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Luxury Defined?

Isaac Mostovicz writes that that luxury brands are having to adapt to today's 'connected consumer' in order to provide them with the unique experiences that they desire...

I was interested to read this article on the definition of luxury and how brands are managing dual expectations of exclusivity and creating a dialogue with consumers.

The article says that luxury is “more than ‘something adding to pleasure or comfort but not absolutely necessary’… to be truly luxury you have to have an element of exclusivity.”

I have previously written on the importance of exclusivity for luxury brands in my articles on the recent trend towards exclusive experiences such as ice sailing, and the rise of ‘no-logo’ luxury.

The article raises the point that brands are trapped between investing in social tools – important to not get left behind, but counter-intuitively making the brand more accessible – and trying to maintain exclusivity.

According to a new study on ‘New Affluents’, the qualities that they value in brands are quality, aesthetics, uniqueness and authenticity, not necessarily a high price tag. They are looking for more brand interaction, and for brands to in a dialogue with them – even to be part of the product development process.

This, I suspect, is why we are seeing more luxury brands than ever throwing themselves into the digital media space, with brands like Oscar de la Renta using platforms such as Facebook to sell exclusive products. But they are also offering tailored services, with Burberry offering a bespoke trench coat service for $9,000 – exclusive, with an element of personalisation.

It is important for luxury brands to connect with their current and prospective consumers, and it is interesting to watch the different ways that brands are going about doing this. Kahro, (the Raleigh NC jewlery store that I founded) for example, differentiates itself by providing consultancy on what kind of diamond would best suit each individual, enabling the customer to make a choice which is both personal and which they are deeply involved in.

Luxury may mean different thing to different people, but if a luxury brand can differentiate itself by both remaining exclusive and interacting with its consumers, it will surely do better than those brands that refuse to change.

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The new M&A market

Isaac Mostovicz writes that luxury brands have been subject to takeover speculation, boosting shares...

Predictions in late 2010 that luxury brands would see a rebound in 2011 so far seem to be proved right.

Jim Taylor, author of the book Selling to the New Elite and a marketing specialist with luxury brand consultant Harrison Group, told USA Today: “Personal embracement of luxury is now back to (pre-recession) 2007.”

According to retail equity research firm Telsey Current Advisory Group, the sales of luxury goods are up as much as 12% from last year. Similarly, Goldman Sachs this week said the luxury sector is expected to become a trillion-dollar industry within 15 years: “We believe 600m new customers are set to enter the market by 2025,” the bank said.

Off the back of such confidence, takeover speculation has further boosted shares this week, France’s LVMH agreed to buy Bulgari, the Italian jewellery and watchmaker. Bulgari’s shares soared 59.4 per cent to €12.10 while LVMH climbed 1.3 per cent to €112.95. Rival watchmakers benefitted too, Swiss pair Richemont and Swatch each gained 2.2 per cent to SFr54.70 and SFr398.40, respectively.

With Goldman Sachs commenting that the sector could be ripe for consolidation, it’s likely that we’ve not seen the end of merger and acquisition announcements from luxury brands in 2011.

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