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The Untapped Power of Luxury

The definition of luxury has never been under more scrutiny than today. And while Cream UK CEO Graham Painter seems not all too sure that this phenomenon is here to stay; during the research phase of a communication strategy for my client Kamoka Pearls, I realized that the definition of luxury had to change. 

    Our research for Kamoka revealed that our audience had high expectations from luxury good companies. Visiting a luxury shop should feel like stepping in through the gates of Nirvana. Like art and religion, as J N Kapferer and V Bastien offer in The Luxury Strategy, luxury aims at "elevating people, making them go beyond functionalities, needs and access intangible values, even transcendental ones." For our target audience however, these values or expectations did not include environmental consciousness or sustainability. It was as if these two ideologies could not co-exist. But as Kamoka offers in their mission statement “It seems only natural to respect the surrounding ocean that nourishes us, produces our livelihood and fills us constantly with wonder.”

    Luxury as Kamoka sees it is not about exclusivity, it is about respect. After all, true connoisseurs buy luxury as they share respect for quality, materials, and the savoir-faire that is only mastered by a small cadre of wondrous artisans. To Kamoka, it is this level of respect that is owed to environmental consciousness and sustainability for any company to sell products deemed luxury.

    As shown through the Kamoka case study, luxury as we know it today has to change. For what it represents, is out of touch with some the most pressing issues threatening our society’s well being. For example the rising level of income inequality in our country. While shifting the definition of luxury doesn’t automatically address the issue, scrutinizing it brings the issue to the forefront of American discourse. It provides for a platform to self-reflect on our society’s values, and layout a path towards addressing it.  

    Moreover as a strategist, I can only but see the wealth of opportunity for creative work this shift offers the advertising industry. In 2014 the luxury goods industry was a $929 billion industry. Despite this success however, the breadth of work seen on magazines and other communication outlets, is ruled by a level of homogeneity that fails to cut through the clutter and resonate with consumers. As the definition of luxury continues to evolve, it opens the door to advertising agencies and brands alike to rethink their communication strategies, reveal new truths, and impact the way they engage with consumers to ensure brand loyalty.


A Revelation

    My work for Kamoka was the first time I had been provided with an outlet to re-think the definition for luxury. Being a passionate purveyor of the American Dream, the definition of luxury as exclusivity had worked for me. I’ve always placed a connection with luxury goods to wealth, and thus success. They were a symbol that you were attaining something, that you had arrived. An award reserved for the driven few who had reached the leading class; a class that I so desired to partake in.

    As film producer Jen Doumanian offers in discussing the significance of the luxury emporium Bergdorf Goodman in Scatter My Ashes at Bergdorf’s:

stores like this are necessary… to make people want to aspire to bigger and better things. You need this for the American Dream. For people to actually reach it, they have to see it.
— Scatter My Ashes at Bergdorf's

    However after a trip to the great land down under, I began to question this school of thought. While in Australia there didn’t seem to be a huge frenzy for the latest designer good. I asked myself why the irrelevance? If for Americans trading up to luxury was part of the American Dream, a symbol of success, did this mean that Australians didn’t care or hope for upward mobility? Or was it that most Australians were content with their status in society, and thus no need trade up?


Luxury is Bliss

    As it happens to be, when measuring equality the CIA's World Fact book measures Australia's GINI Index to be 30.3. The GINI Index ranges from 0 to 100, 0 representing perfect equality and 100 perfect inequality. Meaning, that Australia fairs relatively well in terms of equality (the United States' index for example was 45.0). 

    Now consider the GINI Indexes of some of the world's top luxury spenders like China (47.3, 2013), India (36.8, 2004), Mexico (48.3, 2008), Brazil (51.9, 2012), and Russia (42.0, 2012). According to Eurominotor the BRICs saw an increase of 104% in luxury spending between year 2008 and 2013. China alone now accounts for 30% of global luxury sales. And while Chinese consumption has slowed down, as an Economist article points out “new Chinese middle classes still see luxury goods as a way to show they have made it”. The same Euromonitor report, announced that in 2012, Mexico the fifth largest emerging market after the BRICs had over taken Brazil’s spot as the largest Latin American contributor to global luxury goods sales. 

    Beyond the fascination with all things bling, what all these countries have in common is their high GINI indexes. The inequality that these indexes represent are manifested in a diverse range of socio-economic and political shapes and forms. Mexico’s violence, Brazil’s corruption, and China’s human rights violations are all ramifications of societies deeply rooted in systematic inequality. When there is no path to upward mobility, individuals resort to an underground economy. In summarizing the work of researchers Richard Wilkinson and Kate Pickett, authors of The Spirit Level, Bloomberg columnist Mark Buchanan offers that rising socioeconomic inequality is a recipe for crime and other measures of social dysfunction. And as Michael Johnson, a deacon at East Oakland's Allen Temple Baptist Church offers, violence is "the articulation of the inarticulate.”

 

    If we follow the adage that luxury must be exclusive, luxury goods are no longer a symbol of possibility, but a form to masquerade inequality and the fact that the American Dream is no longer attainable. While the United States is the second largest luxury goods market, our levels of inequality have only climbed to levels comparable those exhibited by developing nations.

    Consider the work of Harvard professor Michael I. Norton and behavioral economist Dan Ariely, which is summarized in the video below. The short video notes how distorted our perception of distribution of wealth is. According to their research:

  • 1% of America has 40% of the nations wealth, 
  • the bottom 80% hold 7% of the wealth,
  • the top 1% own 50% percent of the countries stocks, bonds, and mutual funds, and 
  • the bottom 50% own .5% [there is no money to invest]. 

    Now consider Sweden, with a GINI Index of 23.0 (2005) or Finland with a GINI Index of (26.8, 2008). These two countries are two of the most equitable countries to live in and two of the happiest, according to the World Happiness Report. These two countries pride modesty and equality and frown upon ostentation. As Suvi Lukkarinen and Xing Wei offer in their case study comparing China and Finland’s luxury markets, China’s higher power distance over Finland’s, means that they are more likely to be influenced by those who they worship (the upper class for example). Finland however, “supports equality and transparency and [that] everyone should have the same rights.”


To Be Continued

    And yet my affinity with luxury remains. Luxury doesn’t have to represent inequality. As a symbol of high taste and the highbrow, the definition can come to incorporate so much more. I find that our work for Kamoka in redefining luxury to represent respect, offers luxury companies with great scope and comprehensive framework for new branding strategies that can have a lasting impact on consumers. 

    The idea of respect is already exemplified by the pioneer of luxury, CHANEL. As the Business of Fashion offers, since 1985 CHANEL has been on a mission to secure the future of savior-faire craftsmanship, “Not long ago, many of these businesses, along with the vast repositories of knowledge they safeguard, were facing extinction.” Since then CHANEL has used the power of its brand to acquire and preserve 11 different ateliers, known as the leaders in their craft. Among these leaders includes Lesage known for its couture embroidery, who throughout the last 150 years has accumulated an archive over 70, 000 samples. CHANEL’s noble undertaking also included the 2013 acquisition of Barrie, which allowed for the Scottish cashmere manufacturer to retain 176 jobs. As noted in The Luxury Strategy, "because of the visibility of this sector and its high symbolic power as well as that of its well known clients," luxury brands can have a lot of impact in an array of issues in dire need of attention.

    

In Hitting the Sweet Spot, Lisa Forting-Campbell offers that “in case after case, the richest level of communication comes from combining a rational brand benefit with an emotional need.” For the luxury consumer this yearning lies in being admired for being a taste-maker, an influencer, and being “in the know.” 

    Altruism seems to be the new black. As Kapferer and Bastien offer, the cult of luxury among the youth has to do with the end of ideologies (Castrism, Maoism, Trotskyism, communism). According to the authors “ideologies used to be the stuff of the dreams of teenagers fond of ideals.” But as they note, none of these are left today; “none of them but the defence of the endangered planet or helping the poor by working in a non-governmental organization.”

    For millennials the emotional need Forting-Campbell argues for, is fulfilled by serving a purpose and having a positive impact on society through their purchase behavior. Think the ‘self-transcendence’ level in Maslow’s hierarchy of needs. According to Omnicom “70 percent [of millenials] will spend more on brands that support causes,” and according to Cone Communications, they are “66 percent more likely to engage with brands on social media to discuss social responsibility issues.” Furthermore as the Luxury Society offers, millennials already account for 45% of luxury consumption.


Off to Nirvana

    Luxury as we know it has to change, as its current definition is completely irrelevant to the zeitgeist of this generation. If luxury is of the utmost level of perfection it should be innovative, thought and emotionally provoking. It should empower you as an influencer, wether it be through your latest CHANEL purchase and thus safeguarding thousands of jobs from extinction, or supporting sustainability efforts through your purchase of Kamoka pearls.  

    The time is ripe for advertising agencies and luxury brands to create work that induces conversation about what is relevant. It is time to self-reflect and to think about what we worship, our love affair with wealth and the mega-rich, and how this love affair guides our actions. I don’t know about you but when I think of Nirvana, I think of total perfection. I like to think that Nirvana is a sustainable place, full of equality, respect, and where everyone is wearing a vegan version of Alessandro Michele’s cozy re-interpretation of Gucci loafers.