Is the ‘masstige’ market recession-proof?

Isaac Mostovicz writes that the 'masstige' market's rebound could be helped by Theta personalities looking for long-lasting quality items...


A major casualty of the global recession has been the luxury industry. Sales are down across the board and those who are buying luxury goods are buying far fewer goods than before.

Many companies are rethinking their business strategies, i.e. Gianni Versace SpA closing its Japanese stores, which I’ve previously written about.

But the doom-and-gloom of the luxury market seems not to have trickled down to the ‘masstige’ — mass-market luxury — market.

Though not officially a “masstige” brand — and the brand outright rejects it — Hermes has done well for itself in the recession. Its bags have reached mass-market, and against the backdrop of a global recession, the company has begun crafting expansion plans. Luxist reports:

The Financial Times recently talked with Patrick Thomas the CEO of the luxury brand who has said the brand has held off on expanding as fast as they could because they don’t want to squander the legacy of the company’s history. Thomas refers to it as a “capital sin” to use the image of the company to try and make short term money.

The ‘masstige’ market is tailored to Theta personalities. Even in a recession, where resources are strained, they will seek out quality items. Though the focus on quality will be more to do with the comfort of knowing the item will last for a long time.

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Valentino: buying into masstige?

Isaac Mostovicz writes...


CNBC’s Margaret Brennan made a few interesting observations about luxury this week, triggered by the proposed purchase of Valentino by private equity firm Permira Advisors. This buyout is an example of a private equity firm paying a great deal (€2.6 billion) for a brand itself—past private equity purchases in the luxury / fashion retail space (such as Texas Pacific’s purchase of Neiman Marcus) had a great deal to do with the value of the retailer’s real estate.

Valentino is interesting because as Brennan notes, unlike other luxury brands it hasn’t made a masstige push and licensed out its name into high margin accessories. In Brennan’s opinion licensing brands “commoditizes them in a way that undermines the value of the name.”

This topic is no stranger to Janus Thinking. I’m of the opinion that when pursuing the masstige option, it’s a matter of keeping enough exclusives at the high end to keep buyers feeling special, and educating them that the difference at the high end is worth the price premium (without alienating the buyers of the less expensive goods who are really helping the bottom line). It will be interesting to see, if the purchase goes through, whether Permira will force Valentino to license its name.

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All Hail the Big Green Giant

Isaac Mostovicz writes...

Connoisseurship is not a closed product area. Increasingly, everyday items consumed by ordinary individuals are making their way into the realms of mass-market connoisseurship. Luxury has opened its gates, paving the way for items such as fine cheeses, chocolate and coffee to enter.

Taking the example of Starbucks, its stellar performance in the coffee industry is set to expand, and is based on the accessibility of the positive lifestyle that is associated with its brand. Content Research forecasts predict that Starbucks may overtake McDonalds as the world’s largest fast-food brand. The company has turned a staple beverage into an indulgence associated with connoisseurship. Or has it?

From the point of view of indie coffee houses, vast companies such as Starbucks have replaced skillful barristas with the cold rattle of the automatic machine, drenching its espressos in a milk and syrup mix, thereby driving smaller shops out of business.

But simultaneously and somewhat paradoxically, Starbucks is promoting cafe culture and generating a new generation of coffee drinkers. Tully’s, a small chain admits to locating new stores within the vicinity of existing Starbucks locations. People are given a taste of what they like, the gourmet coffee experience, after which they can venture beyond the land of the big green giant.

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Luxury for everyone…

Isaac Mostovicz writes...

The growth of masstige products is a well attested phenomenon–bringing luxury goods within reach of the hoi poloi. Porsche boxter, mercedes c class, jaguar x-type… the list is endless.

Edwin Collyer makes a really good summary of the phenomenon, over at brandchannel quoting a variety of experts….

Robin Koval says:
bq. There always has to be some sense of scarcity and being out of reach. Yes, you can buy a Mercedes for $30,000 or so, but the really cool one that you dream about is there next to it on the floor for $100,000…. It depends how well you can tier your offerings and reserve a special place for the true luxury consumer.

This is a typical problem with all masstige conversations. They tend to focus obsessively on the price of an item at the lever of luxuriousness, when price is just one facet of their exclusivity (you can add scarcity, sparse distribution, sourcing difficulty to this list). Exclusivity itself is just a tiny facet of luxury, and is primarily appealing to challenge-seekers, who find self-esteem in achieving their goals.

This sort of price-centred analysis fails on two levels. At a basic level it fails to acknowledge the alternative unity-seeking motivation of luxury, but also, at a much deeper level, it fails to recognise that ALL luxury is personal and relative. The masstige conversation falls headlong into the trap of seller-centric thinking, believing that producers can be manufactured.

Koval does clarify his point later in the article, when he says:
“Luxury is now more about emotion than price points. I think it will be more about mindset than wallet size or class. There will always be people for whom certain indulgences provide great meaning—whether for their badge value or intrinsic reward. And there will always be the millionaire bargain hunter as well. It’s all a matter of where your own definition of pleasure comes from.”

As Collyer says, Luxury can be a cream cake instead of a sponge.

Luxury can be a single chocolate with your evening coffee…

But the same chocolate can be emergency rations in the jungle…

The critical point is the brand owner does not determine luxury, the luxury is determined through the personal moments of intention, choice and consumption and remembrance…

Luxury starts well before the purchase, and ends only when memory fails.

The paradox here is that luxury is both utterly universal and entirely individual.

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Gem demand decline?

Interesting news out of Dubai this week. At the 5th City of Gold Jewelry Conference, business leaders suggested that a unified marketing strategy for the global gems and jewelry industry is necessary in order to prevent gems and jewelry from…

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Can we do mail order luxury?

Isaac Mostovicz writes...

Experian’s annual poll of shoppers reveals that residents of Barnes, a leafy London inner suburb, now spend an average of £150 a year on mail order goods.

From a Press Association article:

Experian said the typical home shopper was now a wealthy, busy consumer who liked the convenience of buying “aspirational, lifestyle” items from mail order catalogues.

Shoppers in Barnes fell into the “cultural leadership” group of consumers who were mainly well-to-do professionals living in exclusive suburbs in traditional family units, the report said.

Described as “assured, secure and very discriminating”, they spent their wealth carefully on understated, classic goods and services and had little interest in the “brasher aspects of contemporary consumer culture”.

As home shopping has moved upmarket, wealthy consumers have flocked to internet and catalogue shops in order to avoid having to prolong their working day by spending time shopping. As commuters, they prefer not to stay in central London after work to shop, and, given their professional status, are unlikely to take formal lunch breaks.

Of course, this scenario isn’t unique to London, and so we can ask the more general question – how can the luxury retailer reach the people who don’t shop during the week, and who would probably prefer to stay at home at the weekend? Online and catalogue shopping might seem the obvious answer, but the Experian report implies that luxury items aren’t in the average Barnes resident’s online shopping basket.

So much of the luxury purchasing experience depends on touch, taste and smell – olifactory components simply impossible to recreate outside of a physical shop – that it is questionable whether online shopping will replace the high street as the preferred purchasing mode entirely. Nevertheless, the growing demand for ‘masstige’ products means that consumers will increasingly turn to the internet in search of lower prices.

The dilemma for luxury retailers, then, is this – do I sacrifice some of my physical customer experience in order to better serve the distance buyers? Or am I confident that my customers appreciate being able to touch, taste or smell my products, and so will always come to see me, even if it means getting a later train home or skipping lunch?

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