FASHION, LUXURY AND AFFORDABLE LUXURY

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1 FASHION, LUXURY AND AFFORDABLE LUXURY Definitions and meanings November

2 FASHION-LUXURY INDUSTRY OUTLOOK 2,4 Trillion USD: Global Fashion System Market Value in 2017 It means like the 7 th world economy after: USA, China, UE, Japan, Indian, UK (Mln/USD): Italy fashion system (textile, leather goods, apparel, shoes) Source: McKinsey, The state of Fashion 2

3 FASHION-LUXURY INDUSTRY OUTLOOK 3

4 FASHION-LUXURY INDUSTRY OUTLOOK 4

5 FASHION-LUXURY INDUSTRY OUTLOOK 5

6 LUXURY: POINTS OF VIEW Some people think of luxury as opposite of poverty. Luxury is the opposite of vulgarity COCO CHANEL We have to consume luxury immediately. The best thing that can happen to a dress is to be worn not to stay in a museum. KARL LAGERFELD 6

7 LUXURY: POINTS OF VIEW I m never shocked by an expensive dinner. Especially if I think that it costs less than a pair of shoes. CARLO CRACCO Wear a trench, and you ll feel like Audrey Hepburn walking in Paris. MICHAEL KORS 7

8 LUXURY: POINTS OF VIEW Being happy is a natural wealth, luxury is an artificial poverty. SOCRATE Yes it s true, I have a BMW car, but just because BMW is the short for Bob Marley and the Wailers, not because I love luxury cars. BOB MARLEY 8

9 LUXURY: POINTS OF VIEW The true luxury, is to take our time PAUL MORAND And you? What do you think about? What s your point of view on luxury? 9

10 WHAT DOES LUXURY MEAN? Which is luxury definition? There is a considerable number of possible answers? Over the times the word luxury became in common use and very often it has been downgraded It s easy to hear about true luxury, new luxury, affordable luxury and other terms that made the luxury meaning more vague 10

11 WHAT DOES LUXURY MEAN?? 11

12 WHAT DOES LUXURY MEAN? We can approach word luxury from different prospectives. Let s try with 4. DEMOCARTIC APPROACH ELITE APPROACH EMPIRICAL APPROACH EXPERT APPROACH 12

13 WHAT DOES LUXURY MEAN? Democratic approach Making a survey asking people what luxury means to them. But we ll have different or in some cases opposite answers depending on different groups or social levels 13

14 WHAT DOES LUXURY MEAN? Elite approach It s the opposite of democratic, and it will be limited to selected groups of people such as rich. In that case different cultures could have different visions. Think of a Japanese compared to a German or a Chinese compared to a French. 14

15 WHAT DOES LUXURY MEAN? Experts approach In this case the point is to identify the experts. Who are they? What do they do? Where are they from? 15

16 WHAT DOES LUXURY MEAN? Empirical approach Since brands are luxury markers we should limit luxury to luxury brands. But Which are the real luxury brands? For example Lacoste represents for Chinese consumers a luxury brand for its presence in a selected distribution: Department Stores, Mono brand boutiques. In Spain on the contrary the perception is much lower. 16

17 WHAT DOES LUXURY MEAN? Whatever is the approach method to luxury definition we can clearly say that LUXURY IS A RELATIVE CONCEPT It s a relative concept that necessarily depends on SOCIOPOLITICAL LANDSCAPE OF OUR CENTURY Besides, provided that our society is more and more fragmented and multi-cultural WHAT LUXURY MEANS TO SOMEONE DOES NOT FOR SOMEONE ELSE Also from times prospective: WHAT LUXURY WAS YESTERDAY IS NOT TODAY S LUXURY AND IT WON T BE TOMORROW S ONE 17

18 WHAT DOES LUXURY MEAN? In any case we need to set some milestones on our learning path So we ll choose some definitions and meanings that can suit our educational purpose 18

19 WHAT DOES LUXURY MEAN? A first definition could be that a luxury brand is a very exclusive brand almost unique in its category, symbol of rarity, and sophisticated taste Such a definition, although cane make sense it seems too limited for today s luxury. In this case only a Rolls Royce either and Aston Martin can be considered luxury cars, if we think of automotive. A Ferrari would look too much. 19

20 WHAT DOES LUXURY MEAN? 20

21 WHAT DOES LUXURY MEAN? A broader definition: a luxury brand is a selective and exclusive brand which carries a creative and emotional value for the consumer This is also a clear and valid definition but can be extended to fashion product too. We ll see later fashion/luxury comparison 21

22 WHAT DOES LUXURY MEAN? Rolex Daytona with diamonds Castiglioni lamp,

23 WHAT DOES LUXURY MEAN? A third interesting definition could consider a luxury brand based on three main criteria: artistic contents, handcrafted quality, international scope Those three principles, despite all possible luxury definitions, can be taken as true. 23

24 WHAT DOES LUXURY MEAN? Artistic contents: behind a luxury product we always need a profound aesthetic research Think of a fragrance bottle able to generate impression of beauty and artistic research Think of a cocktail dress created to enhance feminine charm and beauty Wrongly dress a woman and you ll see the dress. Rightly dress a woman and you ll see the woman COCO CHANEL 24

25 WHAT DOES LUXURY MEAN? Artistic Contents 25

26 WHAT DOES LUXURY MEAN? Handcrafted quality: consumers buy Armani clothes or Gucci bags, and although they know product are manufactured on a large scale the want to believe that the product comes directly form designer laboratory We can mention Bottega Veneta where handcrafted quality is identified with the brand itself 26

27 WHAT DOES LUXURY MEAN? Handcrafted Quality 27

28 WHAT DOES LUXURY MEAN? International scope: whether a Canadian buys an Italian or French luxury brand product he/she expects the product to be considered in the same way by Japanese, Chinese or Americans : Louis Vuitton is Louis Vuitton worldwide Similarly if I m an Italian, walking on 5 th Avenue in New York City, and I don t see a Prada store, I become concerned about reputation of the brand. 28

29 WHAT DOES LUXURY MEAN? International Scope 29

30 WHAT DOES LUXURY MEAN? Another important definition is the one provided by Danielle Alleres. It s also a first introduction to accessible luxury. It defines three levels of luxury: Inaccessible luxury: unique models, exclusive, always handcrafted often in one or limited units: Rolls Royce limited edition High-End Luxury: similar styles and models of inaccessible luxury but produced in a series. Think of above mentioned Rolls Royce limited edition (inaccessible) or Rolls Royce catalogue (high-end) Accessible luxury: all product made on large scale like pretà-porter by Dior or shoes by Ferragamo 30

31 WHAT DOES LUXURY MEAN? By this definition affordable luxury would represent 90% of today market. This definition of accessibility is based more on culture of consumers, understanding of luxury by a very niche customer base. It is not related to affordability, it does not include really money as a key factor. Also accessible luxury in this definition includes very expensive items We ll enter more in details to define what we mean today as affordable luxury, introducing a crucial segmentation variable: price The first take away is that exactly as for luxury, also inaccessible luxury is a relative concept 31

32 WHAT DOES LUXURY MEAN? A first Luxury Pyramid according to Danielle Alleres Inaccessible Luxury High-End Luxury Accessible Luxury 32

33 WHAT DOES LUXURY MEAN? Let s summarize so far. Luxury, expression of a brand and a product, always includes exclusivity, handcrafted quality, artistic contents, and international scope. Those elements are able to carry emotional value for consumer. This process can be referred to different levels: that s why we speak about levels of luxury At every level of luxury we are never in the field of necessity but always in the field of emotions. 33

34 WHAT DOES LUXURY MEAN? AND NEVER FORGET.. WHATEVER IS LUXURY LEVEL WE ARE CONSIDERING WE ARE ALWAYS TALKING ABOUT A BIG MINORITY OF THE POPULATION, WE ARE ALWAYS TALKING ABOUT A NICHE OF COSTUMERS. 34

35 WHAT DOES LUXURY MEAN? Our product are made to make people dreaming BERNARD ARNAULT Gucci is the business of selling dreams ROBERT POLET Luxury is the necessity that starts when necessity ends COCO CHANEL 35

36 LUXURY: BRAND AND PRODUCT When we think of luxury we immediately link to brand, we instinctively think of brand names, logos and colours: this is explicatory itself. But behind a brand there is always a product So the question is (also): which is the process that take a product to a luxury status? 36

37 LUXURY: BRAND AND PRODUCT Often celebrities, brand ambassadors, events, right people play a role able to give to the brand the glamour that the product can benefit. Product itself sometimes is not even mentioned It happens sometimes that tremendous efforts in quality research or style details are not rewarded by the market if the product is not supported by a brand. 37

38 LUXURY: BRAND AND PRODUCT Why it happens? At first, we can say that luxury assumes quality but it s over the quality: luxury is a dividing line between the very good and the emotionally moving REMI KRUG And again, those brands maybe they are high quality but they don t have their Kelly who represented the highest mix of richness, fame, charm, beauty, tradition and legend: Grace, the Hollywood star who becomes princess (Kelly, Hermes, icon bag) 38

39 LUXURY: BRAND AND PRODUCT Beautiful but unknown The power of awareness 39

40 LUXURY: BRAND AND PRODUCT Although luxury is strongly linked to a communication process it needs also an intimate multi-sensorial and multi-experience satisfaction depending on the beauty and values of the product itself Nevertheless luxury democratization process made by big logos and show-off took place, a niche of consumers who consider luxury strictly bound with product contents, still exist. 40

41 LUXURY: BRAND AND PRODUCT Luxury pass through a double valorisation process: Its validity as a true luxury work : time and work necessary to produce it, raw material, quality value chain To be addressed to a true luxury clientele, able to understand and to know it : luxury is how to spend not the power to spend 41

42 LUXURY: BRAND AND PRODUCT We can come to a conclusion: true luxury is made by a strong union between brand and product, but whether sometimes brand can skip product, very rarely the opposite is true. AND WHAT S YOUR OPINION? 42

43 FASHION AND LUXURY It s an ambivalent and confusing issue let s try to make it clearer By definition luxury is a social marker: in a democracy, where people are free luxury creates different social levels and influence people to belong to something higher. Fashion, more and more chaotic, represents the the strong reaction to urbanization and raise people from their condition of anonymity, it represent an effort to get back your lost time. 43

44 FASHION AND LUXURY In ananonymous environment, fashion creates a horizontal differentiation not vertical as luxury. Therefore, there is more than one fashion; there are enough fashion for everyone to differentiate themselves and to integrate themselves into their tribe, even at a low price Luxury cerates a hierarchy cleared by democracy Fashion creates a social differentiation to escape the anonymous urban crowd 44

45 Said that. Luxury needs innovation, need to be fashionable Fashion and its products can become aspirational for some consumer segments, representing a dream an affordable luxury FASHION AND LUXURY 45

46 FASHION AND LUXURY Two more aspects of difference between fashion and luxury are - Relationship with time: luxury is timeless fashion flies away - Relationship with ourselves: luxury is for us fashion is to show to the others One example that can include the two concepts is Haute Couture that should represent top of fashion and luxury at the same time although today Haute Couture is not profitable any more, while H&M and Zara street-wear is growing so fast.. 46

47 AFFORDABLE LUXURY We anticipated the accessible luxury in Danielle Alleres definition of levels of luxury We proceed introducing the concept Premium which matches with Danielle Alleres definition of accessible luxury: in this case we talk about Premium brands when communication wise and distribution wise we refer to large consumer base (we are not talking about mass but large segments) Talking about clothes and accessories, Premium would include for example all pret-à-porter, all is not included in Haute Couture 47

48 AFFORDABLE LUXURY We also mentioned affordable luxury as aspirational fashion purchase A more modern concept, closer to fashion luxury industry language, includes a key variable of accessibility: the price. That s why we talk more about affordable luxury than accessible luxury. The accessibility is not a matter of communication or distribution visibility, it s a matter of spending chances. 48

49 AFFORDABLE LUXURY Regarding fashion industry for instance Giorgio Armani first line or Versace first line will be not part of affordable luxury, while the diffusion lines by the same company such as Versace Jeans or Armani Jeans may be included At the same time Furla, Michael Kors, Twin Set are part of affordable luxury, while Zara, H&M, Uniqlo can represent the entry level of this segment. 49

50 AFFORDABLE LUXURY 50

51 WHAT DOES LUXURY MEAN? Going back to Pyramids do you remember Danielle Alleres Pyramide? Inaccessible Luxury High-End Luxury Accessible Luxury 51

52 WHAT DOES LUXURY MEAN? Moving to Premium Pyramid Luxury Premium 52

53 WHAT DOES LUXURY MEAN? Affordable Luxury Pyramid Luxury Affordable Luxury Affordable Luxury (Entry Level) 53

54 WHAT DOES LUXURY MEAN? And your Pyramid?? 54

55 AFFORDABLE LUXURY In the recent past (last 20 years) we observed a lot of trading up cases, low-medium price product that thanks to fashion trend research, and the ability to create good fitting and right shapes, try to elevate themselves to fashion and luxury brand. On the other hand luxury brands that try to conquer new lower markets due to big difficulties in getting profit in their original niche. We ll go back on those topics 55

56 AFFORDABLE LUXURY In summary We can talk about accessible luxury when we refer to goods, in the field of fashion and luxury, addressed by companies communication and distribution strategy to a relatively large segment of consumers. We can talk about affordable luxury when we introduce price as an argument of a further segmentation, and this factor starting approximately from early 2000 created an increasing demand (and an offer), of aspirational goods at reasonable prices. 56

57 LUXURY OR AFFORDABLE LUXURY? Christina Dior ZARA 57

58 LUXURY OR AFFORDABLE LUXURY? HERMES FURLA 58

59 LUXURY OR AFFORDABLE LUXURY? 59

60 LUXURY OR AFFORDABLE LUXURY? 60

61 LUXURY OR AFFORDABLE LUXURY? ASTON MARTIN KIA 61

62 LUXURY OR AFFORDABLE LUXURY? MINOTTI IKEA 62

63 AFFORDABLE LUXURY We said that affordable luxury is also relative exactly as luxury. But luxury and affordable luxury can correspond? 63

64 LUSSO O LUSSO ACCESSIBILE? WHO KNOWS 64

65 Bibliography - The Luxury Strategy Kapferer/Bastien Kogan Page - Luxury Brand Management Chevalier-Mazzalovo- Franco Angeli - Luxe, Strategie, Marketing Danielle Alleres Ecomica, Paris - Le procedure de qualification de produits de luxe Teil G. Edition du Regard Paris - Le Luxe: essais sur la fabrique de l ostentation -Teil G. Edition du Regard Paris 65

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