The major brands have shown that it is possible to get rid of the label of the merchandise.
LVMH boss Bernard Arnault said that “luxury is the only area where it is possible to make margins on luxury”. But what does it really take to get rid of the commodity label and firmly position a product as a luxury item? More importantly, how can we apply this to the diamond and jewelry industry?
I recently traveled to Paris for an invitation-only course on luxury, during which several representatives of major brands shared their expertise. I learned that beneath the glamorous imagery and stunning storefronts of this industry lies a strong ecosystem rooted in the pursuit of excellence and quality.
For certain members only
“There’s nothing better in the world of luxury than creating something you can’t have,” says Philip Vergeylen, one of the course’s lecturers and the man credited with launching American Express black card. This card began its existence as a rumor in the American press, which declared it a mythical object and the closest thing to a fairy godmother. But after years of painstaking research and effort, American Express has made it a reality.
When it finally offered the invitation-only card in the late 1990s, the company was inundated with phone calls from around the world requesting invitations. He hardly had to do any marketing; News of the card and its benefits, including the concierge service, spread like wildfire through word of mouth. To date, membership is tightly controlled through a process shrouded in secrecy. Needless to say, the Black Card remains a highly coveted item.
Vergeylen attributes his success at the company to a “deep understanding and appreciation of the premium and super premium market”. When Christian Dior opened his boutique in the late 1940s, he knew each of his customers personally. Long before the internet became ubiquitous, brands were making significant investments in tracking customer behavior, tastes, preferences and consumption habits. They analyzed their findings in detail and made plans to create the exact experiences that would speak to their customers. Whether it’s giving customers a sense of belonging or accomplishment, or simply boosting their self-esteem, brands have implemented both micro and macro strategies, gathering feedback and acting on it. As a result, they were able to make accurate predictions about what really motivated and inspired different consumer segments.
Speaker Leslie Serrero, Managing Director for France and Monaco at Fendi, summarized in one line: “Luxury is the ability to make people dream.
Quality, quality, quality
Haute couture house Hermès has a tradition of creating products that stand the test of time.
“My grandfather, Robert Dumas, then president, proudly said: ‘A luxury object is an object that can be repaired'”, says Guillaume de Seynes, sixth generation of the family who runs the house. In addition to its distinctive designs, the company’s rigid insistence on using high-quality materials and superior craftsmanship techniques lends a sense of authenticity to the brand.
With little or no dependence on outsourcing – the house controls the vast majority of its own production – Hermès has developed several proprietary methods, all with one goal: to make the product as durable and long-lasting as possible. A man ahead of his time, Dumas understood and inculcated sustainability long before it became an anthem for all things luxury.
Beyond Storytelling: Creating Icons
The management of a luxury house must “nurture and modernize the value and the storytelling of the house”, according to Bertrand Stalla-Bourdillon, vice-president retail development group at LVMH.
While successes and failures occur naturally in a brand’s lifecycle, there are certain events the company chooses to celebrate. These distinguished moments are transformed into tales that define the DNA of the brand. Think of Coco Chanel’s little black dress, Louis Vuitton’s trunk, Hermès’ saddle and, closer to our own industry, Cartier’s Tank watch. The people behind these innovations also go down in history, whether they be founders like Dior or designers like Karl Lagerfeld.
These remarkable products and people eventually form the unforgettable stories that become classics in the world of luxury, cementing their legacy. Just as a work of art increases in value when we learn of the artist’s inspiration, the importance and brand value of a luxury product increases dramatically when we communicate its iconic stories.
Employee trust and loyalty
During the course, one thing that struck me was the extreme level of passion the reps shared for their respective brand heritages – the sense of gratification they derived from just being associated with the company. It seems that this is not limited to sales personnel in contact with customers; the culture of enthusiasm and respect for the brand’s shared mission comes directly from the board of directors and extends to all areas of the company. In turn, this core of trust radiates out to everyone who comes into contact with the brand, be they salespeople, service providers or customers. This in itself sends a strong message.
A worker at the flagship store of a well-known luxury house told me, indeed, that the Covid-19 period was the most difficult for her because it took her away from work. Being allowed to make Zoom business calls to some of her VIP clients, she added, was a slight reprieve.
Tap into technology
Technology is helping companies in the luxury industry do what they already do, only better. During the pandemic, some brands opened e-commerce sites for the first time. This allowed them to reach a whole new set of consumers, without geographic restrictions.
“Thanks to technology, we now have the possibility to communicate differently with different consumers in an efficient and qualitative way,” says Serrero.
The benefits extend beyond sales and distribution to other key areas of the business. For example, the resources needed to create new materials – like vegan leather, which appeals to a whole new segment of consumers – have become more readily available. Artisanal techniques using robots and algorithms are also in development and may ultimately lead to a higher quality offer.
Stalla-Bourdillon likens creating a luxury home to a deep-rooted tree in full bloom. The parts we see are the leaves, flowers, branches and trunk, which he compares to beautifully packaged products, store displays, attractive advertising and PR campaigns, alluring images, fashion shows and at all other high visibility events. Less visible are the roots of the tree, which represent the message of the founders, the obsession with quality, the attention to detail, the efforts of craftsmanship over years of experience and the common passion of the associates for the brand mission.
His advice for building a luxury brand is simple: “Start at the roots.
Fourth-generation diamond maker Harakh Mehta is the founder and creative director of New York jewelry brand Harakh.
Image: Chi Lok TSANG/Unsplash
Article from Rapaport Magazine – September 2022. To subscribe click here.