Luxury – Gemic

How response by luxury brands to the digital age misses the big opportunity

Posted on May 30, 2018April 2, 2020 by FactaDevs

One of the clearest explanations for luxury’s travails has been the sector’s inability to keep pace with large-scale cultural shifts. Specifically, luxury has failed to keep up with the new values and consumption habits heralded by the rise of digital technologies.

This has generated various mismatches between luxury brands and consumers. Luxury brands are centred on bricks and mortar retail, while consumers expect to shop online. Luxury brands seem aloof and impersonal, while digital technologies drive expectations of intimacy. Luxury brands rely on creating mystique via limiting information about products, while digital technologies democratise access to information. Luxury brands rely on formality and close control of the meanings that consumers ascribe to them, while digital technologies promote a culture of subversion and play.

In response, brands have embraced new technologies to create new, cutting-edge products, and to remould relationships with consumers. The strategies employed have been wide-ranging, as the following examples demonstrate:

Revamping instore experiences

Brands are using digital to create more immersive retail experiences. For example, Tissot allowed consumers to virtually “try on” their watches at London Selfridges and Harrod’s stores.

Becoming social media savvy

Old brands are reinventing themselves by mastering the mechanics of social media. The most notable success story is Gucci, which has revived its fortunes via its ironic and kitsch take on late 20^th century luxury and “Instagrammable” products seemingly tailormade for Millennials and Generation Y.

Embracing online platforms

Online platforms such as Net-a-Porter and Farfetch are creating effortless connections between boutique luxury brands and consumers around the world.

Reinventing “analogue” technologies

Samsung and de Grisogono collaborated to reinvent the luxury watch. Whilst the design resembles a traditional luxury watch, it has a smartwatch interface and all the expected functionality. Apple incorporated luxury into its smartwatch via a special range with Hermes strap designs. EMEL + ARIS’ smart coat uses Far Infrared Technology to deliver heat energy that is absorbed by the skin to heat the muscles and increase blood flow.

The perils of technology worship

These strategies, which are all characterized by the worship of new technologies and a constitutive break from “old luxury”, have no doubt been successful for many brands. It would also be reasonable to claim that luxury’s technological revolution is spurring what, according to recent sales figures, is a modest sector-wide revival.

However, we are concerned that this is leading to the belief of “the only way for luxury brands to succeed today is to become symbols of digital progress” becoming orthodoxy. We believe that this will limit the opportunity for luxury.

Certainly, an uncritical embracing of digital technologies may limit the opportunities to create enduring and meaningful relationships with consumers. Since technology is constantly evolving, it leads to products and experiences that capture attention only fleetingly. In other words, it generates faddishness. This is fine for a brand like Gucci. As a fashion brand, faddishness is the nature of the game. Furthermore, propelled by CEO Marco Bizzarri and Creative Director Alessandro Michele, it seems happy to continually churn out new lines.

It is not clear that Instagrammable faddishness is the best strategy for brands outside fashion, or even others within fashion. Indeed, faddishness militates against signifying luxury. Much of luxury’s unique aura derives precisely from its non-faddishness. “True” luxury seems to have something timeless about it – an ability to combine past, present and future, and to conjure escape from a world of transience. Thus, it is not clear that many brands who simply chase digital trends are truly creating meaningful, long-lasting connections with consumers.

Luxury as a counterpoint to the digital age

To create authentic luxury whilst driving contemporary relevance, brands should consider an alternative and perhaps counterintuitive strategy: become not a symbol of digital progress, but a counterpoint to it.

Digital technologies are actually an ambivalent presence in consumers’ lives. On the one hand, they have created a new culture of personal choice, mobility and convenience. The smartphone, to offer only the most obvious example, allows consumers to instantly complete a range of activities that previous generations would have found mindboggling.

On the other hand, the digital age is beset by a profound crisis of meaning. It is a crisis that manifests itself in diverse ways, from the mental health crisis amongst always-on Millennials, to culture wars, to the widespread embracing of political options that previous generations would have found unpalatable.

The fundamental challenge of the digital age is that sources of meaning foundational to human wellbeing that previous generations took for granted have become scarce. Amongst them are community, connection with nature, time, and deep connections with material objects.

Across global culture, we detect a desire to escape the superficiality, relentlessness and ephemerality of digital culture. Truly meaningful products and experiences offer precisely the opposite: depth over superficiality, calm over relentlessness, timelessness over ephemerality.

This represents a powerful opportunity for luxury. More than mass or premium, luxury can offer products and experiences that meet consumer desires to transcend problematic everyday realities, and to experience the sublime.

The meaningfulness and depth the consumer demands is one that is, as it happens, embedded in the historic cultural meanings of luxury. However, many luxury brands lost touch with them during the era of late twentieth century gaudy superficial excess. Thus, for some brands, it is a question of rediscovering these old values and finding new ways to deliver them.

Meaning can be offered by products, but experiences are increasingly key. Whilst we are sceptical of some of the more hyperbolic pronouncements of “the experience economy” thesis, the importance of experiences in contemporary luxury is undeniable. In a world saturated with material possessions, experiences do often seem like the best way of connecting consumers with sources of meaning lost in the digital age.

It is important to emphasise, however, that being a counterpoint to the digital age is not about offering ways for the consumer to simply reject the digital. The new luxury consumer is not a luddite. Rather, it is about offering her the opportunity to have her cake and eat it: to live a digital life that is also connected to what is meaningful.

Thus, brands should not be troglodytes. All luxury brands must, to some extent, signify their membership of the digital age. For instance, it is hard to imagine a luxury brand succeeding today without a decent digital strategy. Brands need not be afraid of technology. However, it is important that it is not used to create frivolous, superficial experiences, but rather is put into the service of the meaningful connections that consumers desire.

We have identified two key strategic opportunities for luxury brands wishing to offer consumers a counterpoint to a world dominated by digital technologies.

Opportunity 1: Purposeful Craft

Purposeful Craft is based on the insight that what is truly scarce in a world of digital is deep, authentic relationships with objects. This depth can be provided by luxury objects that have an authentic provenance, are made via rituals of ingenuity and care, use the finest materials, are ethical, and often are nostalgic.

Around the turn of the millennium, style often seemed to matter more than substance. For example, Paris’ luxury scene was dominated by ‘porno chic’, epitomised by brands such as Louis Vuitton, Givenchy and Dior. Today, however, the equation is reversed. Many brands have gone back to their roots to locate substance. The likes of Louis Vuitton, Burberry and Hermes have gone back to their roots to signify depth. Products such as Burberry’s trench coat, with its century-old style, Montblanc’s Meisterstück ballpoint pen, and Hermes’ leather notebook covers, designed to last many years, have all become newly valued.

Today, the rituals of production are key. They can endow objects with what the cultural theorist Walter Benjamin referred to as “aura”—the sense of an object embedded in time and place. One form this takes is the rediscovery of old-fashioned methods of production. For example, selvedge denim brands like Kaihara and Naked and Famous utilise early industrial production methods like speciality looms and rope-dying to make their clothes. Or then there is the embracing of ‘exotic’ craft processes as in the case Raksasa Mod Vapes’ luxury vapes that are inspired by Hindu deities and hand-carved into Balinese wood by master craftsmen.

The increasing importance of craftsmanship as an antidote to digital faddishness already shows up in how consumers articulate their luxury preferences. In China today, the phrase “craftsmanship” is the word that most defines luxury for 64 percent of consumers, making it their most important consideration according to the market research firm Mintel.

Increasingly, ethics becomes a key part of the story, as awareness of the consequences of many production methods grows. The Food & Beverage industry is already undergoing a major transformation with consumers spending their money on specialty foods that offer authentic connections to craftsmanship, tradition, and ethical production processes. Since 2012 sales grew by more than 50% now topping USD 130 billions in the US alone.

Luxury is undergoing the same shift. Here, there is a role for technology to reinvent traditional production methods to divest them of ethically compromised elements. For example, Stella McCartney has recently been incorporating bio synthetic, biodegradable leather into her shoe designs. The Diamond Foundry produces laboratory-made diamonds to avert the environmental and human toll of the mining industry.

Opportunity 2: Transcendent Wellbeing

Transcendent Wellbeing is based on the insight that the digital age is creating a crisis of wellbeing. Millennials are recording record levels of depression, and workplace stress is at a high in the US and UK.

The crisis has multiple causes. Isolation is an important one. As described by MIT psychoanalyst Sherry Turkle in her books Alone Together and The Power of Conversation, digital technologies isolate us by encouraging us to stare at our phone screens. Rich face-to-face human relationships are replaced by attenuated online relationships, with adverse consequences for our sense of community.

Disconnection with nature is another. Nature is scientifically-proven to generate wellbeing. However, we are increasingly alienated from it. Life has long been urban for most people in developed countries, and urbanization continues unabated in developing countries. Two-thirds of the world’s people are expected to live in cities by 2050.

Finally, it is important to emphasise the scarcity of time. Material success used to be associated with the possession of time. The aristocratic lifestyle was associated with having time to indulge. However, today, the opposite is true. Material success is frequently associated with sacrificing time. For example, entrepreneurs like Jeff Bezos and Tim Cook boast of how little sleep they get by on. Digital technology is a chief driver of the scarcity of time, since technologies like smartphones and computers allow work to be conducted in any time and place.

These major drivers also increasingly show up in studies that survey how Americans assess their personal wellbeing. While 54% Americans state their stress level is usually high, fully 48% feel their stress has further increased over the past five years. Furthermore, at work, 40% of US adults describe their office environment as “most like a real-life survivor program” with a striking share of 41% of Americans who haven’t taken a single vacation day in 2015 according to the latest study of Pew Research Center.

In response to these threats to wellbeing, luxury brands should promise escape from the mundane, the potential for self-discovery, and a sense of the timeless.

Some are already. Livingston Manor Fly Fishing club offers luxury fishing trips that centre on community, reconnection with nature and enjoying peace and tranquillity. In China, Buddhism-inspired luxury hotels, spas and tea houses promise busy urbanites opportunities to recenter and reconnect.

Technology is also utilised to offer wellbeing experiences. Dornbracht Sensory Sky promises a multisensory shower experience that combines water, light and fragrance that gives the sensation of being outdoors.

Whilst many Transcendent Self-Discovery brands offer tranquillity and slowness, others promise self-discovery through responsible hedonism. The Burning Man festival beloved of Silicon Valley, with its emphasis on carnival, sexual exploration, wellbeing, and community, is a key example. Rich American consumers are travelling to South America for Ayahuasca retreats. Such retreats promise mind-altering experiences and the chance to explore new facets of the self.

These shifts in what people perceive as truly scarce already impact the travel industry in major ways. The type of travel that is aimed at improving one’s physical, emotional and/or spiritual well-being is growing double digit and is now a half-trillion-dollar market, accounting for 14% of all tourism revenues. It’s just a matter of time for this new value paradigm around Transcendent Wellbeing to play out in the luxury market as well.

Conclusion

It is indisputable that luxury brands need to respond to the rise of digital technologies in order to stay relevant. However, many brands have been thinking about this from a narrow and singular perspective. Brands have focused on an uncritical embracing, incorporating a number of technological trends in order to appear relevant. This misses what may be the true opportunity for many luxury brands: to provide a counterpoint to a world dominated by digital technologies. The digital age precipitates a crisis of meaning that provides powerful new opportunities for luxury brands. This article has briefly outlined two growth opportunities: Purposeful Craft and Transcendent Wellbeing.

The rise of new luxury

Posted on February 12, 2018April 2, 2020 by FactaDevs

There is a crisis in luxury today, and it’s not just emanating out of China. The global luxury sector is enduring its slowest growth since 1994. At present, business and marketing analyses of the luxury retail crisis point primarily to a lag in digital, a widening stock and a failure to reach the social-networked Gen Z. But what these critiques fail to grasp are the new cultural codes and value systems that have developed around luxury consumption – ultimately, the luxury market is treading water because the luxury consumer is changing.

We are witnessing a seismic shift in luxury, one that the overwhelming majority of categories and brands refuse to acknowledge. This oversight means that brands have a difficult time distinguishing between the old and the new type of luxury consumer. The old consumer responded to cultural codes of luxury and exclusivity that were unanimously recognized from above. The new consumer, conversely, is self-made, self-assertive and selective. It is imperative for us to trace how this new consumer came to be and examine how she manifests herself in order to theorize how consumer categories should be reimagined around her.

A Brief History of Recent Luxury

The rapid expansion of the mid-90s through the early 00s opened up luxury categories to mainstream consumers across the globe. This expansion was largely steeped in the hangover of “Old World” luxury codes. The traditional signifiers of aspiration – excess, opulence and status – were transmitted by visual codes that for centuries had been financially, geographically and culturally inaccessible to the general public. These codes, a means to reading and deciphering the cultural world, needed to migrate to retain their exclusivity.

So, as luxury crept into mainstream middle-class consumption its validity was called into question. Having been defined by its exclusivity, traditional luxury came to appear less and less appealing as its availability spread. This coincided with an era of mass-market imitation, global counterfeiting and a financial crisis, which meant that luxury, as it once stood, ended up in its death throes. But that is not to say, of course, that luxury itself was disappearing – far from it. Rather, it was only morphing into its next form.

The Shift from Gilding to Optimization

Luxury transformed from the “Gilded Object” to the “Optimized Object”. Luxury was once found in 700 pairs of Manolos, the Cartier emerald, Waterford Crystal, the interiors of Liberace or Zsa Zsa Gábor; by these standards today’s objects are markedly ascetic. 1000 objects are to be replaced with just one; apparel, beauty, jewelry and cars do not change with the seasons nor with the trends but the single object satisfies all possible interpretations. The ultimate white t-shirt, the perfect walking boots, the all-in-one membership: the optimization of utility, quality and iconicity defines the aspirational luxury object of today. To crystallize this shift, we ought to look at the best-selling sneaker of 2017: Common Projects’ Achilles low-top ($415), a simple white, rounded-toe lace-up with no visible detailing. Its only allusion to luxury are Common Projects’ signature metallic article numbers embossed on the heel, but even this is understated and has a hint at the functional. The Achilles has proven to be infinitely more desirable than the “ultimate gilded shoe” – the Buscemi 100mm sneakers – which feature a nod to the Hermès Birkin bag (the fur and diamond-encrusted versions of the shoe can retail up to $132k). This example does a good job illustrating the changes happening in luxury consumption, especially when we take into account that Common Projects has never even advertised. Despite being a relatively new player in leather goods, they have become the encapsulation of the Optimized Object.

This seemingly new approach to luxury, however, is not without precedents. In 1908 the design theorist, Adolf Loos, derided the ornamentals of the Viennese Empire. He equated ornament with a feminized world of excess, frivolity and immorality. Wasting time on ornamentation, Loos argued, only hastened the designed object’s path to obsolescence. He propounded, instead, the functional, ergo masculine, and the formalistic that would come to define Modernist design of the next half century. We are beginning to see this moralistic equation mirrored in today’s luxury objects, as the purging of the superfluous becomes an adept metaphor to describe the aspirational shift towards the Optimized Object. Perhaps the best example of the fetish of utility is the unforeseeable rise of Canada Goose, a down parka originally formulated for scientists at the Antarctic station. Such coats are now ubiquitous across America’s and Europe’s cities, and have a particularly powerful appeal among China’s counterfeiters. Canada Goose’s appeal is in its excessive warmth (labelled “the warmest coat on earth”) and heavily-emphasized manufacturing. It’s a self-declared utility object and the $1000 price tag is justified by its functional, internal composition – not by its external properties. Needless to say, the absence of Yukon dog-sledding in urban centers does not deter the brand’s loyal consumers.

In the post-recession age, being mindful and having solid principles are of prime interest to the new luxury consumer. The Optimized Object expresses this temperament in a number of ways. Its purging of superfluity is not limited to its design, nor to its function, but encapsulates the entirety of the object-culture. The Optimized Object in luxury might be embodied in the reduction of many objects to few objects; the privileging of non-material resources (time, ingenuity, passion); an emphasis on down-to-earth craftsmanship; or prioritizing subtlety over overtness. However it is expressed, the Optimized Object shuns the “Old World” of gilded luxury in the quest for enlightenment. Objects for a better self – essentially a better future – are the new luxury.

In her 2017 text “The Sum of Small Things”, Elizabeth Currid-Halkett declares the death of conspicuous consumption: gone are the silver spoons and corsets of Thorstein Veblen. Enter the intangible. Investments in education, health (and its sister, wellness), travel and other services eschew the concrete materialism of the past. This makes the criteria for identifying luxury all the more opaque to the uninitiated and the division between the haves-and-have-nots more socially striking. This is a helpful observation because it posits the post-recession shift from goods to services, towards the “luxification” of the everyday. However, Currid-Halkett’s contemporary examination of the luxury class cannot account for the material goods that are still being purchased. To explain this continuity amidst an otherwise total shift, we need to look to the type of goods purchased and the rituals that encapsulate their consumption.

The Importance of Authentic Longevity

The minimalist mode of consumption may appear at odds with the very concept of luxury. It may perplex readers that a $2’500 pair of Yeezy sneakers is a minimalist purchase and, similarly, a hand-crafted BestMade hatchet (for $400) is most likely not the first object that springs to mind under “luxury”. But this pairing demands a re-evaluation of the luxury object in the everyday.

So, what makes a luxury object suitable for the everyday? It must satisfy three things: utility, quality and iconicity. The Optimized Object must necessarily therefore be an object with longevity – but this does not represent an invigorated interest in design and aesthetics. Rather, the useful, high-quality, iconic object satisfies an existential need. The objects that withstand the toils of the everyday are distinct from the “Old World” behaviors of occasion dressing and a sedentary, cushioned lifestyle. The Cipollini Bicycle, The Shinola watch, A.P.C. Selvedge Denim – these are perhaps not yet household names, but they are surreptitious signifiers of luxury, channeled through the symbolism of endurance. Up to this point, smaller brands have been the most adept providers of this mode of luxury.

We present here a test-case as an example of how certain old-world brands have failed to address this new mode of consumption. Tiffany’s own “Everyday Object” series (“The ordinary made beautiful”) – ranging from an 18k gold paperclip to a sterling silver tin can – failed to capture the luxury of the everyday object. Instead, these objects, in attempting to hide their excess, communicated their role as “the paperclip for the person who has it all”. This mode of luxury sits too close to the “Old World” in its gilding of what already exists rather than producing something innovative. Had Tiffany’s been able to demonstrate their commitment to utility, quality and iconicity, they may have been able to create truly lasting and iconic everyday objects.

Alongside a desire for “objects built to last”, there exists a desire for luxurious, ephemeral experiences: The Class by Taryn Toomey, Yachts & Friends holidays, a Hermès dinner party are examples that represent this type of luxury. There is an argument that in the face of an uncertain future, millennial consumers put off traditional milestone purchases (things like spending money on housing and weddings or investing in arts for example). This anxiety permeates even high-income earners, so what people do is use these fleeting experiences to feel momentary, luxury relief from persistent real-world problems.

The Fragmentation of the Archetype

How are these objects selected to enter the “New Luxury” landscape and why are certain “Old World” codes relegated to the dust heaps of history? What is required to craft “New Luxury” is a new type of knowledge. This new knowledge has, in part, arisen from a new category of consumers – The Innovator, a self-made, future-oriented type, who proactively seeks wealth – but also out of necessity, because in growing markets like China and India inherited wealth has been almost non-existent. In this context, the established knowledge of traditional luxury codes becomes obsolete and inaccessible, and as a result, a new form of luxury is created to satisfy desires.

What becomes aspirational, therefore, is the ingenuity: the ability to discern what is the best based on the utility, quality or iconicity of an object. Ingenuity, rather than knowledge (that sits in the static “Old Luxury” domain), involves a process of transformation. It is within this process that the luxury consumer, and the luxury object is produced. The luxury consumer is always looking for ways to remove herself from the outdated model of mass consumption, searching for ways to “game the system” and “one-up” it. The luxury consumer desires a short cut to what is best, and for this she requires ingenuity, rather than decades and generations of built-up knowledge.

Not only is new luxury an acquired skill – the intersection of time, knowledge and resources – to acquire the right products, but new luxury is defined by the self-identification with the object and its producer. The new luxury consumer desires to replicate the engineering ideal that is suggested by the Optimized Object, for ingenuity is the new currency. She wants to mirror the object, to be ingenious and savvy like its creator: the buyer of the Shinola watch regards herself in parallel with the producer who created and crafted the piece. This demonstrates that new luxury is not simply about ingenuity, but the capacity to apply (and therefore possess) others’ ingenuity in clever ways.

What is “best” has become diffused. It is up to the luxury consumer to produce their own criteria and imbue their own sense of meaning within the luxury object. Here we see a break-down of the archetype, where luxury shrugs off its role as an authority figure: gone are the Gianni Versaces, Antoni Pateks, and Elizabeth Taylors. New luxury looks to new sources, coinciding with globalization: it moves away from the hegemony of Paris, New York, London and opens itself up to cues from Addis Ababa, Chengdu and Bogotá. The consumer can imbue the new luxury object with their own selfhood, in the absence of the archetype.

What will the new luxury world look like, and how should brands respond? One of the most profound challenges will be negotiating access to knowledge. Luxury education today demands shortcuts but must maintain exclusivity. To achieve this it is crucial to build cohesive narratives, not just market one-off stories. With these narratives, luxury stores must reflect the diversification, they must speak to multiple worlds. As a result, they will become more museum-like, upholding the local and promising longevity. To do this, brands will need to not only engage with consumers, but also engage with experts, storytellers, craftsmen, archivists.

The Optimized Object, built to last, but also built to reflect the consumer and her fragmented world, is something to affix her identity onto. Luxury must shake off its former associations of grandeur – it can act as an authority and a guide to strive towards, but it should not be a doctrine to live by. New luxury must leave room for the playfulness of the new luxury consumer.