I may not agree with a banker friend that “luxury is dead”, but I understand the sentiment.
Long before the sub-prime tremors of August 2007, I felt we were storing up trouble for ourselves. But now the crisis has hit, maybe this year could end up being good for us?
Post-Lehman Brothers we have had to learn 101 things about a recession: marking down excess stock, renegotiating contracts, pausing on investments, and so on. Now we need to tackle the trickier and more deep-seated challenges. These are the concerns that have always been and will continue to be important to luxury - the Five Luxury Basics.
First, the best luxury brands offer value, longevity and creativity, in bad times and good. As people buy less, discernment counts for more.
Second, we need to deliver value while taking our own values seriously. Cyclical periods expose those who rely heavily on image, trim quality or diversify too far.
Third, do not undervalue product provenance. For some time customers have been flexing their muscles against old-style brand control.
Fourth, the human touch will be more important than ever. Many have forgotten how to listen to and treat customers. This is broadly acknowledged, yet few have taken it seriously.
And five, seize the opportunity for online innovation, in which the luxury sector is still underdeveloped. However, online isn’t just about sales. It is where consumers go for information, to discuss brands and share views.
There is an opportunity to recapture the trust of consumers while improving as businesses. If we do that, perhaps 2009 will be remembered as the rebirth, rather than the death, of luxury.
- Guy Salter is deputy chairman of Walpole, the trade body that represents British luxury companies