Selling the extraordinary

“Everything has become more experiential”

– Dante D’Angelo, brand and consumer development director at Valentino

It is an odd state of affairs indeed for the retail sector at the moment. On the one hand, consumers are flocking to digital devices like never before, particularly for their shopping. Conversely, this means that the physical experience of shopping becomes rarer, creating more opportunities for specialism. An article in the Financial Times a few weeks ago read as if a commercial plague had swept through the UK high street over the past few years. With 4,000 stores affected, 2012 was, according to data from the Centre for Retail Research, the “worst year since the start of the credit crisis in 2008”. Names of erstwhile stalwarts like Woolworth’s, Jessop’s, Peacocks and Clinton Cards have all fallen under the knife. As we wrote at the beginning of last month, what little salvation there is lies in embracing digital technologies.

The luxury sector however has its own special, gilt-edged cards to play. In St. Tropez, the Christian Dior boutique’s ample courtyard has recently been made use of with an all-day restaurant. Louis Vuitton have a cinema screening classic Italian films in their Rome boutique. It’s no wonder such brands have also branched into the hospitality sector, the former working with the St. Regis to develop branded rooms, the latter into full-scale hotel management. Ferragamo have been involved in the hotel sector for years. Two recent examples show how companies can extend the experience for visitors, and help drive revenue at the same time.

The auction house Sotheby’s will tomorrow auction a rather large collection of surrealist art. One of the few things that definitively puts it ahead of Christie’s is that it has its own cafe, which, last week and this week, is pushing the surrealism theme into its catering (see above menu). It’s a simple, creative idea that creates a cohesive brand, celebrates a big event, and ultimately hopes to drive revenue from peripheral streams around the auction. The RA’s current Manet exhibition is taking a leaf from this tactic, opening later but charging double the usual rates for a special experience, including a drink and a guide. The other interesting news of note was a new tactic being employed by the fashion company Valentino. Not content merely with having a major exhibition at London’s Somerset House, the label is also tinkering in an innovative way with its event structure. As detailed last week in Bloomberg Businessweek, Valentino is opening a new boutique in New York later this year, during which the typical glitterati will be in attendance. However, the new idea comes in the form of the company inviting prized customers to the opening for the chance to rub shoulders with said VIPs, for a steep price. Similarly, Gucci is offering its non-VIP customers tours of its Florence workshops for the first time.

Something that Zeitgeist has been noticing for a couple of years now, recently echoed by Boston Consulting Group (BCG) senior partner Jean-Marc Bellaiche, is the importance, particularly for those in their 20s – like Zeitgeist – that people place in defining themselves by what they’ve done rather than what they own: “In an era of over-consumption, people are realizing that there is more than just buying products… Buying experiences provides more pleasure and satisfaction”. On a macro level there is significant bifurcation in the retail market; not everyone will be able to afford in creating extraordinary experiences for their customers. A recent BCG report helps illustrate this, noting that while the apparel sector as a whole saw shareholder returns fall by 1.3% for the period 2007-2011, the top ten players produced a weighted average annual total shareholder return of 19%. Expect then for retailers – those that can – to increasingly provide exclusive experiences to their customers, beyond the celebrity, whether it be early product releases, tours, or events. Just don’t expect it to come without a pricetag.

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.

Campari’s breath of fresh air

Zeitgeist has a bit of a soft spot for that lovely libation that is Campari. The bitter spirit is hardly known at all in this country, despite a push in years past both here and in the US with some excellent print ads (see above). Last week, Zeitgeist went into a very respectable sports club to ask at the bar for a Campari and orange, only to be greeted with incredulity by the ingenue of a bartender serving him. Campari is not only not cool in this country, it is not known.

It was refreshing then to hear of a little activation campaign in Milan – home of Davide Campari – that featured the “aperitivo three ways 1. Straight drink 2. Solid form – alcoholic jellies moulded like italian design classics 3. Gas – a vast breathable cloud of Campari.” The wonderful blog NOTCOT has the lowdown. It’s great to see a brand creating a cool event around appreciating the product in a different way, not just sponsoring some party at some club-of-the-week.