Blurred Lines of Identity

This week’s Versace H&M debut raised more than a few eyebrows for the “gladiator style” stampede, violence and subsequent hospitalizations it incited.  Unfortunately, this is neither the first nor last battle in this unbridled co-branding mania.  Consumers have been fitting themselves with their helmets and sharpening their swords since 2004 in H&M co-branding free-for-all sales with the likes of Karl Lagerfeld, Viktor & Rolf and Jimmy Choo. Rumour has it Tom Ford is next up on the field, a designer whose ability to “generate hype” should prove to generate just as fierce a sales floor battle as did Versace.

Sadly, the boutique arena is not the only playing field for cutthroat luxury goods addicts.  Some brand-gladiators are so crazed that they are ready to steal the baby before it’s even born.  Just this week the Marc Jacobs SS12 collection was stolen from a train en route to London from Paris. No ransom was demanded, but the designer is offering a reward for the collection’s return.

This disturbing trend is the symptom to a much deeper affliction. Luxury is in crisis, one that needs to be addressed.  Somehow along the way the lines got blurred and luxury lost its identity.  After all, what is luxury?  Is it a product, an attitude, a way of living, a state of being, a “universe”?  Does the product make the man / woman / brand?  What makes brands and consumers act the way they do?

A Distorted Image Leads to Bingeing

Correctly identifying this over-zealous bingeing symptom is the key to diagnosing the disease.  Sadly, both luxury brands and their clients are acting like bulimic teenagers. The sad truth is — the luxury industry needs professional counselling.  In fact, both companies and consumers need to go into rehab…. urgently.

On the “customer” side, we see what author Robert Frank calls the dangerous “high-beta rich” – affluent consumers who derive their wealth from financial markets, bubbles and deals.  These “manic ”consumers are highly volatile, bingeing on luxury homes, cars, clothing and technology, only to have the assets repossessed in the next downturn.  They binge on easy investments that they are subsequently pressured to sell at a loss, hiding a mountain of debt behind a façade of success. In emerging markets, the explosion in the number of millionaires creates fickle purchasing behaviour, as the new rich are searching for identity through luxury consumption. Less wealthy consumers binge on the latest luxury fashions, some even prostituting themselves to acquire their next handbag “fix” in a desperate attempt to maintain their social status.

On the “company” side, luxury companies are feeding on easy revenues, bingeing on consumers outside their target segments.  In an effort to be all things to all people and create the most comprehensive brand universe, they binge on diversification, venturing into industries outside their core competences.  They binge on new markets in en effort to stake their claim to new territory in countries where they have no knowledge of the regulations, culture and purchasing habits of the locals.  To keep up with the resulting surge in sales, brands are rushing to build factories and hire workers to respond to unstable consumer demand.

To acquire new clients, they jump into the newest technologies, bingeing on e-commerce and social media recklessly, without considering how these channels should be used to best fit their brand image.  They binge on acquisitions to expand their luxury empires without taking care of the home front — their core business and heritage.  In the worst-case scenarios, they even binge on gray-market channels, turning a blind eye to the parallel market’s debilitating dissipation of the brand name.

Gray Matter

Unfortunately, just identifying the disease does not provide the way out.  The multitude of shades of gray in the evolution of the luxury industry and its fast-paced deterioration in identity and values has blurred our vision.

But, as any wise teacher will tell you, the answer lies in the question. It seems that both luxury brands and consumers are simply not using their head.

Physiologically, gray matter is vital in sensory perception, like memory, hearing, emotions and speech.  It’s the stuff that allows us to use our senses.  Studies have shown that reflecting on our decisions actually increases gray matter, and that the larger the volume of gray matter the more accurate we are in correctly judging the subject of our reflection.

Just as the bulimic teenager needs to step back and gain a new perspective on the distorted image in the mirror, in the same way luxury brands and their clients need to use their gray matter to pause and reflect on who they are really trying to become, on where they are and how they got there.

One valid question might just be…. should luxury be fat or skinny?

For consumers, bingeing is the result of their desire to become what they think will make them appear successful.  Being “skinny” means sacrificing what makes you fat—a healthy lifestyle, proper eating, saving, family, rest.  The “skinny” luxury consumer image is, in fact, a cheap counterfeit.

Luxury companies are also looking for ways to be “skinny” – they boost margins by scrimping on quality, seduce the maximum number of consumers by sacrificing exclusivity, and thereby gain maximum profits in an effort to retain investors. Their brands are dying but they can’t see it.

The answer could be very simple.  Maybe luxury should be “fat”.  Extravagant quality, customer service, design and craftsmanship used to be the bywords for the industry.  Models used to be womanly, healthy, sophisticated, elegant.  Clients used to be philanthropic, generous, cultivated, noble.

Using our gray matter will reveal the real question…. In a world of true luxury, what profit is it to gain the world but sell your soul?

By Claudia Garofalo de Pretto