Selling Luxury in 2013 – Does brand education lead to monetisation?

At Cannes Lions tomorrow, Burberry’s Chief Creative Officer Christopher Bailey will ask “What if ads didn’t have to look or feel like ads?”. In a guest post, Chloé Hajnal-Corob writes about how luxury goods companies are seeking new and diverging paths in order to engage with their customers. Chloé spent time working at a fashion startup earlier in the year, assisting with the launch of a fashion hub for Vine videos, among other things. She is currently placed at Editd, a fashion data insight company.

*

This spring, the House of Dior descended upon Harrods in London, one of the world’s premier department stores, for their “So Dior” exhibition and café. Last month, for one week only, Hermès had their “Festival des Métiers”, at London’s Saatchi Gallery. These two events represent a recent trend for providing luxury experiences, and though they are markedly different in some ways, they share a common goal: to drive revenues via brand education.

The “So Dior” exhibition, café and pop-up boutique took over a large designated area of Harrods alongside their usual concessions. Their presence was felt throughout, and Harrods have described the takeover as “a luxury-charged adventure combining French Savoir Faire and British charm”, the premise of which is to showcase the brand’s relationship with the store, and Christian Dior’s personal affiliation with the capital. Zeitgeist and I paid a visit, after seeing the social media hype from opening night. The event did not disappoint. On arrival, we were offered a private tour of the exhibition. What followed was a complete education into the history, heritage and identity of the brand and designers (Christian Dior, as well as Yves Saint Laurent, John Galliano and now, Raf Simons). The assiduousness and attention to detail demonstrated in the event were striking, and the quality of the experience was exceptional. It stands in particular favour given it was a free event, especially when compared with similar exhibitions such as the recent Valentino show at Somerset House, for which entrance was £12.50. We wondered if Dior and Harrods would set a precedent for luxury experiences where no fee is charged. Enter Hermès’s Festival des Metiers, which has been touring the world in a travelling circus of craftsmen, demonstrating their skills, and charging nothing for the privilege of seeing them. This harks back to how customers at high-end boutiques are treated, but without obvious intent to purchase. We are rewarded for our passion for the brand, not simply our contribution to sales.

Dior’s exhibition excelled at presenting a linear history grounded in contextual relevancy

What is the ROI for these free events then, when the cost of execution is so high? Both exhibitions come after a lengthy stream of brand “experiences” (as noted in a previous Zeitgeist article) that represent the latest luxury market strategy for driving revenue and footfall to retail spaces, in attempt to allay fears of a mass exodus of shoppers from the street to the website. However, Dior’s CEO, Christian Toledano reportedly told vogue.co.uk at the launch party of the event: “This isn’t a marketing tool… It’s a transmission of Couture”. But these are not mutually exclusive concepts; rather they are means to the same end, and arguably an education into the brand is simply the chosen method of marketing. Indeed, Hermès openly acknowledges the lucrative repercussions these luxury experiences have. An article in the FT cites that the event, in each city, draws around 30,000 visitors, which in turn increases footfall to brick and mortar stores. A twenty percent increase, to be precise, in the week following the festival in Seattle, Washington. In a far more low-key event than Dior, these are impressive figures, particularly given that no attempt at sales was made on the exhibition site. A bespoke, or even generic, selection of products on sale at the event would likely have been very popular.

Both events encouraged significant online chatter, though neither seems to have been particularly driven by the host brands. Dior at Harrods was littered with high impact branded totems, ripe for the social media picking, and as usual, Twitter, Facebook and Instagram were filled with images and comments from the event, and now Vine, twitter’s 6-second video app, provided the ideal way to document the experiential nature of the event. It is interesting that Dior made no attempt at harnessing or leveraging the veritable mass of attention the event garnered. On investigation, I found only a limited amount of content around the event on Dior’s twitter feed and Facebook timeline. There was no official hashtag for the event and no evidence (that I could find) of any engagement with consumers who were talking about it. Hermès, though a far more low-key affair, “discreet to the point of invisible branding”, were no less well-represented in the social media space, but were almost equally poor at engineering and engaging with their online audience. The hashtag #festivaldesmetiers seems to have been widely adopted but it is completely unclear whether this was brand-driven, and Facebook interaction was limited to a single status update announcing the event. For brands that exert meticulous control over themselves in the physical space (something that was made patent in the exhibitions), it is strange that they are not attempting to implement this in the digital space, where barriers are borderless and the opportunity for damage is massive. This is a bold (perhaps naïve) move in the current climate, albeit that both events seem to have been highly successful.

It is somewhat ironic that Dior’s exhibition was held at Harrods – an obviously commercial venue, where special Dior products were available to buy – choosing to assert their mission as education rather than marketing. By contrast, Hermès chose an established art space to host their Festival des Metiers, albeit one that is often known for its consumer links, and have clearly acknowledged the potential of education as a means of marketing. Neither space is less appropriate then the other, but both are indicative of the kind of events hosted. Harrods, with its lavish window displays, reputation for luxury and labyrinthine layout, was apt for Dior’s fantastical and grandiose display, not to mention that it was intended to draw on the relationship between brand and department store. The Saatchi gallery’s minimal open space provided a neat backdrop for hosting “a rendez-vous with the Hermès craftspeople”, and apparently, sought to appeal to a younger demographic than perhaps the Hermès customer would ordinarily be. It is appropriate too, to present what can only be described as a fine art and craft, in an artistic space. It’s a notion that rival (and owner of Dior), LVMH, clearly thought worth cashing in on, since they have subsequently launched a similar initiative: the Journées Particulières, which this year will see it open 40 of its ateliers to the public for a weekend.

Hermès attracted large crowds with its silk screen printing demonstrations

Both Dior and Hermès certainly made good attempts at getting people to engage physically (as well as virtually). The “So Dior” exhibition, and of course the café, were multi-sensorial. Beyond visual aesthetics, short films with headphones were provided, touch-sensitive technology was exploited and food inspired by Dior’s cookbook made for a wholly engrossing experience. Perfume was a key focus of the exhibition, explored from many different angles; not content with simply handing out the usual sticks of paper to smell, Dior and Harrods provided a telephone box (grey and white, in-keeping with brand décor, naturally) emitting one of Dior’s signature scents. Hermès was less immersive but more intimate; the possibility of viewing and interacting with those who create the product (and by extension the legacy), and even partaking in the sewing of scarves or ties, successfully created a feeling of exclusivity and privilege that the event no doubt strove for.

Toledano stated of the “So Dior” exhibition, “We need to explain why and how we do what we do. I want people to understand the passion, the innovation and our commitment to excellence.” In a similar vein, Guillaume de Seynes, great grandson of Emile Hermès explained: “We want to demonstrate that for us, craftsmanship is something that happens everyday.” Both brands sought to educate the consumer about themselves – Dior by making comment on the ideas and inspiration that produce the end product, and Hermès by demonstrating their commitment to the heritage of the brand by maintaining the quality of garments through skill of craftsmanship. Were they successful in their mission? Certainly; both provided real insight and inspiration. In doing so, Dior and Harrods, and Hermès’s Festival des Metiers, created an opportunity to become part of a legacy, and with this, the aspiration to turn something memorable into something wearable.

Luxury pushes beyond the store

Luxury brands have found it hard to come to terms with the shift in consumer shopping habits from retail to online. For several years they have dipped their toes in the water of digital, but with little commitment and much hesitation (until recently). This is understandable. Often for luxury products, the justification for higher prices is only evident upon seeing the item in real life, or it can sometimes be intangible. These assets are hard to replicate when seen on a computer screen. A store’s retail environment allows the company to control every aspect of the brand experience. Someone checking out the Louis Vuitton website could be using a slow computer in an old browser; the experience will suffer, and there is nothing the brand can do about it. Much more sensible then to invest in concept stores, such as the recent one in Selfridges. But there needs to be a focus still about managing the brand and courting attention beyond the four walls of the shop.

So it should be of little surprise to see that recently luxury has been looking to broaden its horizons in the physical space, aiming to brand experiences that seamlessly fit into the lifestyle that they think is associated with their brand. This was evident in no small part when Zeitgeist took a trip recently to St. Tropez. Before even entering the town, visitors were greeted with the sight of mega-yachts and enormous Gin Palaces, and – on one of the days Zeitgeist visited – evidence of the relatively recent collaboration between Gucci and Riva (see above picture). Such a partnership probably helps the former more than the latter. It certainly helps validate the clothing company’s brand, which sometimes fails to leverage its relatively strong heritage. Walking away the port – past the recycling collections strewn with empty bottles that had once contained vintage wine and champagne – toward the famous Place des Lices brings you face-to-face with the hotel White 1921. This is one of LVMH’s newest incarnations, an eight-room hotel.

It was a beautiful hotel to behold, and had just opened the week Zeitgeist was visiting. Though much in need of a lunchtime glass of champagne – the brand here makes the most of its ownership of several champagne labels – the dining area was sadly not open until the evening. White 1921 is not alone as a recent example of hospitality being managed by a luxury brand. LVMH’s first such hotel was back in 2010 in Courchevel, named Cheval Blanc. More recently, Bulgari have launched their own hotel in London’s Knightsbridge area, close to the Mandarin Oriental hotel. The St. Regis hotel in New York now has a small collection of fashion-related suites, including the Dior Suite. All this is about embracing a certain idea, a crystallising of what it means to be living a particular lifestyle. The question for LVMH begins to arise as to whether, strategically speaking, having one arm of your company (Dior in this case) having a room owned by St. Regis creates any significant competition between the hotels you are opening elsewhere in the world. The more they open, and the more branded suites appear under competitor’s names, the stickier this situation could get.

Releasing products that compete for the same consumer type is never a good idea, and is a mistake General Motors made. A very good essay on this is available in Richard Rumelt’s ‘Good Strategy / Bad Strategy’. The market is becoming crowded. Hermès has side-stepped this by designing luxury apartments in Singapore. Some companies have thought at a more granular, perhaps relevant, level. Trunk-maker Moynat have teamed up with the famous Le Meurice hotel in Paris by providing French chef Yannick Alléno with a roll-in trunk so he could cook breakfast for guests in the comfort of their own room. It’s an inspired idea that retains the original idea of what makes the brand special and heightens it by creating a unique experience for the consumer. The New York Times reports,

The chef’s breakfast trunk is genuinely designed to travel, its porcelain plates held upright with leather straps and its cutlery in drawers. Mr. Alléno already has plans to send it to hotels where he has connections, first in Dubai in September, then to Courchevel in the ski season and on to Marrakech. At each destination, he will make a personal appearance and demonstration.

Similarly, Prada has thought about how best to showcase its ready-to-wear line, in this case including its clothing in the sumptuous film The Great Gatsby, due out next summer. The highlight of Zeitgeist’s time in St. Tropez was in visiting one particular boutique. Christian Dior, while not be a brand one immediately associates with good food, featured an open courtyard that hosted a cafe dedicated to indulgent delights. Mr Alleno was also responsible for the food here. It was an impressive exercise in brand management… and excellent profiteroles.

Sustaining the Green Push for Brands

Zeitgeist was recently asked to write an article on sustainability trends for the coming year. The following is an altered excerpt of the original article…

There is a hotel in Italy, nestling in the heart of the Tuscan countryside. It literally blends in to the surrounding hills; they form part of the architecture of the building. The Klima Hotel is not just an aesthetic triumph, however, for the soil that forms the roof of also helps keep the building insulated, saving on both cost as well as emissions that would otherwise be generated from artificial heating.

Today, sustainability issues are more prevalent than ever, as organisations and corporations desperately try to set themselves apart from their peers, creating a manifesto for their brand. Often though these efforts can amount to little more than lip service, a practice in danger of becoming as saturated in use as the phrase ‘lip service’. So many brands are exploiting these issues that it no longer suffices merely to say x amount of the paper used in the office is being recycled. There has to be a point, a purpose to the policy that goes beyond cosmetic dalliance. It’s not just about having a solar panel here or a wind turbine there, though these are important things. It’s about recognising changing shopper habits; since the recession, people want to be able to keep items for longer, reuse them, pass them on or put them to a different use entirely.

Pepsi’s Refresh Project has been an earnest attempt at promoting issues of sustainability, and not just environmental. Several supermarkets are currently making an impressive effort in this area too… Sainsbury’s take their sustainability credentials out of store, with beehives to help sustain the bee population, and even treehouses for, well, who wouldn’t want a treehouse? The Sainsbury’s in Gloucester Quay has employed an impressive array of sustainable initiatives, one of the most interesting being a device that takes the kinetic energy of cars as they pass into the car park and uses it to help power the store. It’s technology like this that can be taken a step further; can these touch-sensitive pads be used to monitor where free spaces exist, to direct shoppers using digital signage? 7-Eleven in Japan are planning to use LED lighting and solar panels on 1,000 of their stores, but the key point is their desire for charging points for the Prius. It illustrates that sustainability is not just relegated to specific areas, it is a way of life, a lifestyle that encourages responsibility as well as innovation. So far we’re lacking the impetus for that innovation…

What constitutes the next step? One trend is that of upcycling, that of not just dumping your goods into a big box with a swirly arrow on it, rather actually stretching the efficiency of your products once their initial purpose has expired and reconstituting them for entirely different purposes. At a recent LS:N trends briefing, London designer James Gilpin’s latest work was mentioned; it involves using urine from diabetics (therefore with a heavy sugar content) and turning it into a premium, single malt ‘Gilpin Family Whisky’. In this instance, the material is such that it is already labeled as ‘waste’, but actually still has the potential to be something else. While shopper habits might preclude a desire to see old urine sitting on supermarket shelves any time in the near future, as consumers get more thrifty, such a philosophy would go down well in homeware.

There is more than enough room then for aesthetic beauty and sustainability to co-exist. Fashion brand Hermès recently launched a line of accessories created from upcycled materials. The copy for a brand of upcycled wooden watches is beautiful in of itself; “Completely absent of artificial and toxic materials, the WEWOOD Timepiece is as natural as your wrist. It respects your skin as you respect nature by choosing it… the perfect natural mate, whose story also becomes yours”. Selfridge’s recently unveiled its Project Ocean, “aiming to raise awareness of the dangers of over-fishing”, Contagious reports. One very whimsical example recently highlighted by PSFK was the creation of furniture from old parts of the fair on New York’s Coney Island. Not only is this sustainable production, but it also imbues these “new” items with an in-built past, a piece of history that people can continue to live with (and eat off of, too, I suppose). And we all know how things get better with age.

Hermès sets the marketing bar haute

Hermès leads the pack in luxury branding both on and offline.

Having recently pushed back against conglomerate LVMH‘s significant stock purchase of the company, Hermès has been pushing further with a marketing strategy that includes digital, retail environments and experiential.

Though the company may be family-run and known for it’s dedication to tradition, digitally the brand is very modern, with great banner ads appearing in The New York Times and The Economist websites. As well as a great Facebook presence, the official website has for years been an exemplar of how to market luxury wares online. One section of the website takes the user to a simple e-commerce section where a range of accessories for both men and women can be purchased, as well as the obligatory store locator, etc. The other half of the site offers a full immersion into the brand. Some permanent sections allow you to print off your own Kelly bag, to cut and make yourself. Recently, for the launch of a new fragrance inspired by India, the brand had a special film made playing on themes of Indian folklore and mythology, made as a play performed with shadow puppets, which some kind soul has since very kindly uploaded to YouTube, here.

In the offline world, aside from an entirely new brand being created for shoppers in China, in the UK the brand has begun advertising outdoors for the first time. While previously print ads and outdoor ads may have been seen for Hermès’ latest perfume, this is the first time Zeitgeist can ever remember seeing an ad for the brand itself adorning two bus stops in South Kensington. In the last week, the brand has also opened its first store on the famed Left Bank of Paris, built as much to accommodate locals as it is those keen Sino-shoppers. Built on the site of an old swimming pool, the site is by no means a facsimile of the Faubourg store, reflecting instead a more edgy identity. Scores of pictures of the new store can be found here.

Speaking of stores and Kelly bags, Selfridge’s, that bastion of capitalism located on London’s Oxford Street, recently unveiled a gigantic Kelly bag. Called the Kellydoscope, it stands at fifteen times the size of a regular bag. It’s a fun experiential installation by playful brand that could otherwise, given its heritage, risk seeming staid. To add to its hip quotient, Hermès over the summer opened a pop-up store in East London, promoting its scarves. The store, J’aime mon carré, has closed now but reopens Friday until December 23rd in the similarly gentrified-but-cool area of Notting Hill. If that weren’t enough, it has thrown in a skateboarding video too.

Fashion’s digital moves

Both parts of Zeitgeist may be out of the office at the moment, but that doesn’t mean we haven’t kept our nose to the grindstone, our ear to the ground, our eye on the ball, our finger on the pulse and our foot wedged in the door.

Last week, Zeitgeist was fortunate enough to attend the International Herald Tribune’s Heritage Luxury conference at the InterCon on London’s Park Lane. While the Missoni clan waxed lyrical on the importance of keeping it in the family, after such luminaries as Paul Smith and Alber Elbaz had already spoken, the real highlight was seeing the legend that is Karl Lagerfeld, designer for Fendi and Chanel, as well as his own eponymous collection. Karl spoke on a variety of subjects. He even offered his take on the LVMH / Hermes debacle, which Zeitgeist wrote about recently, suggesting that Hermes keep their earnings private, as Chanel does, so as not to encourage hungry buyers by “putting the milk out”.

Host Suzy Menkes asked Karl to talk about Coco herself, which he did with no subjectivity, criticising her knee-jerk dislike of blue jeans and miniskirts, and failing to adapt. It is this same failure to adapt that is causing many businesses – or even entire industries, such as books and music – to suffer massive losses, with Chanel itself a “dowdy dowager”, as the Wall Street Journal once described it. Indeed, when the managing director of the reputable Brown’s stores asked Karl what how important he thought the digital world was for luxury brands, Karl was unequivocal, saying Chanel the brand ignoring digital would be like Chanel the lady ignoring miniskirts and blue jeans. He was also talked about the increasing binary pull of fashion, where inexpensive and expensive rule, with no middle ground. Businesses in that middle ground – think FCUK – will not fare well in the future he intimated. If one thinks of this from a branding perspective, it is perfectly understandable. Selling your product as the best you can get, or, conversely the best you can get at the cheapest price, is a robust selling point. Anything between becomes undefinable and wishy-washy; at exactly what point has quality been sacrificed for expediancy in x product? Chanel have done a fair job so far of embracing the digital world, with an engaging iPhone app as well as an e-commerce section on their site.

Of course, some brands – especially luxury ones – revel in their heritage, and so it was on Tuesday night when Zeitgeist attended the evening preview of Dior Illustrated at Somerset House. Illustrator Rene Gruau was still drawing adverts and couture dresses for the company long after other labels had switched to photography. Of course, it is when one can combine the worlds of heritage and keep the brand contemporary that is most impressive. So it was with Ralph Lauren’s 4D presentation, also last week, shown in New York and London, recorded by a friend of Zeitgeist’s. Enjoy.

Hermès Family Fortunes

Luxury group LVMH acquired what is to be a 17.1% stake in Hermès, it was announced at the weekend. Historically, the group has a tendency to purchase a minority stake before settling in for a full assault on the target acquisition. In order to leverage such a purchase, it is rumoured that LVMH is considering selling off the “MH” part, Moet and Hennessy, which Ogilvy client Diageo is understandably very keen for. Any rumours of takeover may just be that, of course.

But what of Hermès? Zeitgeist has paraphrased current IPA chairman Rory Sutherland before when he spoke of clothes today being about much more than mere “atoms”; these goods, especially in the realm of luxury, are sold on their intangible benefits, not on the assumption that they will merely keep you warm. Hermès, futhermore, really is a world unto itself, having been controlled by the Dumas family (offspring of Thierry Hermès) since its inception. The death of the brand’s patriach clearly left room for a potential hostile takeover.

LVMH must tred lightly however. One of the things that makes the Hermès brand so coveted by so many people around the world is that it is fiercely independent. Its heritage is bound up in the history of a single family, rather than a more homogenous consortium of initials. This family history has, without doubt, strong – though intangible – brand equity for its consumers, for obvious reasons. If it is to become subsumed into a phalanx of other brands however, the loss of this familial association might having a thoroughly tangible impact on the brand’s bottom line.

Hermès sends a message to China

Images for the new Hermès Fall/Winter collection were released earlier this week, with the usual, luxurious European tint (and an indulgent tagline roughly translated as ‘Live like a Count’ or ‘Live like a story’). While Zeitgeist was happy to receive another of Hermès’ seasonal eCRM emails recently (see below), the company was also making headway over the other side of the world, namely in China, the world’s second-largest luxury goods market, (recently overtaking the US), according to Luxuo.

On Tuesday the FT reported Hermès is creating a separate, “bespoke” brand for China. Called Shang Xia (meaning “Up and Down”, hopefully not an analogy for the future of the Chinese economy), the brand launches in September. Those critical of the decision suggest it will dilute the brand essence; this will depend on how it is handled. Giorgio Armani has managed to keep its excellent reputation despite it’s more accessible diffusion lines like Armani Exchange and Emporio Armani. Does watchmaker reverred watchmaker Breguet suffer from being owned by Swatch?

The answer is that it is all a matter of perception. To avoid diluting the principle brand, there must be complete compartmentalisation. Florian Craen – Hermès’ managing director – says “It is a Chinese brand, developed in China with the Chinese team, based on Chinese craftsmanship and broadly made in China. We don’t want any confusion”. Hermès is one of the few remaining boutiques to still have their clothing and accessories made in Italy and France in order to ensure its quality. The other interesting thought will be whether this new Sino-brand will be anywhere near as aspirational for Eastern consumers as its parent is, when all Western allusions are removed.

Curb Your Luxury

From the January, 2010 Zeitgeist…

In these stringent times even Zeitgeist have had to cut corners. We have, for example, begun opting for sevruga caviar over beluga. Luxury brands know that their consumers, a large portion of whom were buying on credit, are in danger of not returning to their stores any time soon. So what have these brands been doing over the holiday period to entice people?

On the Friday before Christmas, Zeitgeist received emails from Hermès, Veuve Cliquot, Emilio Pucci and Yves Saint Laurent. Perrier Jouet, Zegna, Tod’s and Selfridges all followed suit over the ensuing days. Only Selfridges’ email was about a sale. Other emails simply promoted the new season or reminded the reader that there was still time to place an order before Christmas. Some have begun to tie their products in to the lifestyle of their prospective customers, such as Veuve with its The Season campaign. It might be thought that these emails missed a trick by not offering some kind of promotion to those people whom the brand deigned to have on their list, to reward their loyalty in the midst of a recession. No such luck, however. For most of these brands, any such indulgence would not impact the bottom line so much as it would impact the image of the brand. Keeping a semblance of dignity while reminding the shopper of their presence goes a long way. For example, Hermès holds discreet sales for loyal customers at the Dorchester Hotel rather than in-store. Moreover, Louis Vuitton never has sales. Surplus products are destroyed.

However, the recession has in some cases led to some fashionista legerdemain. On a trip to Chloé two weeks before Christmas, Zeitgeist was identified as a returning customer and offered a discreet 40% discount on any purchase.

On Christmas Eve, Zeitgeist found Harrod’s had quietly begun its sale, with 50% off a huge array of items. A significant move as Harrod’s is a stalwart for not starting sales until after Christmas. What has brought about these relatively drastic measures? Though some brands are undoubtedly suffering, the recession has more exacerbated already pressing problems, rather than being the problem itself. Some brands, such as Hermès and Louis Vuitton are doing well. Vuitton contributes some 70% of group LVMH’s profit. In truth, the principle reason for such significant discounting is due to customers expecting and demanding them.

Away from the boutiques themselves, both Gucci and Hermès are currently playing on their equestrian roots. Gucci have decided to take advantage of the rather lucrative industry that has built up surrounding used products, recently starting a venture with Christie’s. Vuitton recently began a new campaign, from Ogilvy and Mather in Paris, which shows the artisans at work. The brand is trying to tread the fine line between its brilliant, bling ready-to-wear collection designed by Marc Jacobs, and the immense heritage it has in the luggage it has been painstakingly making since 1854.

During the recession then, most brands have been sticking to their guns (or the fashionable equivalent), waiting for credit to flow once more, so the cycle can start all over again. Chanel’s new surfboards should get things going again.