Lambda personalities seek originality and challenge, and love products that make them stand out and feel unique.

It’s nice that both worldviews are included in the film, but could the popularity of the series make these black diamond rings become popular so that having one no longer makes the possessor unique? With a series so popular, it’s certainly a possibility.