Mark Ritson, associate professor of marketing & branding expert, investigates why Louis Vuitton’s brand is worth more than Tiffany, Fendi, Cartier, Rolex & Chanel combined.
The world of luxury is not just exclusive, it is highly secretive too. Several of the very large luxury brands are privately held like Chanel and Rolex and therefore do not need to report their annual or quarterly results. Even when the companies are publicly listed, like Louis Vuitton or Gucci, they are part of much bigger companies which makes assessing the individual performance of the brands very hard to do with any accuracy.
So the power and value of the Brandz top 10 Luxury brands league table is particularly pronounced. Millward Brown interviews more than 600,000 consumers for this research each year and the results provide arguably the single most insightful peek inside the golden robes of the luxury industry. The 2010 data provides many insights. First we must stop and simply marvel at the size, scale and domination of Louis Vuitton. The range of Vuitton products combined with its global appeal and strong price premium make it, by far, the biggest name in luxury.
It also plays a near perfect game in terms of brand management with its products only being sold through its own superbly run boutiques and with a no discounting policy that saw it last run a sale in 1986. And Millward Brown more than captures this power and scale in its ranking. Louis Vuitton’s brand is worth more than Tiffany, Fendi, Cartier, Rolex and Chanel combined.
“ there is no greater skill in luxury branding than to sell in the billions but present oneself as making each product with exclusive, singular devotion ”
One of the biggest surprises to non-luxury experts will be the brand ranked second in the list: Hermes. Even devotees of Hermes like to portray it as small, private and extremely high end. And yet despite this image Hermes is the second biggest brand in luxury. There is no greater skill in luxury branding than to sell in the billions but present oneself as making each product with exclusive, singular devotion. Hermes manages to achieve both feats perfectly.
For Chanel there is a challenge ahead. Despite an almost maniacal following the brand is getting dusty. The average age of clients is increasing and the all-important runway collections are starting to lose their vigour and impact. The mighty Karl Lagerfeld has served Chanel well as creative director for almost thirty years – but with his contract up soon there is a significant possibility that Chanel will opt for a younger and more up-tempo mastermind to take them into their next chapter. All the smart Euros are on Alber Ebaz – the current artistic director of Lanvin – to take over.
There has been a double disaster at Cartier which dropped by almost a fifth in value in 2010. First there was an unavoidable focus on watches and jewellery – the one sector of the luxury market that was hit hardest by the global financial crisis. And second was the lack of creativity and progression within Cartier’s designs. Gaze into the window of Cartier today and one sees pretty much the same collections and codes that would have been there in 2001. In the world of luxury an inability to move on and constantly revitalise your offering is the ultimate sin, and Cartier is paying the wages of it now with its brand equity.
“ an inability to move on and constantly revitalise your offering is the ultimate sin, and Cartier is paying the wages of it now with its brand equity ”
A last observation from the top 10 is not who is there but who is not. Gaze down the list of luxury’s biggest brands and you will have to go all the way to number 10 before uncovering an American brand in Tiffany. In contrast, the list of consumer goods brands and the overall Brandz top 100 is dominated by American brands. Why is it that the all powerful American approach that has dominated branding for so many years cannot stretch to luxury?
Some would cite history as the reason and America’s relative youthfulness. Personally I think it runs much deeper. The American dream is built from a belief that anyone can make it. It’s an entirely inclusive as meritocratic philosophy and one that lends itself well to consumer goods where everyone is in the target market. But luxury is a different beast – one that celebrates the principle of exclusivity and an ideal that not every consumer can or should be part of a brand’s clientele. The French dominate luxury because they have a culture that is comfortable with artistic development and one entirely at ease with the idea of excluding most to include the few.
Courtesy of Luxury Society ,25 March 2011
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