It used to be simple to be rich.
Until a few years ago, the über-wealthy had the market cornered on fashion, thanks to a guiding equation that was as uncomplicated as it was irrefutable: the more consumers spent on lifestyle-defining items such as clothes and cars, the more fashionable they were. Luxury brands such as Louis Vuitton and BMW served as a convenient shorthand—badges of affluence that never went out of style. Over time, even countercultural movements such as hip-hop came to worship at the altar of high-end branding, with artists regularly name-dropping Cristal, sporting expensive jewelry and introducing the term “bling” to describe the glories of conspicuous consumption.
No trend lasts forever, though, and while bling may now be a dictionary-approved part of the English language, it has begun to lose its lustre as a fashion philosophy.
In the middle of the decade, environmental concerns such as global warming shot to the surface of public consciousness, and the economic crisis that began last year has made ostentatious displays of wealth appear more obnoxious than glamorous. Owing to this powerful one-two punch, the iconic Hummer-driving, diamond-wearing shopaholic has transformed from a hero of the consumer society to a social pariah, a transformation that has left luxury marketers scrambling to adjust.
“We’ve been living for a decade or more where it’s been about status labels and bling, and there’s been a conscious shift from that,” says Lisa Tant, editor of Canadian fashion magazine Flare. “Whereas bling was once a status symbol, now it’s almost a stigma—you don’t want to be seen with it.”
Tant has witnessed enough to indicate that the wealthy, even those rich enough to be essentially recession-proof, have been chastened. She has seen women at luxury retail stores ask for bags without logos, or in some cases no bag at all. The February 2009 issue of Flare also deals with the growing phenomenon of clothing swaps, where women rummage through each others’ wardrobes rather than drop thousands on new outfits. And even those who do splurge on a pricey Chanel item are increasingly looking to pair it with something downmarket.
“From what I’ve observed, a lot of the very wealthy don’t want to be conspicuously fabulous, because they think it’s in bad taste,” says Tant. “It just isn’t in keeping with the world around them, and they’re very conscious of that.” So conscious, in fact, that conspicuous consumption has been replaced by a desire among the affluent to show just how cost conscious they are.
Like Tant, Pamela Davis-Ross, vice-president and chief marketing officer at Sunnybrook Foundation and former head of marketing at WWF Canada, has noticed with interest the current trend toward “conspicuous austerity,” a term coined in Joan Kron’s 1983 book Home-Psych.
“We use symbols in part to show where we are in the social strata,” says Davis-Ross. “We used to use things like Hummers, but now we’ve rejected those symbols in favour of things like super-expensive tiny appliances that come from Europe, and hybrid cars.”
Davis-Ross says the new status symbols aren’t necessarily any cheaper than traditional luxury labels, but they project a different meaning. “It’s no different than wearing logos. It’s exactly the same thing,” she says. “If I have my hybrid, it means I care about the polar bears. Not only am I a successful person, but I’m also a good person.
“It adds dimensions to my greatness.”
For luxury brands and retailers, these shifting winds have added to their marketing challenges. According to a 2008 study by Unity Marketing, year-to-date spending on luxury goods by U.S. households with incomes of $250,000 or more was down almost 20%. Statistics from Autodata show that September, 2008 sales of Porsche vehicles were down 58% in the U.S. compared to the same month in 2007. And a study conducted last fall by Bain and Co., indicated worldwide sales of luxury items could fall by as much as 7% in 2009.
In some cases, purveyors of luxury haven’t survived. Tant points to the closure—with millions of dollars of inventory still in stock—of high-end Toronto clothing store Hazel just a week before Christmas.
Meanwhile, lower-priced brands like Joe Fresh Style, the creation of Club Monaco impresario Joe Mimran, sold exclusively in Loblaw’s stores, are seeing an opportunity to boost their market share.
“We are very well positioned to do that,” says Mimran, adding he’s encouraged by recent Joe Fresh sales figures. “In the past, people might say, it really doesn’t matter whether I pay $29 or $49, but now people will make that decision a little differently.”
Nevertheless, Mimran doesn’t expect luxury brands to become extinct.
Holt Renfrew, for example, has branched out from haute couture magazines, placing ads in mainstream publications such as Toronto Life and the Globe and Mail. These advertisements focus on the craftsmanship and quality of the featured products in an attempt to remind consumers why they’re paying top dollar.
Tracy Fellows, vice-president of marketing at Holt Renfrew, echoes Tant in suggesting luxury consumers have become less interested in hefty price tags and more attracted to one-of-a-kind items—investment pieces, Fellows calls them—which can anchor a wardrobe and offer good value for the money.
“Our spring campaign is all about the design and details,” says Fellows. “It talks to consumers in terms of the workmanship, the fabrics, the textures and the thoughtfulness that goes into the design.
“This is what our customers want to see.”
What customers don’t want to see, says Tant, is a high-end company diluting its luxury brand status. “They’re selling a dream, a fantasy, so that would be a mistake,” she says. “They still have to have an image of desirability, without being offensive.
“Walking into a high-end store where there’s sales racks and it’s 70% off everywhere—that’s not good.”
Like Fellows, Kevin Marcotte, director of marketing at BMW Canada, knows it’s not a good idea to mess with the positioning that has made his company a luxury leader. While he acknowledges BMW took a sales hit in the final quarter of 2008 and expects the negative effects of the economic downturn to continue this year, Marcotte and his team will make only a few tweaks to their marketing plan. For example, the company’s annual January print ad adopted a more modest tone than in years past, but still focused on BMW’s performance-driven brand proposition.
“We need to adapt to the current market conditions, but our core values have been consistent for decades now,” says Marcotte, adding the company is determined to reassure purchasers of six-figure BMWs that “an investment of that value is a good investment.”
Marcotte says this commitment to established values has served BMW well through previous recessions, all of which eventually came to an end, as the current one is sure to do. And when it does, there’s every chance that bling will be back.
In the meantime, however, luxury brand marketers must strike a difficult balance, maintaining their opulent image while putting other dimensions of their greatness front and centre.
