Something to Chew On

Auction houses often reflect what is really happening in the “luxury” economy.  When luxury boutiques are floundering over missed sales objectives, the gavel is faithfully resounding for luxury auction houses.  These days, avid collectors around the world are paying top dollar to acquire just about anything with the time-tested mark “exclusive”.

Wealthy fans are willing to spend impressive amounts for a piece of the stars, with music icons on the top the list.  Last year, some of Pop-King Michael Jackson’s furniture was put on the block.  Even though he passed away before ever seeing the finished products, the bidding on the Baroque sofa he would have sat on started comfortably at 150’000 USD.  This week a Canadian dentist even invested 31’000 USD to purchase a tooth that supposedly once belonged to singer John Lennon.

Deceased music stars are not the only ones drawing attention. Last month Sotheby’s, which hosted its first dinosaur auction in 1997, sold a full Allosaurus skeleton at a world record price.  Stars like Nicolas Cage and Leonard DiCaprio apparently fought tooth and nail a few years ago over a T-Rex skull, which closed on a 6-figure sum.  A more common investor might choose to snap up a T-Rex tooth instead for a mere 1’000 USD an inch.

Putting the Pieces Together

Apart from Hollywood stars and institutions, who is actually doing the buying, and why?

According to Wealth-X, a Singapore based research firm, the ultra-wealthy in the US should still outnumber those in Asia until 2032.  Eager to make a mark for themselves and catch up to Westerners, Asian consumers are actively seeking new investment opportunities and are building up their personal collections of luxury goods and collectibles.  Some Chinese are even investing in US citizenship just as they would the next new sports car or luxury yacht.

Studying the evolution of buying habits is uncovering an age-old trend – when times are tough, luxury becomes more about long-term return-on-investment than ephemeral jet-set prestige.  Looking back in history, when stocks and bonds are no longer the safe haven for affluents, the market for collectibles skyrockets.  If luxury brands want to compete in this market, they have to provide a comparable offer.

The Missing Link for Brands

Some brands have correctly understood the motivations behind the collectibles trend and have recently launched or reinforced their jewelry lines, emphasizing the eternal nature of the materials and the long-term brand value in the signature.  Others have focused on “bespoke” or limited edition items.

Despite this appropriate product response, brands have often missed the link between what’s going on in the auction market and their choice of brand ambassadors. The reason a collector bids on an item at auction is two-fold:  either he believes in the intrinsic value of the object itself and it’s future ROI potential, or he believes in the potential long-term gain due to name value, posthumous or not, of the original star who owned it or the creator who fashioned it.  For luxury items the name is not just in the brand or the product itself, it is also inextricably linked to their ambassadors and what they represent.  Yet when it comes to choosing brand ambassadors, it seems that many luxury brands are putting their faith in dinosaurs.

Longines, is an example of successful ambassador selection.  Even though they most likely never wore timepieces by the brand, in the past the company has successfully convinced the public that classic Hollywood stars like Humphrey Bogart and Audrey Hepburn were Longines aficionados.  More recently, Aishwarya Rai Bachchan is a classic intimate connection to the Asian consumer, while Kate Winslet‘s in-a-class-of-her own personality speaks to the heart of Westerners. Their marketing campaign is brilliant, with internationally recognized and trusted ambassadors that display timeless star-appeal.  China, a market where Longines shines and far surpasses many other brands in terms of online reach and search results, is captivated by the brand’s tailor-made regional communication.  This in turn translates into a positive perception of long-term value and enduring relevance.

Louis Vuitton is another champion in ambassador selection. The luxury powerhouse is able to interweave their ambassador’s personal journey into the brand’s unique history.  By choosing social justice conscious ambassadors like Angelina Jolie and Bono, or classic icons of elegance and artistic performance like Mikhail Baryshnikov, they stand out as more than just a luxury brand.  Even their choice of photographer allows them to capitalize on personality-appeal, with world-renowned portrait artist Annie Liebovitz taking the online consumer on a cinematographic journey of sight and sound into the world of Louis Vuitton.  A special “Friends of the House” section on their website introduces the online consumer to even more personalities that are linked to the brand.

In a world where luxury is becoming more about quality, values, history and return on investment, brands would do well to also reevaluate their ambassador selection process.

Generation X and Millennial consumers want more than just return on investment.  Much like constructing their Facebook page, they are looking to luxury goods as a way to build their own unique personal identity and peer group.   The ambassador “fans” of luxury brands have powerful impact on consumers.  Their selection is not only about beauty and performance; it is about the ambassador’s long-term personal footprint in the world.

By Claudia Garofalo de Pretto, Digital Luxury Group