What Separates Average Luxury Brands From The Best?
In most industries, brand dominance usually continues until a disruptive technology comes along or some cataclysmic event occurs that reshapes society. For instance, Coca-Cola has been right at the top of the soft drinks industry for over a century, and it is almost impossible to imagine Pepsico overtaking it, either now, or many years in the future. There have been no major disruptions to its business model.
The same dynamics, though, are not at play in the fashion industry. Here, there’s significantly more churn as tastes change. And sometimes, they can be hard to predict.
In 2022, Gucci is the top brand globally. It dominates revenue, sales, and internet searches. Everyone wants one of its luxury handbags.
Next on the list is Dior, followed closely by old stalwart, Chanel. Combined, these three brands make up more than 35% percent of search interest online, and have by far the biggest social media audience at 78 million, 69 million, and 89 million respectively.
Other luxury brands, such as Tiffany, Versace, and Cartier are still extremely popular, but they pale in comparison to the market leader – at least right now. Most remaining luxury brands attract between 3 and 5 percent of online search interest.
Of course, it wasn’t always this way. There was a time when Ralph Lauren was at the top of the pile, and Prada. Rolex has also seen its fortunes ebb and flow over the years.
So what’s going on in this industry? What separates average luxury brands from top performers?
Lucky Breaks
Many of the top luxury brands are extremely old. Hermes, Dior, Louis Vuitton, and Tiffany have all been around since the 19th century, with many being founded before 1850. These brands have always been big names, but their brief ascension to the dizzying heights of the top global brands is hard to explain.
In many cases, it was the result of blind luck. Brands got to the top of the industry because of lucky breaks in popular culture that got people talking about them. Perhaps a movie star was spotted wearing a Dior dress or a singer started wearing Valentino, and all of a sudden, everyone wanted to join in.
These lucky breaks are hard to predict, even for the brands themselves. While they might pay for product placements and sponsorships, they never really know which aspects of culture are going to become popular with regular people.
Management
While fashion brands like to present themselves as being different from run-of-the-mill firms, the way they operate is actually largely the same. They still require finance departments, marketing gurus, and salespeople.
Critically, they also require good management. Heading a top luxury brand requires understanding consumers on a deeper level than other firms, simply because of how tastes can change so rapidly.
As the Corporate Coach Group points out, all brands need a system, regardless of the industry they operate in. But this is particularly true in the fashion industry. Average luxury brands are usually average because they’ve taken their finger off consumers’ collective pulse and are coasting on historical brand capital.
For instance, many leading fashion brands in 2022 jumped on the NFT craze, selling tokens to customers and making their brands more digital. Others jumped on the bandwagon of various social movements, attempting to appear more virtuous or moral than their competitors. And these strategies worked. Top brands were extremely successful in moving with the times, even though these technologies were unimaginable for their founders.
Digital Savviness
Lastly, many of today’s top luxury fashion brands invest heavily in understanding the online space and how to leverage it. While some designers, such as Armani have been quite slow to the punch, others, like Chanel really understand the opportunity.
What’s interesting about this is that many of the older brands appear to be doing better in this regard, while younger ones, born after the middle of the 20th century, are lagging behind.
Brands are also leveraging the internet during a time when everyone is going back to their corners, international movement is slowing down, and companies are struggling to find new markets. The digital space makes it considerably easier for brands to change their messaging and target individual consumer groups, instead of crafting a blanket brand. This consumer-specific differentiation is helping companies appeal to wider audiences, even though it is leading to contradictions across audiences.
Brands are learning that the trick to success is to become more open and omnichannel in their approach. They need to let go of traditional, cloistered, elitist models and appeal more to aspiring consumers who are prepared to work for the privilege of wearing a designer label.
