The Power of Cultural Cool

04 May 2008|Added Value

Melanie Skotadis, Director and Head of Prestige Brands and Izzy Pugh, Associate Director of Cultural Insight at Added Value examine how luxury brands are injecting cultural cool to ensure their products resonate locally from New York to Shanghai.

From the Chinese schoolgirls who travel to Hong Kong and splurge their lifesavings on handbags to the New York elite who strive to find the luxury items no one else knows about – this is the seductive power of luxury brands today.

The global luxury market was worth $263bn in 2007, and despite fears of an economic slowdown it is forecast to grow by 71% to reach $450bn by 2012, according to Datamonitor*. True luxury consumers are less affected by economic concerns and the luxury market illustrates the potency of brands. It is an industry driven by consumer want rather than need, by emotional rather than rational judgement.

The recipe for a successful luxury brand is a balance of three key ingredients: one part product and two parts brand. First, the product part is perhaps simplest; the luxury item must have some kind of product superiority, a reason for costing more. But it is usually the brand that permits the full price premium.

Second is the brand myth or story, drawing on the product’s background – its heritage, history and provenance. Third is what we call “cultural cool” – the elements that make a luxury brand culturally relevant today. To ensure success with modern luxury consumers it is essential to find the perfect balance of these three.

Many luxury brands are failing to maximise their potential by not building up their relevance in local markets. Cultural cool has to be earned.  After all you can’t just say you are cool; that will be judged by others. Some brands have lost their cultural cool and, having sought to trade on their past alone, are now realising that this is not enough to succeed with today’s luxury consumers. Cultural cool is an opportunity to ensure a brand resonates among local audiences and adds a new, contemporary dimension to an acknowledged past.

So is it enough to play to global culture? We think not.  While trends exist internationally, how they are expressed can vary enormously according to local cultural variations.

Thus cultural relevance can be as simple as tweaking the range stocked in different countries, or by offering tailored products to some markets. For example, in China, some luxury brands are offering entirely new products aimed at the Chinese consumer. While Gucci in Shanghai is a Mecca of accessories, Yohji Yamamoto sells leather organisers, belts and coin purses, Hermès sells bracelets and mobile phone trinkets and Louis Vuitton sells chess and mah-jong sets.

In emerging luxury markets like China – and South Africa – consumers are more likely to want logos to be as prominent as possible. They want to show their success via instantly recognisable status symbols – luxury brand logos. Hence, some global luxury brands will sell products patterned in logos in these countries, a design that would be frowned upon in developed luxury markets.

For those who are new to luxury, logos help to navigate the category. As luxury experience grows, the need for such markers decreases and niche brands, recognised only by those ‘in the know’, replace these overt badges of success, sending a coded message between like-minded individuals.

So, what does a luxury brand need to do to gain cultural cool in a market? Take Chanel as an example, a brand that epitomises elegance and sophistication. It can still benefit from understanding the modern codes of elegance locally. To do this, our advice is to look in the corners of local culture.

A brand can gain cultural resonance by forming relationships with a model, a designer, an artist or a musician – but how to tell who is the Next Big Thing? Understanding which celebrities, local or global, embody the concept of elegance in that market is crucial to picking the right one.  What does elegance look like locally? Which social events express the idea of elegance in that market? Find the local designers, artists and musicians that embody elegance today. Look at how designers in other categories are creating elegance of the future in their market to help influence store design and build a complete, relevant brand experience.

Perhaps this is why South Africa, and indeed Africa, has yet to produce a true global luxury brand.  Despite emerging luxury fashion names like Sun Goddess and Gavin Rajah, we have neither a local heritage of production excellence nor a defined cultural cachet that will drive the development of an African luxury brand. Yet!  But with burgeoning luxury consumer market, there is definitely a opportunity for international brands to become more relevant in an African context.
* Datamonitor, Global Luxury Retailing 2007, October 2007.

Sidebar:
What’s cool in luxury culture in Moscow, London, Shanghai, New York and Paris?

Moscow
Logomania is over. Discrete, niche brands are in. Successful luxury retailers are those taking the time to educate their consumers to become experts.

Russian luxury consumers make a lot of their purchases abroad, frustrated they can only get the “standard” pieces at home.

Emerging Russian designers are working with their elite customers for the ultimate in exclusivity – made just for me.

London
Collaboration, collaboration, collaboration. Henry Holland collaborating with Levis. Swarovski partnering with Philips on memory sticks, Porsche & Poggenpohl on kitchens.

Arockstocracy belong not to the landed gentry, but the rock gentry. The new Burberry ads feature Bryan Ferry’s son and Sting’s daughter.

20ltd.com sells limited editions in 20s only on its website. Once they are sold they are gone.

Shanghai
Shanghai luxury consumers use expensive shopping malls like Plaza 66 as editors. If it’s not in, its not in.
The endorsement of Hollywood stars means everything.

Logos are still important in China, helping to make sense of the confusing jumble of English brand names.

New York
For the highest end consumer, once everyone has it, they don’t want it. It’s important to be in the know—to find the small jewels first.  At the highest end, the more exclusive the better—a private jet, a private island, a little known designer.

Paris
Luxury boutique hotels designed by emergent artists, designers, sculptors and architects, like Hôtel Bellechasse and Bel Ami are countering fatigue with the Five Star Palaces. The quest for extremely rare and exclusive brands for the happy few. The heart of Paris (75001) is regaining its past luxury glory thanks to an array of hip couture openings including Marc Jacobs, Acne and Rick Owens.

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