Luxury brands have shown exceptional resilience during financial crises and steady growth over the last several decades. To keep the momentum, some of the biggest brands are tempted to expand even further and explore new categories. While appealing, being ‘everything, everywhere, all at once’ is a risky strategy.
The appointment of Pharrell Williams as the creative director of Louis Vuitton’s menswear, although he has no formal training in fashion design, has been hailed a signal that Louis Vuitton ambitions to become a cultural brand. In the last two decades, the French luxury brand has expanded far beyond its original territory of being a travel-focused luggage and small leather-good brand. It now sells, beyond its famed canvas monogrammed bags, products ranging from perfumes to jewellery. It has also expanded into other travel-related categories, opening an airport lounge in Doha, Qatar, and having plans for a hotel in Paris.
PARIS, FRANCE – JUNE 22: General view outside La Samaritaine Department Store, at La Samaritaine on … [+]
The Rise Of Luxury Brands Of Everything
Louis Vuitton’s transformation into a luxury brand of everything is driven by the fact that, being the powerhouse brand of the LVMH group, it needs to contribute significantly to achieving the growth targets of the conglomerate. Brand extensions are a common strategy to increase turnover, as brands can capitalise on brand awareness to enter new markets. The academic literature on brand extensions however suggests that these can be risky and eventually lead to brand dilution, a phenomenon where a brand has been morphed into so many product categories that consumers struggle to associate it with any. In the long run, this can also affect the perceived exclusivity and uniqueness of a brand.
When it comes to brand extensions, consumers have come to expect certain product categories, such as perfumes, sunglasses, and cosmetics to be natural extensions for fashion luxury brands. Such extensions are typical of what the academic literature calls downwards brand extensions, which aim at offering more accessible entry points to the brand universe. Upward extensions involve entering markets with a higher price point. For luxury brands like Gucci, entering the high jewellery category, or for fashion brands offering Haute Couture, doing so is not simply a question of image but a way to increase desirability and drive prices up for other categories, especially more accessible ones such as perfumes and cosmetics.
Short Term Growth Vs Long Term Appeal – Can A Luxury Brand Of Everything Maintain Its Exclusivity?
Brand extensions are not magical, even in the luxury sector. Consumers may like a luxury brand’s handbags, but it does not mean they will like its perfumes. Brand familiarity helps driving curiosity and store footfall but converting consumers to a new product category – and keeping them – is a different game altogether. A luxury brand of everything is also less likely to be associated with craftmanship – most luxury brands have their roots in a specialised craft and claiming too many territories risk turning luxury brands into ‘Jacks of all trades’. A more sensible approach to exploring new territories for luxury brands is to collaborate with niche brands from other universes.
While many traditional luxury brands are approaching growth with the introduction of new product categories, other brands remain focused on their historical categories. A striking example would be Chanel, which has so far eschewed menswear to remain focused on womenswear.
According to Olivier Nicolay, former president of Chanel UK, “the success of timeless brands such as Chanel lies in staying true to their category – in Chanel’s case, being a brand for women”. ‘Being in fashion is in fact risky, because it means that you may be boring tomorrow”. Nicolay adds ‘brands today must navigate two uncertain extremes. On the one hand, brands can ‘keep expanding and grow into multiple categories, wherever it makes sense to them to connect with customers but doing so risking tarnishing the brand image and prestige. On the other hand, being too controlling and conservative with sales means creating a secondary market that will escape its control”.
Against the rise of luxury brands of everything, the resurgence of niche brands
The last decade has also seen the rise of smaller, specialised, niche luxury brands. Brands for which maintaining an exclusive, small-scale identity is more important than constant growth. This can be achieved by having a purposely limited retail presence and excelling at one or a few product categories. The rise of quiet luxury is helping these brands to find a space – and voice – in a luxury landscape increasingly dominated by luxury brands of everything.
A luxury segment that illustrates the resurgence of niche brands is the perfume industry. After the massification of the perfume industry in the 1990s, when perfumes were launched worldwide with hefty marketing budgets, consumers have been looking for brands offering smaller ranges or harder to find fragrances. It became fashionable to wear a perfume that could only be found in certain cities – a concept pushed by Le Labo’s ‘city exclusives’ collection. Beyond geographical restrictions, perfume brands have reconnected with scarcity, an essential aspect of luxury, by launching premium or exclusive perfume lines, such as Dior’s ‘Collection Privée’ – which also includes limited editions.
Being niche and smaller scale is also a way for luxury brands to be less consensual and more daring. According to Nathalie Feisthauer, an independent perfumer who has created perfumes for iconic luxury brands such as Amouage, Hermes, or Yves Saint Laurent, ‘niche perfumes are more about the experience and vision of the creator, as opposed to a market-driven commercial approach. Niche perfume houses tend to care more about ingredients and originality than what consumer tests says about the perfume’.
The success of niche brands has led to traditional players buying these – with Estee Lauder buying Le Labo, and LVMH acquiring Officine Universelle Bully. Le Labo started to offer its city-exclusive collection worldwide one month per year. A reminder that the temptation to grow will always compete with the spirit of exclusivity.
