Sustained exposure to brand messages means people in developed countries
are switching off to fashion. For luxury brands to continually keep
enticing their customers, there is a fine line between achieving
performance and remaining covetable.
A recent article by Reuters suggests the sales downturn at Italian luxury
house Gucci could be in part due to brand fatigue, where perhaps it could
be time to change strategy and hire fresh talent. From uninspiring
campaigns to rehashing fashion pieces from its archive, there appears to be
little excitement.
A global spending downturn has affect biggest luxury brands
With a global downturn in spending, luxury companies are feeling the pinch,
with the worst sales growth expected in the past five years. No doubt this
is affected by the conflicts in the Middle East and Russia, the political
upheavals in Hong Kong and downfall in demand by the Chinese.
Big brands have also been suffering from consumers’ growing appetite for
smaller, less widely distributed labels, particularly in key markets such
as China, which was the luxury goods industry’s main source of growth until
2012.
According to Reuters, Gucci, Burberry and Louis Vuitton have been
rebuilding the aura of exclusivity they lost by going too mass market in
the mid to late 2000s. A volume-based strategy is great for shareholders
but not for image.
But while some brands manage to retain the aura of exclusivity, others,
like Gucci, have suffered. Not since the Tom Ford era has Gucci managed to
be on consumers’ most wanted list.
And insiders are wondering if Prada could be next. Prada was one of the
brands that opened the most shops last year, leading analysts to wonder if
it was not starting to be over-exposed.
There has been little innovation at Gucci in the past few years and the
company has raised prices too much, too quickly, nearly 40 percent in the
past few years. Customers are being driven to more accessible luxury brands
it appears.
“You cannot just keep reviving past icons, you also need to have
breakthrough innovation,” Exane BNP Paribas luxury goods analyst Luca Solca
said citing designer Hedi Slimane at Saint Laurent as a successful example.
There are no last seasons repeats at Hermès, for example. There is an
apparent ban on re-launching old classics which have kept its Kelly and
Birkin bags to be highly desirable, and for most, unattainable. That is the
key to remaining exclusive.
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