Luxury Briefing.

Our contacts at Porsche tell us that the recession is over! Orders for their rather ungainly looking Porsche Cayenne are better than predicted. Ditto sales of sales of LVMH’s superb Dom Pérignon, and Hennessy XO Cognac. Indeed after an 8% drop in sales last year, Bain & Co expect sales in luxury goods to rise by 4%, up to $158bn, against an October ’09 forecast of just 1%. So far so glittering. Business as usual, then? Noses back in the trough, on with the glitz, trowel on the excess and Bulgari’s your uncle? We think not; and we think there are several very good and low-key reasons why LVMH, Hermès, Cartier etc have made it through the recent recession – ‘low-key’ being the operative phrase.

For if the recession has taught us anything, it is this: that artisanal brands, heritage brands, or brands that major on service and minimalise the desire to max up the lustre, have come through with untainted pedigrees and, in some cases, with losses less staggering than Bulgari, which made a net loss of E47m in 2008. The brands that have done this best are the ones that have their own retail presence and distribution channels (as opposed to using wholesale, agents and concession-based formats), and located themselves in key BRIC cities and regions.
Another attribute to consider is their refusal to skimp on design, or their brand’s emotional, experiential or creative equity. And these aspects of a brand, more than any other, are the ones we expect to see greater investment in as the market recovers and brands work once more to win share of mind in a post-recessionary world where pre-recessionary de?nitions of how luxury brands should behave are now in freefall.

An example: Aquascutum, once the most moribund and design-free of all British luxury brands now does ‘pop-up’! And so it should, for the new rules of luxury are about being spontaneous, fresh, creative, local, energetic, design driven, collaborative – and conversational.

We note this in food, as well as in fashion. In France, where we were stuck during the recent volcanic ash ?asco, we discovered that many chefs and diners are forsaking the calci?ed stuf?ness of the luxe hotel and Michelin star dining experience for CFD (for that read ‘casual ?ne dining’): treats such as L’Agrume, La Gazzetta, Jadis and Le Chateaubriand, a Basque casual deluxe diner we have been frequenting for some time for food that is as smart, amusing and casual and wry as a comic from Brooklyn.

Casual is the new formal, but a casualness that speaks of belief in one’s art, a conviction that all that claims to be local is indeed local, and that the customer (who isn’t always right, by the way), is knowledgeable and intelligent enough to allow you to serve up the food without all the excessive paraphernalia that comes with that old-school Michelin-style service that luxury’s old guard still embrace. We are reminded of this old versus new debate when we travel to the south of France and dine at a number of the Michelin-starred restaurants that dot the azure coast; great, if over-fussy food, inspiring views, insipid, over-stuffed interiors, a rash of bread sticks, and chi-chi ambience par excellence – a regular Gâteau et Relais experience in other words.

All of which reminds us of what the recession has accelerated – a ?ight from fustiness, clogged arteries, over-embellished materials, cloying service, clownish celebrity and a brand philosophy that more is never enough! Looking ahead, if you want to get it right, the key words are purpose and place.

Know your purpose: just what is it you exist to do? Sounds a simple question, but many of us are still entrenched in what luxury became in the previous decades. Just as some are trying and make themselves relevant to a 20th-century consumer, others are waking up to the fact that their consumer is now very much part of the 21st century. Either your purpose or the customer can come ?rst, but one will de?ne the other. Understand which is more important in your brand DNA and you’ll have a far easier time designing, manufacturing marketing and selling product in the months and years to come.

Know your place: luxury no longer sits at the centre of our world. It did, for a brief period, at the cusp of the new century, as it has done many times in history, when excess is at the epicentre as one civilisation fades and a new one emerges. But now we yearn for simplicity, we crave meaning and authenticity. Luxury can, of course, provide all of these three qualities, but for the foreseeable future we believe its role is to provide the consumer with more immediate needs – the lightness, the indulgence, the tendresse we all crave when times are turbulent and the way forward uncertain. Leave the job of delivering meaning to the politician, poet and philosopher.

And ?nally, as the dust/storm/ash (select according to appropriate environmental situation) clouds hover, remember our warnings from over a year ago: that businesses that fail to ‘think the unthinkable’ and be in a state of constant preparedness for systems to change, fail to mutate and be in ?ux, are businesses that don’t have a future.

www.thefuturelaboratory.com

More from Blogs, Future Lab blog.