Hermes. Bulgari. Louis Vuitton. PPR (owner of Gucci and Bottega Veneta). Richemont. All have recently reported strong profits.
Clearly, these firms have benefitted from their growing presence in the booming Asian luxury markets. But something else is going on. I believe this dazzling performance during a worldwide recession is about more than their global footprint.
All of these brands represent a powerful legacy of craftsmanship, of superior materials, of timelessness. Unquestionably these products are expensive, yet time and time again, consumers choose them over much less costly options or similarly priced more trendy alternatives.
Because the affluent consumer’s capacity and willingness to spend remains constrained, brands must work even harder to capture a disproportionate share of the available wallet. These heritage luxury brands are getting more than their fair share in a flight to quality. They have taken a purchase which could be seen as a splurge and made it a seemingly sensible choice.
Of course, regardless of the price point, any brand wins because the consumer sees a strong price/value relationship. And let’s face it, it’s easy to run a sale, offer extra loyalty points or give away a gift with purchase to drive short-term revenue.
Spending the money, making the hard choices, having the patience to build an investment quality to your brand–well that takes something extra. It takes leadership, vision and courage to build something truly remarkable and enduring.
What’s your choice?