Luxury Business - Selected Excerpts

LUXURY BUSINESS A SAMPLER OF LUXURY BOOKS FROM PALGRAVE PROFESSIONAL BUSINESS

Selected Excerpts from: Luxury, Lies and Marketing Real Luxury Luxury Fashion Branding Luxury Sales Force Management Luxury Talent Management The New Chinese Traveler

CONTENTS 3

Luxury, Lies and Marketing

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Real Luxury

63

Luxury Fashion Branding

88

Luxury Sales Force Management

Marie-Claude Sicard

Misha Pinkhasov and Rachna Joshi Nair

115 Luxury Talent Management

Uche Okonkwo Michaela Merk

Gilles Auguste and Michel Gutsatz

153 The New Chinese Traveler Gary Bowerman

Palgrave Professional Business books are written by the best minds in business, combining topical writing, cutting edge research and strong industry case studies.

In this sampler we have included chapters from our recently published and forthcoming Luxury Business books, offering a fresh perspective on the trends and developments of all things luxury. As luxury becomes a truly global industry, our guides are essential reading for professionals across business functions, from managers and strategists to marketers and HR. To order any of these books, please visit www.palgrave.com and enter the promo code PM14THIRTY to receive a 30% discount.

Luxury, Lies and Marketing: Shattering the illusion of the luxury brand Marie-Claude Sicard 9781137264688 | December 2013 | ÂŁ24.99 | $42 | $46 CAN | Hardback | 224 pages

Sicard uncovers the truth about luxury brand marketing and shows that like any other commercial brand, they manipulate and influence their customers with traditional commercial techniques. Full of case studies and practical tools for understanding luxury brand marketing, the author provides frameworks to help companies with their own branding strategy Available to order at www.palgrave.com

Enter the code PM14THIRTY to receive a 30% discount.

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CHAPTER 1

Doing Away with Some Received Ideas ARE WE SURE WE KNOW WHAT WE’RE TALKING ABOUT? It is difficult, if not impossible, to open a book or read an article about luxury without happening upon the same commonplaces, made up of a few of the following words: Dream Magic Myth Eternity Emotion Fairy

Perfection Taste Rarity Genius Marvels Art

Sublime Mysterious Amazement Culture Spell Exception

I have nothing in particular against any of these words, but as soon as you start combining them and applying them to luxury, I grow suspicious. These words exhale vapors that are supposedly poetic but that in reality are as harmful for thought as were the clichés of David Hamilton for the art of photography in the 1970s.

We’re going to attempt the feat of avoiding them here, as best we can, for it’s not an easy enterprise. But since luxury loves French culture, to which I am also very attached, I’m going to turn to what’s most profound—and in my eyes also most precious—about French culture. What’s most luxurious, in a sense, for if luxury is priceless, the most priceless thing of all is that which nobody in the world can buy: a culture, and, by extension, a language and a way of thinking, which are inseparable from each other.

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Luxury, Lies and Marketing The French language, which is known to be rich and precise, is perfect for expressing an idea that 17th-century French classicism summed up in a well-known formula: “A thought well-conceived is clearly expressed/And in the right words is easily dressed” (Ce qui se conçoit bien s’exprime clairement/Et les mots pour le dire arrivent aisément) Boileau, L’Art Poétique, 1674. Before any words are spoken, then, one must think as clearly as possible, and this reflection establishes the reference points of the subject under consideration and does away with confusions, lies, and prejudices.

It is out of loyalty to this tradition, and, in a way, out of concern for intellectual hygiene, that I am setting aside the evanescent vocabulary mentioned above. It’s impossible to define anything with words as nebulous as “spell,” “genius,” “taste,” and “sublime.” These words are so much quicksand on which it’s impossible to build anything.

A more methodical and fertile approach consists—before turning to luxury brands—in defining what is meant by brand (this was the aim of my previous book, Brand Revolution), and what is meant by luxury, without, if possible, falling into any traps. Now there is a trap that is waiting to snare me here, that of believing that I should know better than anyone, since I’m French and was born in the country of luxury. This is the moment to remember that, in order to rightly conduct one’s reason, as Descartes asked of us,1 we must begin by never accepting something as true until we have carefully verified that it is. And we must do this without regard for the consensus of public opinion about it, the prestige of those who uphold it, or the personal advantages we might hope to derive from whatever it is.

It happens that the first article of faith one encounters when dealing with luxury is the idea of French hegemony.

It is thus this article of faith that we must examine as closely and scrupulously as possible. As it’s very old, we’ll have to go a long way back in history to verify whether or not it’s well founded. And because the French are its most effective and zealous proponents, we’ll also have to dismantle the propaganda machine. This is a tall order, and the best we can do here is to outline it. But it offers the advantage of decontaminating the ground on which, later on, we’ll construct a definition of luxury that’s more suitable, more precise, and, above all, more operational than usual.

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Doing Away with Some Received Ideas FRENCH LUXURY: AN EGO AS BIG AS THE RITZ To get some idea of the incredible impudence that the French display when speaking about luxury, let’s proceed by means of comparison.

You know what the word “art” means. Your ideas about art may be precise or they may be vague, but on the whole the names and images that are associated with it are fairly familiar to you. Perhaps you’ll think, for example, of Botticelli’s Primavera, a Degas dancer, Picasso’s dove, or Kandinsky’s Blue Rider. Perhaps also of Romanesque churches, the Guggenheim Museum—in New York or in Bilbao—or the Venus de Milo, or a Calder mobile.

So what would you say if someone asserted out of the blue that art, the only real, true art, has nothing to do with any of that, and that art is—and is exclusively, as everyone knows—the art of the Momoyama period in Japan? 2 You would surely be astonished, skeptical, even indignant. Even supposing that you knew what the person was talking about, and unless you happened to be precisely a fanatic of the Momoyama period, you wouldn’t believe it. True, Japanese art and its history are extremely rich, but why should they and they alone represent art as a whole? And why this period rather than some other one?

The line one most often hears in France, and that everyone repeats, is that luxury, the one and only luxury, is the one the French invented in the era of the Sun King, shared with the world in the 18th century, and have perpetuated to the present day—as if nothing had happened before, nothing after, and nothing elsewhere; as if the French were the legitimate and uncontested owners of the notion of luxury, and as if the entire world had no choice but to measure itself against this standard and submit to it, in the past and also today.

Nothing could be further from the truth.

Although my saying so may offend national pride, the French are neither the inventors nor the owners of the notion of luxury, whatever the specialists, the professionals, and even the academics may say. One hoped for a little more intellectual rigor from the latter, but no: blinded by the brilliance of a milieu endowed with a prestige the university has mostly lost, academics are more likely to look indulgently upon luxury than they are to subject it to a critical analysis.

And yet any historian will tell you that French luxury neither came first nor is superior. The contrary position can only be

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Luxury, Lies and Marketing defended at the cost of distortions—distortions that may be touching when inspired by fine feeling, and possibly understandable in an economic war where all’s fair, especially bluffs, but which, in both cases, are deceptive.

To state that luxury has been French for more than three centuries is to cut up space and time with a magnifying glass and crooked scissors. The only thing that can be said with any certainty is that trade in certain products of French luxury expanded considerably in Europe in the 17th and 18th centuries, before meeting with strong competition—notably from the English—in the following century, then enjoyed a resurgence in the 20th. But luxury goes beyond French and even European borders, covering an area so vast that it goes back to prehistoric times and extends into the most deserted corners of the planet.

The only thing we can say without fear of being mistaken is that the 17th and, above all, the 18th centuries in France were a pinnacle in the history of luxury—but not the only one, and not the most sumptuous in a long history: Europe, Italy, Spain, England, and Flanders also experienced “golden ages.” It is also true that French high fashion, leather goods, perfumery, and wine moved to center stage over the 20th century. But the 20th century is over, France no longer has a monopoly on high fashion, its perfumery faces ever increasing competition, and in many sectors France is even losing ground: in porcelain, for example, or in shoemaking, or in watchmaking, where the Swiss prevail. In the automobile sector, the luxury brands are English, German, and Italian. In hi-fi and home cinema, they’re Danish (Bang & Olufsen), American (Bose), and German (Loewe). Even French wines, apart from champagne, are starting to lose their supremacy, which has never been universal.3 And when an American magazine devotes a long article to the most celebrated chefs in the world, it cites David Chang,4 Jamie Oliver, and Ferran Adrià. If the French weren’t all transfixed by the ecstatic contemplation of their dazzling national ego, they would have noticed a long time ago.

A NEGLECTED HISTORY Oddly enough, few people take any interest in the history of luxury.

Entire books are written on the subject without any allusion to its

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Doing Away with Some Received Ideas origins, as if luxury were, by nature, immune to any examination of its genealogy. Even in France, where there should be keen interest, the last major study on the topic goes back to the end of the 19th century.5 Since then numerous monographs on table settings, wine, fashion, jewelry, decoration, gastronomy, and various brands have appeared in every sector. But there hasn’t been much of anything about the history of luxury, and nothing that makes it possible to look at the phenomenon from a new angle.

First of all, this is because the definition of luxury is a problem, one that has never been solved. Today, as in 1864, it could be written that: This word applies to purely relative things, whose elements are very complex and elude exact and scientific definition. Thus have the economists of the last two centuries and even those of our own time discussed in depth the advantages and disadvantages of luxury without being able to arrive at a definitive and satisfying formulation.6

The second reason why nobody takes much interest in the history of luxury is that nobody is really concerned about checking to see whether the history of luxury, as we think we know it, might actually be a legend. How was this legend created, and what kind of historical reality does it possess? We can reconstitute it by observing how the French tell themselves the story of luxury, and this without regard not only for truth, but also for mere good sense. The French literature on luxury abounds in peremptory declarations, such as: “Of French origin, luxury emerged in the 18th century,”7 or: “Luxury has always existed, ever since the 17th century, in fact,”8 which, you’ll admit, makes an awfully short “always.”

But let’s take them at their word, let’s not even stray (at least for the moment) from their own history and borders: it’s blatantly obvious that such notions are absurd. So there wasn’t any luxury in France before the 17th century? You might think so from reading what people are saying, without even mentioning the Renaissance.

As for going back still further—pointless: the question is dismissed by stating ex abrupto that “the European middle ages, if you don’t include cathedrals and castles, wasn’t a very luxurious era.”9 You even read that the Middle Ages, “the era of Western obscurity, swept away the luxurious products of Antiquity.”10

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Luxury, Lies and Marketing Oh really? And yet you don’t have to have a doctorate in medieval history to be doubtful of such statements. Just recall the tapestries called The Lady with the Unicorn or the marvelous miniatures that adorn the Très Riches Heures du Duc de Berry: the banquet tables covered in golden cups and damask tablecloths, the people in sumptuous costumes lined with fur and adorned with jewels. Think too of the gothic chests studded with precious gems, of the sculpted ivory, of the finely chiseled weapons and armor, of the long trains and the frills and ruffles of the feminine garments.11 Think of the parties where the number of dishes was exceeded only by the richness of the place settings, to the point that Juvénal des Ursins, the Archbishop of Reims, declared in 1468: “There’s almost nobody in France who doesn’t want to eat from silver dishes.” The palace of Jacques Coeur, in Bourges, is of a rare architectural refinement, and to perform its function the roof of the Hospices de Beaune, built by Nicolas Rolin at the time of Charles VII, had no need of the splendid patterns in which it is covered. This was indeed luxury. Have we forgotten that the oldest French chef, and one of the most famous, Taillevent, officiated at the table of Philippe VI and then at that of Charles V, in the 14th century? And that he served them various meats seasoned with extremely rare spices that cost what was then a fortune, accompanied by dumplings wrapped in gold leaves?

Not only can one go back up the path of French luxury much farther than one usually does, but one must do so, all the way to the Middle Ages and even beyond. For well before the Middle Ages in Europe there were the Celts, the Vikings, and the Visigoths.

In each of these cultures, which we’re quite wrong to keep calling “barbarian,” there were luxury objects of extraordinary richness and elegance, although the population lived well below what today we call the poverty line. And it wasn’t only the religions of such cultures that drew on the resources of an extremely refined craftsmanship: the jewels of Scythian art, the mastery of cloisonné enamel displayed by the Saxons, the famous crown studded with precious gems donned by Charlemagne, the no less famous Ardagh Chalice, and the miniatures in the Book of Kells, the 8th-century Irish masterpiece—all testify against the nonchalance with which, in France, everything before the Renaissance is expelled from the domain of luxury.

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Doing Away with Some Received Ideas ON THE ART OF DENYING ONE’S MOTHER If you heed what the “specialists” have to say on the subject, there’s hardly any mention of the Renaissance either—or else just lip service—nor of the considerable role that it played in the birth of French luxury. This is not to say that anyone denies it an influence that is too obvious to be challenged, but, rather, that it’s often passed over in silence, which is at the very least paradoxical when you see how the luxury crowd venerates everything that resembles noble titles, the most enviable of which are obviously the most ancient.

The label “dating at least from the Renaissance” would provide such titles to any trade likely to boast of them, and luxury houses would have no trouble demonstrating that many French arts were already flourishing in that era. Yet they prefer to lop a century off their age rather than appear as the heirs of the Renaissance. Why, when they could claim such an illustrious lineage, do they deprive themselves of it? If their desire for age is so strong (and it is, to judge by the care with which they display their birthdates), why stop at Louis XIV? Why not climb another rung on the ladder of time and prestige, if it is decreed that prestige is directly proportional to age?

Because the Renaissance is first and foremost Italian. Of course, there were the Loire châteaux, but unless you imagine that they burst forth spontaneously, one must give back to Italy that which does not belong to François I. From architecture to glasswork, from jewelry to table manners, from sculpture to poetry, and from weaving to painting by way of fashion, everything that adorned and brightened the French 16th century was imported from Italy.

If the origin of luxury were to be situated in France, one would have to grant transalpine genius a preeminence that the French, in this area, are unwilling to share with anyone—which explains their evasive discretion about this sumptuous era, whose brilliance cannot be directly attributed to them. When you claim to descend directly from the Sun King, it’s not in your best interest to let the genealogists go through your family papers and unearth a foreign ancestor, illustrious though he or she may have been.

Nor is it in one’s interest to show that it’s not just you but the whole family that inherited the genius of luxury from someone else, in this case the whole European family. For the Renaissance

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Luxury, Lies and Marketing fueled, inspired, and infiltrated minds and tastes from one end of the Old Continent to the other. Each Renaissance hotbed was a crossroads teeming with intellectual currents, artistic influences, and all kinds of wealth. Welcomed in the south by the Portuguese and the Spanish, in the north by the Dutch, these currents flowed just about everywhere … except in France. There, no bounty flowed in from South America or the Indies, and there wasn’t even a naval or merchant fleet to support territorial conquests or commercial activities, which, in any event, were treated with contempt.

The country imported frugally, but didn’t export luxury products, as Colbert himself reports in his Public Testament, published in The Hague in 1694: “If foreigners must have our money, let it be only for that which [is not produced] in the kingdom, like spices that must be sought far away or bought from the Dutch.” And he added: “As for all the rest, we must do without it, and may luxury not tempt us into making a mistake so detrimental to the State.”

An economic mistake, in this case, but also a moral one. It is often forgotten that Colbert’s policies were born of a surprising blend of strategy and personal conviction. Colbert was a minister who, even as he served Louis XIV’s megalomania, thought—and he wasn’t the only one—that “luxury and vanity have such a hold on everyone that all of France is disfigured by it.”

We must therefore seriously reconsider the history of luxury, and enlarge it in time and space. From the beginning of the Renaissance in the 15th century we see it not emerging (it already existed) but spreading all over the south and north of Western Europe. Even on this relatively small scale it was immediately cosmopolitan, as the era’s numerous and sumptuous portraits of kings and important personages testify. All of them, beginning with the portrait of Elizabeth I, bear the mark of multiple influences—Spanish, Italian, French, English. And the trade in luxury goods also quickly became international, as can be seen (among other places) in the history of fashion. It was Spain, and, to a lesser extent, Italy, which, in the 16th century, imposed their style and innovations—the ruff, the corset, and high-heeled shoes—across Europe.

Once you go back in time a little and enlarge the viewfinder, it becomes abundantly clear that the birth of luxury cannot be attributed exclusively to a single reign, even one as glorious as Louis XIV’s, or to a single country. It would be simpler to do so, but it

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Doing Away with Some Received Ideas would be false and quite unfair to all the other actors who have contributed to luxury, whether they were as famous as the Medici or as anonymous as the madder-root merchants who walked the streets of the Middle Ages to provide Turkish and Persian weavers with the dye that they alone used in making what were already considered, in the 16th century, to be “the best carpets in the world.”12

GOING BACK STILL FURTHER If we continue our trip back in time and space, it becomes clear that luxury eludes all attempts at appropriation. The roots of the phenomenon must be sought on a planetary scale, and by going much further back than the Renaissance or the Middle Ages. They must also be sought by discarding the myth of a luxury whose origin, possession, and legitimate usage are supposedly limited to a narrow window of time and space and an equally narrow social, economic, and cultural sphere. No, in reality it’s an atemporal, aspatial, and multipolar phenomenon, traces and evidence of which are everywhere once you break through the ancient carapace of received ideas. It is time to acknowledge our debt to every society and every civilization, including China, India, the Americas, and even Africa.

To Africa? Really?

Yes, really, because if you’re looking for the roots of luxury not on the surface but in the deepest layers of human behavior, you have to take Africa into account, granting it neither more nor less importance than other civilizations, even if there are fewer written traces there than elsewhere. Recent work has shown that the African Middle Ages, far from being dark and abject, witnessed several “golden ages” in which Africa was a nerve center of world trade. The continent’s reputation extended all the way to Europe and even to China, and all sorts of rare, sought-after commodities such as gold, salt, amber, and precious woods and metals were exchanged there.13 One has to admit that today Africa appears to be far from wanting or being able to revive this rich past, and that it has other problems on its hands. So let’s spin the globe a little until we come to the border between Africa and Asia—the Middle East—which, as unstable and turbulent as it looks to us at the moment, was also a

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Luxury, Lies and Marketing hotbed of untold riches, and of a luxury that dazzled the travelers of the ancient world. Mesopotamia, Persia, and Arabia had attained summits of refinement well before the century of Pericles, as testified by vestiges of the kingdom of Saba or the reign of Solomon, which are mentioned in the Old Testament. So true is this that the Western collective unconscious bears the memory of these ancient kingdoms to this day, by way of that well-established Greek and Roman conviction that luxury was in a sense Oriental by nature.

The first person to have directly experienced this was Alexander the Great, whose military expeditions led him into Persia, to Babylonia, and all the way to northern India. The splendor of the Oriental courts and the debauchery that took place there soon triumphed over the frugality and virile ardor of the Greek armies.

Alexander himself, seduced by (among other things) Darius’s sumptuous royal tent, adopted the local customs and sunk little by little into a life of pleasures that many hold responsible for putting an end to his adventures. The chroniclers tell us that military victories gave way to a moral rout, with the result that the Greek and then Roman fascination with Asian luxury was accompanied by stern condemnation, for it now appeared dangerous because of its capacity for diminishing and even paralyzing the strength of body and mind. Even doubly dangerous, because it was foreign and threatened, in the long run, to conquer, perhaps even destroy, the collective identity and integrity of those who surrendered to it.

We may think that today we’re light years from passing such judgments on luxury, which appear so absurd to us. And yet, this vision of Oriental luxury perverting the virtues and mores of the West by imposing corrupt tastes—isn’t it also our own, as we witness, fascinated but disapproving, the resurgence of a spectacular form of luxury in Dubai, Qatar, and Abu Dhabi? Or when we dismiss Indian luxury as kitsch and deem Chinese luxury vulgar?

Without this historical perspective, luxury professionals (especially in the BRIC countries) can neither understand nor combat the prejudices that are thwarting their expansion in the West.

So let it thus be known: in all eras and all over the world there have been luxury goods and services, whose traces are found in the most ancient tombs in the form of jewels and votive and funerary objects. Some civilizations, notably in India and China, produced them on a grand scale while the Mediterranean world was still in a deep slumber.

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Doing Away with Some Received Ideas Let’s go still further: even in prehistoric times there were luxury objects. If you consider that even a boomerang, for example, is an object that didn’t need any sort of decoration to perform its function perfectly, you have to acknowledge that when you find beautifully decorated boomerangs, they’re luxury boomerangs.14 As for the oldest jewels discovered to date, in South Africa, they are supposedly almost 100,000 years old.

It’s quite simple: there was luxury, and true luxury, all over and in all eras, even the most distant ones, quite simply because luxury is inseparable from any society, even fledgling, primitive societies. Nothing authorizes us to state that an 18th-century Bohemian crystal vase is a more luxurious object than a gold-incrusted silver pitcher in the form of a winged ibex—a masterpiece of Persian art dating from the 5th century BC15—or that the pitcher is, in turn, any more luxurious than the sculpted bronze axe heads of the Chang dynasty in China, 1500 years before our era.

Luxury is universal. It is naturally produced by all tribes, societies, and civilizations that surpass the subsistence threshold and can use their surplus wealth for purposes other than purely functional ones, and whether it takes the form of a bear claw necklace or of a Harry Winston diamond necklace doesn’t change a thing. In certain eras, for political, economic, or cultural reasons, such and such a society or country may temporarily become a more active and influential center of luxury than the rest, but to come to the conclusion that because of this they have a monopoly on luxury is a ridiculous, perhaps even a scandalous, leap.

Now that we’ve clarified this, it’s easier to sense the insidious and unconscious contempt that oozes from declarations such as: “Arab civilization is luxurious in its way.” In its way? But that way is the Alhambra in Granada, the Great Mosque of Córdoba, the Alcázar of Seville! It’s the way of the blue mosaic cupolas of the Isfahan mosques, and also of the Taj Mahal! It’s the way of Persian miniatures, of highly refined ceramics, carpets, and jewels, not to speak of the musical tradition. And have we forgotten the debt that all perfumes owe to Arabia, well before owing anything at all to Messrs. Farina, Houbigant, or Guerlain? Serge Lutens, at least, hasn’t forgotten:16 Perfumery was born and developed in the Muslim world. It was the Arabs who, out of taste and pleasure, gave us the appreciation for perfume. Like herbs and spices, perfumes only arrived in Europe with the

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Luxury, Lies and Marketing Crusades. […] It’s an immense culture, and it’s been around forever, from Andalusia, from illustrious and refined men like Ziriab the Magnificent, who came to Cordoba from Baghdad. What a fabulous gift!

And if you consider that artisanship prepares the way for luxury, then wherever there were high-quality artisanal traditions, there was fertile ground for luxury to take root, with neither more nor less legitimacy than anywhere else.

THE ORIGIN OF EUROPEAN LUXURY: COURT SOCIETY Obviously, when you put it in such a wide context, European luxury resembles a shooting star in a sky where many stars more ancient and brighter than it are shining. This doesn’t take away any of its brilliance, but it does make it possible to relativize its pretensions.

We can also put it in its rightful place by distinguishing between what belongs to luxury in the largest sense and to commercial luxury in the narrow sense. For the French, the two are the same: “Luxury does not have a life outside luxury houses and brands.”17 Yes it does, and fortunately, too! Who would seriously think of saying “New Balance” or “Callaway” when asked what sports are?

There must be a clear distinction drawn between luxury in general and commercial luxury in particular, as it has emerged in the West over the last thirty years or so. You can’t say—because it’s ridiculously false—that the former is of essentially French or European extraction and essence. But what you can say is that commercial luxury, as we conceive it today, is indeed—in part—of French origin, and aristocratic in spirit.

But aristocratic in spirit only, and only partially. For, in reality, things are more subtle. They can be presented in the following way: the mother of French-style luxury is court society, its father is commerce at the dawn of the industrial era in the 19th century. One is noble, the other bourgeois. The first is older than the second, which hasn’t prevented them from engendering some extremely fruitful activity and establishing the principles by which the whole sector functions: principles that many still adhere to today.

Let’s first take the mother of commercial luxury, court society.18 It is as old as our monarchical systems, but historians are in agreement that court society was slowly refined over the centuries

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Doing Away with Some Received Ideas and reached its zenith in the 17th and 18th centuries. Although it was never one of a kind—think of the court of Henry VIII or Elizabeth I in England, those of Christina of Sweden or the Empress Catherine the Great in Russia, of the Habsburgs in Spain, not to mention the papacy—it is certain that the organization of the French court exerted a great deal of influence on its neighbors.

Why should luxury be regarded first and foremost as the heir of court society? First, for an obvious reason: court society commissioned an enormous number of luxury goods. Not necessarily the most or the biggest orders, because for a long time the Catholic Church was as big a customer—if not bigger—than the monarchy, the nobility, and the upper bourgeoisie put together.

But, above all, the zenith of court society corresponds to the moment when luxury had the richest and most concentrated meaning. Through a grouping of quite visible (for they were made to be displayed) signs and objects, luxury condensed a whole series of values to which the era’s society attached the greatest importance, and which continue to resonate even today.

In the court of Louis XIV, luxury was not a sign of wealth—it had a far more significant value: it made it possible to distinguish certain people and to justify their eminent position in society. At the very top, a single man reigned beneath God’s watchful eye.

The nobility, the bourgeoisie, and the people occupied the stages beneath him. Convinced of the original inequality of conditions, everyone had a place fixed by birth and accepted it for one and only one reason: the aristocratic reason,19 which stipulated that atop the scale was an elite made up of men who had distinguished themselves as the most valiant warriors, and as the most loyal and reliable. Thus it was right that they should possess more land, more goods, and more wealth than everyone else. And more prestige.

This social hierarchy was supposed to be blatantly obvious, just as today we distinguish a policeman or a priest by certain signs so as to be able to spot them easily. For an aristocrat, failing to display one’s rank could even be as dangerous as adopting noble airs would be for a member of the bourgeoisie. In both cases, there was a subversion of the order established by royal, and thus divine, authority. The position one occupied on the social ladder had to be indicated unequivocally—today we would say that the people of that era had no choice but to publicly “own” their rank.

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Luxury, Lies and Marketing At best a maximum of visibility was thus imposed: whether rich or not (and more often than not, it wasn’t very) the nobility had to show that it was noble. Spending wasn’t a choice, it was an obligation. We might think that this mentality has long since disappeared, we who think it natural, even endearing, that the most fortunate among us wear blue jeans just like everyone else. But, in luxury, the traces of a morality of spending that comes down to us directly from the reign of Louis XIV are alive and well. It’s that morality which causes Karl Lagerfeld to say: “I detest rich people who don’t spend their money.”20 It’s impossible not to hear in this an echo of the following anecdote, recounted by critic and historian Henri Taine:21 the Duc de Richelieu gives a purse full of gold to his son and assigns him the mission of spending it. A few days later the son comes back with the purse intact. In his presence, the father immediately throws the purse out the window, to teach him to live according to his rank. “To be noble,” writes the historian Georges Duby, “is to waste, it’s the obligation to stand out, it is to be condemned—or else lose one’s status—to luxury and spending.”22 Old Regime society was thus based on the marking and maintenance of distance between social categories. As in the army, everyone had to display their rank, and that’s what luxury was for, much more than it was for showing off one’s wealth.23 It was, from the beginning, ostentatious, not in the pejorative sense that the word has taken on since, but in the sense of showing others, by one’s appearance and behavior, the rank one occupied in the social hierarchy.

So true is this that throughout European history, as long as the monarchic system prevailed, there was a succession of sumptuary laws, which regulated the consumption or display of luxury objects. For despite the rigidity of these heavily hierarchized societies, what has been called the dynamic of the West was at work,24 and regularly triggered social, economic, and intellectual spurts that threatened the established order. To maintain it, and because that order had to be made visible to as many people as possible, luxury was reserved for the few, and forbidden to the rest.

Nearly all ancient civilizations produced such laws: those of ancient Rome and Japan, for example, are known to us.25 It is known also that Venice, very early on, set up provveditori delle pompe to ensure that the sumptuary laws were obeyed in patrician

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Doing Away with Some Received Ideas families. The first sumptuary law in modern times was enacted in England in 1336, which is as good a proof as any that our vision of the Middle Ages as a period without luxury is false. This law required, for example, that a meal include no more than two courses, and that each of these courses include no more than two dishes “without sauce.” In 1336 an English knight wasn’t allowed to wear gold fabrics or ermine or clothing adorned with jewels.

Nobody but the royal family could wear imported fabrics.

In France, a 1664 edict declared that “there is no more certain cause of ruin for a state than the excesses of unregulated luxury,” and it has been demonstrated that, in the 18th century, while economic protectionism may explain some of the sumptuary laws, their most important function was to maintain the “distinction of ranks.”26 Since luxury signaled and signified the nobility’s superiority, nobles had to make the widest and most visible use of it possible, whether they wanted to or not, and whether or not it was within their means—which explains how many families were ruined, the passion for gambling that enabled some to compensate for the absence or meagerness of their incomes, and why the aristocracy was constantly in debt.

AND ON THE PATERNAL SIDE? If the mother of French luxury is court society, its father is younger: commercial trade as it emerged in Europe at the beginning of the industrial era, under the auspices of the mercantile bourgeoisie—in other words, over the course of the 19th century. Just by looking at the Colbert Committee’s list of members one is struck by the fact that at least half of the brands cited first saw the light of day in the 19th century. Here are a few of those names, which you hear as perfect representatives of French luxury: Laurent-Perrier: 1812 Puiforcat: 1820 Mauboussin: 1827 Guerlain: 1828 Christofle: 1830

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Hermès: 1837 Krug: 1843 Hédiard: 1854 Louis Vuitton: 1854 Boucheron: 1858 Bernardaud: 1863 Ercuis: 1867 S. T. Dupont: 1872 Daum: 1875 We can add other names with birthdates that are officially older but which in reality saw their activities expand in the same period: Mellerio dits Meller, which displays 1613 as its date of birth, acknowledges frankly that in reality “it was only at the beginning of the 19th century that they came onto the scene in Paris,” in 1815, on the Rue de la Paix. Baccarat was born in 1764, but the crystal production that made it famous truly began in 1816.

And Veuve Clicquot (in English: “Widow Clicquot”) only became such in 1805, when Madame Clicquot lost her husband before setting out to conquer the Russian market that was to do so much for the brand’s renown. This, incidentally, is also true of many other champagne houses, which were created back in the 18th century but whose actual commercial expansion occurred in the early 19th.

Finally, we mustn’t forget some of the Richemont group brands: Cartier (1847), Lancel (1876), Baume & Mercier (1830), JaegerLeCoultre (1833), nor the innumerable luxury houses that flourished in the 19th century and have since disappeared: Gellé, Molinard, Lubin, Pinaud, Pivert, Houbigant, for example, in perfumery. The same holds true for most well-known English luxury brands (Burberry, John Lobb, Smythson, Penhaligon’s) as well as the more discreet brands, for the Spanish Loewe, and for the Italians Rubelli and Bulgari.

Thus, commercial luxury only really starts to take off in Europe sometime in the 19th century. And many of its habits were forged in that period, then handed down unchanged to the present. It is

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Doing Away with Some Received Ideas true that throughout the 18th century the influence of the bourgeoisie and of a few major merchants was on the rise, but this was nothing in comparison with what happened a century later.

What are the traits that characterize commercial luxury as it developed in that era, and as it was perpetuated until at least the end of the 20th century?

First, an expansion of its clientele, which still included the aristocracy of Europe and sometimes of more distant regions too (America, Asia, India), but also extended to the upper and middle bourgeoisie.

Next, intensifying commercial exchanges thanks to the development of communications as well as to the vogue for fairs and expositions that sprang up just about everywhere (the first was in London in 1851), where luxury houses solidified their prestige thanks to the numerous prizes they were awarded.

Finally, a change in the meaning of luxury: little by little it lost its function as a “calling card” for a specific social class, which was required to make a display of luxury within a restrictive hierarchy.

The vise loosened its grip. In the 19th century luxury was still a sign of individual superiority but that superiority was no longer necessarily linked to how old one’s name or title was: it was increasingly the result of success in business. In other words, luxury was no longer inherited, but could be acquired with money. It was still the prerogative of a part of the aristocracy, but also became that of fledgling capitalism. And, above all, it was no longer linked to merit.

As a result, the very conception of luxury was transformed. The change started at the end of the 18th century, when the Encyclopédie defined it as “the usage made of riches and industry for procuring an agreeable existence for oneself.” In other words, luxury was becoming bourgeois. It was no longer just an aggressive display of splendor, it was becoming cozy and plush, tending toward wellbeing, the “modern conveniences,” and the art of living; soon it would integrate the notion of comfort,27 a word that was unknown in its current meaning before the middle of the 19th century.

Commercial luxury is thus not the direct descendant of court society: it results from mixing with the rapid emergence of what has been called big capital and the mercantile bourgeoisie. Though the mother of luxury is about noble displays, its father is new commerce. Might this not be an unsuitable match, and the origin of

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Luxury, Lies and Marketing the collapse of aristocratic luxury into a bourgeois, not to mention petty bourgeois, demi-luxury, which, in the 19th century, sees the proliferation of imitation and facsimiles,28 thanks to innovations like silver-plated metal, which made Christofle’s fortune?

Ordinarily, nobility and business don’t mix. The second is slave to the first, and never raises itself up to the nobility except to serve it.

And for good reason, as we’ve seen in the Introduction: nobles are forbidden from engaging in commercial activity,29 otherwise they “derogate,” and waive their noble privileges. This is why, despite the resemblances they bear to our modern fashion designers and perfumers, the suppliers of the Old Regime court, Rose Bertin, Hippolyte Leroy, or Fargeon, remained in the shadow of their princely clients: there, too, the hierarchy of social positions could not be transgressed. A noble is always above a bourgeois and far above a shopkeeper or a supplier, even ones who are highly regarded.

And then, over the course of the 19th century, shopkeepers and suppliers are emancipated. All of a sudden they’re well established, they’re doing advertising, and customers are banging down their doors, crowding into their stores. Once, they were called to Versailles or summoned to the Parisian mansions of the aristocracy.30 Suddenly, the current starts to flow in the other direction; the aristocrats come to them. Once, they set up shop within convenient range of their customers. Suddenly, the customers are the ones rushing to the Place Vendôme, the Rue de la Paix, and the Rue Saint-Honoré.

One man embodies this reversal all by himself: Charles Frederick Worth. He is ordinarily presented as the inventor of high fashion, and it is true that he was at the origin of a certain number of innovations that prefigured the way the big Parisian houses function. For example, he was the one who invented “doubles,” the ancestors of models tasked with presenting dresses to clients. He was the one who imagined offering ready-made dresses (instead of waiting for orders and fulfilling them). He invented the “designer label” by having his name woven on the labels sewn inside the clothes. In a way he became the first true “creator” and even imposed his views on the Empress Eugenie,31 prefiguring the tyranny exercised by his successors on generations of women in France and throughout the world.

But, above all, Worth is the pivotal point of a reversal of power whose full extent has yet to be appreciated, and which explains,

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Doing Away with Some Received Ideas in large part, the mentality and attitude of luxury people all over Europe and now the world: the supplier becomes the king. Not only was Worth welcomed at the court, not only did he frequently meet all the royals, but he also received them. He sometimes went to visit them, but they also sometimes went to the trouble of visiting his salons. Instead of satisfying their slightest desires, he anticipated and provoked them. Instead of being at the mercy of their whims, they were at the mercy of his. He was the master of elegance instead of being its instrument. The embodiment of commercial luxury, he seized power and wielded it over his customers.

Like him, saddlers, perfumers, crystal makers, jewelers, and luggage makers would all reverse the relationship with their clientele and, having been servants, become masters.

The symbolic outcome of this reversal of power can be seen clearly today: in court society, the suppliers were at the service of the aristocrats. Later, and right up to today, the aristocrats put themselves at the service of the suppliers, as proved by the number of aristocratic elements floating around in the luxury world, especially in high fashion—look at Chanel’s models in the 1960s, or the ladies with multiple titles hired to preside over what, significantly, are called the “salons” in fashion and jewelry luxury houses.

This complete role reversal is behind the fiction that the luxury market is a supply market and not a demand market. This is a fiction because no luxury house could survive if it wasn’t paying heed to the desires of its customers and didn’t know how to satisfy them just as well as the mass-market brands, which go to such lengths to monitor the expectations of their consumers. Hermès would be dead or dying if it hadn’t diversified its operations to include leather accessories, and then scarves, neckties, watches, and perfumes, and if it hadn’t finally—in the 1980s—headed in the direction it did, which was such a success. Cartier had a good sense of how minds were changing when it launched its Musts line in 1972—an exemplary case of marketing if ever there was one. And Chanel’s Allure perfume, like most of its competitors, enjoyed the benefits of every market study and opinion poll necessary before its launch.

But shush! You have to do it without saying a word if you want to keep intact the myth of intuitive, noble, and inspired luxury, in which creation surges forth spontaneously and must therefore take place at a safe distance from the baser instincts of the market.

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Luxury, Lies and Marketing Is this absurd? Yes, and even insulting to the plain good sense that Descartes affirmed was “the most evenly distributed thing in the world.” And yet this good sense must be lacking in many people in the luxury business, and (let’s be fair) in an even greater number of their customers.

LUXURY’S QUEST FOR MEANING What are the chances for survival, in today’s world, of a very elitist conception of luxury, so different from the one in which it was born?

They’re not slim. As long as what Thorstein Veblen called more than a century ago in what is now a classic phrase, “conspicuous consumption,” continues to exist,32 European luxury will maintain all or some of its allure.

Look at what’s happening at Dior, where the aristocratic ideology continues to work its magic. Not only has it retained the Louis XVI armchairs and the metalwork at Dior salons on the Avenue Montaigne, and in some advertisements, and the website, but if, behind the aristocratic mythology, we detect something other than a taste for period décor, if that mythology still has a religious dimension, then that dimension is easy to read in the name of what today is the house’s most visible perfume (J’adore, “I adore/worship”), to which the reply in the past would have been: one only worships God. From ostentation to veneration—the circuit is complete.

But it is complete without reference to a higher plane, that is to say without deriving its value from the moral superiority which, in the monarchic system, justified the elevated rank occupied by certain people and their right, as well as their duty, to signify this by displays of luxury. The reign of Louis XIV is at once a zenith and a tipping point, the point at which a luxury of plenitude begins to slide toward a luxury of emptiness. A luxury of plenitude is one that corresponds to a society where visible wealth is a sign of moral wealth, of a preeminence owed to the possessor of the supreme value in court society: honor. The luxury of emptiness isn’t based on any personal quality but rather solely on the vicissitudes of fortune, the taste for pleasure, and the desire to show off.

Initially, luxurious garments, dwellings, and equipages signaled someone worthy of being noticed, and thus justly endowed with some form of power. Emptied of this initial meaning, luxury

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Doing Away with Some Received Ideas sooner or later becomes the sign of another form of power, one without moral or cultural value, a mere external sign of wealth.

And when that sign becomes too obviously what it is and nothing more, European luxury reacts badly. Take this portrait of a man who attains luxury solely by means of the power of money, seen through the eyes of someone at Chanel: Slumped on the plush off-white sofa of a boutique, an obese creature with the air of a Caucasian peasant, wearing a Nike baseball cap, giant, filthy sneakers—but made by a top brand—a Havana cigar in his mouth, his shir t stretched tight by the immense quantity of dollar bills that are bursting the seams of his wallet. G. Prévost, Voyage au pays du luxe (Paris, Le Cherche-Midi, 2001)

European luxury needs meaning. It used to derive meaning from a social system in which appearances signified being. What does it become in a world where being and appearances have split apart, where the aristocratic ideology no longer has any currency? What does it become in a democracy?

Let’s forget even the differences in political systems and observe the total reversal of values that has led, the sociologists tell us, to the triumph of the individual.33 European luxury was formed in an era when the individual didn’t count. Only rank was important. So true is this that at the court of Louis XIV, a marquis stood and took off his hat when a lackey spoke to him if that lackey was a duke’s or a prince’s: the lackey represented a rank superior to his. The private person was nothing. Today, it’s the opposite. What does a luxury forged on the “nothing-individual” become in a society organized around the “individual-king”?

That luxury falls back on another rationality—which is also another ideology: economic rationality. It trades the unconscious heritage of court society for that of yesterday’s industrial societies and today’s digital-media societies. It forgets about political power because it has a substitute form of power, which is economic. Whence the duality of luxury discourse: whenever it’s criticized for being what it is, arrogant and very—even too—ostentatious, since the prevailing ideology can’t justify this, it falls back on economic justifications.

For the moment these justifications are based on French luxury’s dominance in the world. But that dominance has never been and

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Luxury, Lies and Marketing still isn’t absolute. Increasingly, powerful competitors are battling it with success. Others will emerge in the future, with a different sort of luxury.

What is French luxury’s answer to this threat? It can be summarized thus: “What others do isn’t luxury. We are the only true arbiters of luxury.”

The least that can be said is that this answer is the poorest one imaginable.

FALSE ANCESTORS The most widespread piece of foolishness in the world of luxury consists in stating that the word comes from the Latin lux and means “light.” Marketing people are the most zealous proponents of this etymological fantasy, but buying into it is tantamount to tripping over one’s own feet—the etymology is false.

Luxury has nothing to do with lux, light, but with an old IndoEuropean radical, lug-, which gave us the Latin luxatio, the ancestor of the French “luxation” (in English, “dislocation,” though the verb “luxate” is used in a medical context).34 Nothing could be easier to verify, so why continue to spread a false etymology? Because even though it’s false—especially for this reason—it’s good for something.

What it’s good for is justifying a certain vision of luxury.

Etymology, we know, is the unconscious of language, and just as an individual’s origins go a long way toward explaining his story or character, those of a word say a great deal about the societies that use it, and about both their prejudices and their beliefs.

Our ways of thinking are guided, most often without our being aware of it, by a very distant meaning whose traces are still visible and revealing, provided we take the trouble to look for them. This is the case for the word “luxury,” and doubly so, for its origins, as they are usually talked about, are not only false—they have been falsified. Just as there is identify theft, here there is meaning theft.

Who committed the crime? When, and why?

We can respond to the latter question with the classic answer from police investigations: when there’s identity theft, it must have been in someone’s interest. Find the beneficiary and you’ll also find out when and why the imposture took place.

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Doing Away with Some Received Ideas When: the 17th century. Why: the birth of French luxury, soon to be brought to the baptismal font by Louis XIV. It’s obviously not by pure chance that the word and the thing appear at the same time.

In the modern sense, the word luxury appears in the 17th century, which is sometimes called the century of Louis XIV, otherwise known as the Sun King.35 That light, and especially that which comes from the sun, should be a metaphor of celestial power is shown by numerous IndoEuropean myths: think of the place that light occupies in ancient Egypt, for example. That it played a leading role in the symbolism with which Louis XIV surrounded himself, and which shone over all court society, is also a well-known fact.

THE LIMPING DEVIL And yet, it is not to light, but, almost conversely, to the notion of mourning or of pain, that luxury must be attached, such that in its most profound, its most universal, meaning, it has absolutely nothing to do with Louis XIV. It is indeed thought that the Indo-European root lug-, which means “to break,” first gave the Latin lugere, “to lament, to be in mourning,” from which is derived the French adjective lugubre (in English: dark, gloomy, lugubrious). The violent demonstrations of grief that accompany funerary rituals would explain why a verb meaning “to break, to dislocate, to disconnect” was used to refer to them. From this same verb a bifurcation occurred, leading to the noun luxatio, “disconnection, displacement,” and the adjective luxus, “misaligned, out of whack.”36 It is this adjective that later came to mean “excess in lifestyle, splendor, abundance.”

Luxury is thus a deviation, a swerve, a gap. It moves in a crooked, angular fashion, taking long strides. It’s hard to follow. It doesn’t walk in a straight line, it runs in a zigzag, too fast, and on the diagonal. It limps. But we want to follow it, to run after it, because it is tempting, seductive, alluring, bewitching. It is, thus, a devil. It is, quite literally, the lame or limping devil, The Devil upon Two Sticks, as Lesage’s comic novel (published in 1707) is known in English: “I’m the one who brought luxury, debauchery, gambling, and alchemy into the world. I am the inventor of merry-go-rounds,

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Luxury, Lies and Marketing of dance, music, and comedy, and of all the new fashions in France.

In a word, I am Asmodeus, nicknamed the Limping Devil.”

This is a dangerous patronage,37 first of all because Asmodeus belongs to the demonic cohort led by the eminently ambiguous figure Lucifer, who is at once the bringer of light and the king of shadows. And luxury bears his colors, if one observes its predilection for black and gold, or white and black, which are often superimposed on the packaging of perfumes, on monogrammed handbags, and on the signage of certain boutiques.

It is also a dangerous patronage because the devil is he who disunites (from the Greek dia-bolos). Luxury, too, separates: those who venerate it from those who condemn it, the rich from the poor, the profane from the initiated, the privileged from the rest.

And it is dangerous for another reason: because it represents everything that is troubling to the conscience, everything that leads us astray, everything that disturbs us. First and foremost, of course, the libido.

The path from luxury to lust is a well-trodden one, and has been for a very long time, like a shortcut across a field of wild grass. This is, in fact, the very first meaning of the word luxury (in Latin: luxuria): a luxuriant vegetation that grows in all directions, in profusion, prodigally. Next it was applied to animals, then to human beings, to designate an overflowing, excessive ardor.

And, by means of excess, a connection was made with the notion of luxury. In French, a decoration can be luxuriant, and, if it is not sublimated, the libido can be “luxurious” (“luxurieuse”). It is not sublimated in advertisements labeled “porn chic.” It is in an image of Opium, the Yves Saint Laurent perfume, in which the naked body of Sophie Dahl, in 2000, caused a scandal that was sufficiently resounding for the poster to be censored in the UK. Lambasted by feminist critics at the time, attentive observers recognized in the images—beyond the allusions to Van Dongen and Baudelaire—an echo of Italian mannerism, its cold sensuality and its taste for the linea serpentina, which we admire, for example, in the paintings of Bronzino.

Except that, in the case of Opium, a luxury brand, the image was obviously diabolical: white skin of an almost luminous pallor, but … against a black background. Behind Asmodeus, Lucifer’s silhouette can always be glimpsed.

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Doing Away with Some Received Ideas LUXURY IS ALWAYS A SWERVE So, luxury does not come from lux, light, but from luxus, deviation, excess. In the beginning it’s a disarticulation, an elongation, which produces, as we’ve seen from the word’s history, a disconnection, a dislocation.

It is thus a swerve—the sort of swerve that a horse makes when it jumps to one side or trots sideways (luxurians equus).

There is no exact English equivalent of the French word écart, which I am translating as swerve, but which could also be translated as “gap,” “margin,” or “discrepancy.” I’ll continue to use swerve, since the word is the foundation of my entire thought process. But to try to convey an understanding of the true wealth of its significations, I can give a few examples.

An écart is the distance that separates two objects (for example, the required distance between two plates on the tables of a fine restaurant), or two ideas (there is an écart between authority and authoritarianism), or two practices (there is an écart between Neapolitan pizza and Gordon Ramsay’s white truffle pizza). It can be the difference between the real temperature, as measured by a thermometer, and the apparent temperature, which is modified by the wind-chill index. Or else écart can mean a behavioral swerve, a deviation with respect to the norms of good conduct, a form of misbehavior.

An écart is thus at once a distance, a difference, a deviation, a swerve, an interval, and a distancing. It’s everything that was contained in germ in the root lug-, then in luxus, and which is found today in luxury.

A first consequence: if luxury is a swerve, it is positioned with respect to a norm, a rule, a law. Now laws, rules, and norms change from society to society and era to era. Luxury is thus always relative. That is why it is impossible to define it without situating it in time and space. All attempts to try to define it in the abstract prove to be vain. All attempts at distinguishing between “true” and “false” luxury fail. There is nothing but relative luxury. To gain purchase on the concept, we must have the humility to recognize that we’ll never arrive at anything but provisional and partial truths.

This is a position that French luxury has trouble accepting. This can be seen from the fact that many publications on the subject

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Luxury, Lies and Marketing simply avoid defining luxury, going on for pages without specifying exactly what it is they’re talking about, as if it went without saying, or as if everybody knew intuitively what the word means—or as if there was but a single meaning, known to all and for all eternity.

But actually it doesn’t go without saying: nothing could be more subjective. Today, every individual has his or her own idea of what luxury is. Every society has produced its own luxury, according to principles and values that are not those of its neighbors or its predecessors. It is thus impossible to address the subject of luxury without embarking on at least a minimal historical and sociological exploration.

And, by historical explanation, I don’t mean the history of each luxury brand: in France “storytelling” is all the rage, making people believe that the history of luxury can be reduced to a few famous personages, inspired founders of companies so well conceived that they endure 150–200 years after their inception, objects of a cult of personality which, like a time bomb, continues to explode around these “creators” even today.

That is not how history is made, but it is often how the history of luxury is presented, especially in France: as a volley of absolutely irreproducible successes, due to some extraordinary men (and a few women). It is easy to see where this distortion comes from: the courtier’s ideal was individual heroism. His descendant in the economic realm, the captain of industry, also likes to pose as the hero of modern times, who deserves all the credit for the exploits he accomplishes.

But we know, to the contrary, that the history of mentalities, of political regimes, and of social systems offers a much better explanation for the current positions and particular aspects of the luxury sector, in France and abroad. The fact is that this history sheds a very different light on the heroic gesture of the first maisons de luxe, the first luxury houses. It does not minimize individual talent, but it places it in a context where the realization of this talent becomes possible, which would not have been the case a century earlier, nor, perhaps, a century later. What must be concluded from the sudden emergence of so many luxury houses in the 19th century, and then in the 20th, in France and all over Europe? That Europeans are more gifted than anyone else? That luxury is their domain? No, rather that the conditions of production, distribution,

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Doing Away with Some Received Ideas and consumption of luxury objects worked in the Europeans’ favor at that specific moment of their economic and social history.

THE THREE “SWERVES” OF LUXURY Luxury is always relative—so be it. It is always subjective—okay.

But then the only possible attitude with regard to it is not to wriggle out of the difficulty of defining it, but to choose a position, an analytical vantage point, and to clearly acknowledge it.

Mine is based on the history of the word’s meaning, as given by its etymology. I went into this in detail above, and I’ll sum it up here: from the beginning, all the way up until now, what the word luxury fundamentally denotes is an “écart,” which in English can best be rendered as a swerve.

My conviction is that this notion of a swerve is the one that best and most completely encompasses what can be observed in the commercial luxury sector. It explains how the concept of luxury was formed in Europe, before spreading elsewhere. It also explains how this concept continues to function today.

The swerve can occur in three directions: ■

upward;

■

laterally;

■

downward.

The upward swerve is the direct descendant of court society, where the rule of the luxury game was to indicate the distance that separated the nobility from the populace. The same rule applied within the nobility itself among different titles, each being required by etiquette to adopt a usage of luxury befitting its rank: two lace flounces and not three according to whether one is a duchess or a marquise, such and such a height for a count’s wig, and a different one for a baron’s, red heels only for the most exalted nobles, and so on. The gap between a count and a viscount may seem small, but it must be maintained, expressed, and made visible, otherwise the whole aristocratic order is undermined. For what is an order that is not respected?

Whenever a luxury brand uses words like “extraordinary,” “sublime,” “unique,” and “rare”—which is to say all the time—it

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Luxury, Lies and Marketing practices an upward swerve, an echo of a system of thought in which whatever is above, and one of a kind, has greater value than what is found below.

This is the same when one uses a religious vocabulary: luxury’s insistence on speaking of its “soul” is the most visible sign of this. The way in which the press describes haute couture fashion shows is equally revealing: it is never a question of anything but ceremony, ritual, liturgy, and high masses. Certain ancient and religiously maintained or renovated locations become “temples,” like Hermès in the Faubourg Saint-Honoré, Gucci in Rome, on the Via Condotti, Ferragamo in Florence, and Fortnum & Mason in London. Some flagship stores are like “cathedrals,” if we’re to believe the press clippings. And every great brand has its “Bible” in the form of one or more catalogs or coffee-table books on glossy paper.

And the same holds true when one claims kinship, or even equal status, with art, which is supposed to occupy an elevated position— even the most elevated—in the hierarchy of human productions.

Couturiers, jewelers, perfumers, and glassmakers are frequently presented as artists. Some are treated as such, for example when works by Yves Saint Laurent, Armani, and Alexander McQueen are shown at the Metropolitan Museum in New York, or by Van Cleef & Arpels at the Cooper-Hewitt, National Design Museum in New York, or at the Musée des Arts Décoratifs in Paris. The word “genius” is the one that is most often used to designate the “creators”—in particular those from haute couture houses. The latter never deny themselves an opportunity for drawing inspiration from painting, as was the case with Yves Saint Laurent and his Mondrian dresses, or the evening coats that featured embroidered motifs borrowed from Picasso, Braque, and Van Gogh. Bulgari made his reputation by borrowing from Greco-Roman art, and Buccellati did the same by borrowing from the Renaissance. The glassmaker Daum declares: “Art is the ultimate luxury,” a phrase that could be the tagline of most luxury brands.

The same thing applies, finally, when French luxury is presented as an instrument of distinction, in the sense that Pierre Bourdieu has given to this word:38 once again, it is a matter of making an upward swerve by presenting luxury as a social attribute that denotes more taste, more refinement, and more elegance than that displayed by people who lack it.

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Doing Away with Some Received Ideas Now for the lateral swerve, which is observed when luxury claims not superiority but difference.

The difference is always a difference in form, first in the literal sense, the form of objects. The ultimate difference is the unique piece. Here we find traces of luxury’s penchant—French luxury’s in particular—for the world of art, in which each work, by definition, is unique and derives all its value from this fact. And, more exactly, for that moment in art history (the 19th century and its romantic ideal) that places great emphasis on uniqueness—which isn’t the case, for example, of the Renaissance, during which studios found it quite natural to produce several copies of the same painting.

This explains the mythology of custom-made objects, which is particularly striking in high fashion (but which also exists elsewhere): a custom-made dress is, by definition, unique, or at least unique several times over, according to the small number of clients who have ordered it. There was an era—and in certain milieus it remains the case—in which two women could not wear the same model of dress without exposing themselves to public ridicule.

The maintenance of difference, and of the most visible difference, by means of the unique piece, persists even now and costs a very hefty sum.

Creativity and creation play a fundamental role in this regard: they are asked to create a gap, a distance. The search for a new form is a way of creating distance and goes against the popular taste for immediate understanding of the spectacles offered by consumer society.39 Luxury makes systematic use of this distancing operation: boutiques at the door of which you must ring to be admitted, guards at store entrances, salespeople in impeccable uniforms, with their insistent politeness, shop windows and interiors made to be admired but not touched, and, of course, the products themselves. Not only is it forbidden to pick them up in one’s hands, but sometimes one simply can’t understand them. This was the great advantage of some of John Galliano’s collections for Dior: the vulgus pecum didn’t understand anything, which made it possible to present his collections as works of genius, since genius, as we know, is always misunderstood. And so journalists, buyers, and clients all fell into the trap of formal distance, the distance which creates the greatest possible gap with respect to traditional

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Luxury, Lies and Marketing norms of elegance and good taste. The creator’s talent (genuine in this case) is not in the least at stake in these instances, only his capacity for standing out.

But the lateral swerve can also be a refusal to play the traditional luxury game, while embodying luxury in one’s category of products, as we see with Apple. There is undeniable creativity here, and beauty too, and the prices put the brand at the high end of the new technology sector. Yet Apple is very minimalist in its advertising, and deliberately accessible to a large number of clients, through the ergonomic design of its products, first of all, and even through its pricing, which gives the richest consumers the freedom to buy many more Apple products than they need. The media had a field day with the case of Karl Lagerfeld, who, in the days when having just one was still rare, supposedly had 70 iPods.

The refusal to play the luxury game while occupying a foreground position is also visible in the case of Prada, for example, and not only in its approach to clothing or in the iconoclastic interviews given by its female designer. The desire to stand out is obvious in the architecture of its stores, which have been christened “epicenters,” as well as in certain initiatives calculated to disconcert the public, like the installation of a fake boutique in the middle of the desert, in Texas, in 2005.

Finally, a luxury brand can make a lateral swerve by adopting an approach that is deliberately different from that of its competitors.

This has clearly been the case for several years with Mauboussin, which is skilled at pulling off unprecedented commercial operations in the world of luxury jewelry. The brand’s pedigree is impeccable, but since 2007 it has gone off in a direction that is taking it far from its origins. It has literally taken to the streets, for example by advertising in the subway (the posters are displayed symbolically on its website’s home page) or by opening a boutique, as is the case on the Champs-Élysées, wedged between a fast-food restaurant and a Benetton. Such a provocation could amount to a dangerous example of the downward, rather than the lateral, swerve, were it not for the occasional touches of eccentric humor that appear in some of the advertising campaigns.40 Even though some products shamelessly display their price (a watch for less than 400 euros), the brand’s image is not (or not yet) damaged.

The halo effect that extends from luxury craft jewelry (yesterday)

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Doing Away with Some Received Ideas to commercial jewelry (today) continues to work in its favor, and so long as the quality of the most reasonably priced products and the look of the boutiques aren’t questioned, the brand’s sidestep won’t draw criticism. Thus, Mauboussin has amassed a capital of sympathy, modernity, and dynamism that many of its peers can only envy.

The downward swerve, finally, occurs when luxury is associated with some sort of transgressive behavior: an obscenity, a misdemeanor, an indecency. Here, it is the moral—or amoral— dimension of luxury that is under scrutiny, and we know that this is an accusation as old as luxury itself.

There is, of course, the question of pricing. When he gave his three stars back to the famous Michelin Guide, Alain Senderens confessed to being aware that his prices “had become indecent” and that a “juxtaposition of expensive dishes, such as a sea bass with a spoonful of caviar on top, is a great luxury, to be sure, but requires neither talent nor creativity.” This is an echo of very ancient quarrels that the media and public opinion regularly revisit, and in vain.

For the reality principle forces us to admit that if there is, on the one hand, a restaurateur who offers a truffle omelet for 1000 euros (a real example) and, on the other hand, a client ready to pay this sum, the latter action may be absurd, but, technically, there can be no objection to it in a liberal economic context. If there are people willing to pay 1490 dollars for a dog bowl,41 so much the better for its manufacturer (Goyard). With regard to those whom such a sum could protect from cold and hunger for quite some time, yes, it’s indecent, and history offers several examples of societies which, one fine day, decided to put a stop to such things. But we are not, it seems to me, on the eve of a new revolution, and the question posed by such excesses is, for the moment, instead: is there a clientele out there ready to believe, merely because of the extravagant price, that a dog bowl is a luxury object, or is this just a media stunt intended to consolidate Goyard’s position and image in the world of luxury?

But after all, you’ll say, the prices of luxury objects have always been extravagant without anyone raising an eyebrow, persuaded as we are that they were justified by the rarity of the raw materials and, above all, by the extreme quality of the workmanship. Yes, but now this illusion is being punctured from all sides. There have been numerous inquiries whose results are discussed in public,

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Luxury, Lies and Marketing in books, on the Internet;42 even in major tabloid newspapers like the Sunday Mirror,43 which published a detailed report relating how the most prestigious Italian brands employ an underpaid Chinese workforce. When one discovers that a pair of Italian shoes sold for 900 pounds in Great Britain was probably made

by Chinese immigrants paid 3 euros per hour to work in thirdworld conditions, then yes, the price of luxury reaches heights that public opinion finds indecent.

However, the question of price is perhaps the tree that hides the wood: it’s the most visible excess, but it is perhaps not the worst.

In the moral order, we know that money can lead to all sorts of excesses, to all sorts of corruption. The “bling” phenomenon, a bastardized form of luxury, offers forceful testimony of this. But there are other misbehaviors that can be observed, other transgressions, notably those that take us out of our human state and bring us down to the level of animals, inciting us to liberate those instincts that civilization encourages us to overcome, or at least to control.

The presence of certain animals associated with luxury brands is a sublimated or, shall we say, “noble,” but significant, expression of this tendency: the Cartier panther, the Hermès horse, the Rolex falcon.44 The inverse of this theme is offered by the Belgian artist Wim Delvoye, with his famous pigs tattooed with the Vuitton monogram.

Another example of this dangerous alliance of luxury and the animalistic is its propensity to push us toward several cardinal sins, including gluttony and lust (in French: “luxure”). Where gluttony is concerned, the result is periodic and, on the whole, inoffensive pairings, such as Audemars Piguet with strawberries and chocolate for an advertising campaign dedicated to its Millenary collection.

But the most spectacular aspect of the downward swerve remains, even today, and despite the revolution in mores and behaviors, the recurrent tendency of luxury to rub shoulders with the theme of lust, even if that means descending into what is known as “porn chic.” Contrary to what we may think, this is not a recent phenomenon, as testified by the lubricious frescos in the bordellos of Pompeii, but the media’s power of dissemination has resulted in its assuming wider proportions and greater visibility than ever before. Luxury and lust have the same root, as we have seen: both contain the idea of excess, both are swerves away from the norm

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Doing Away with Some Received Ideas of ordinary behavior—sexual or otherwise. In both cases, there is a turning away from the straight and narrow path, a taking of liberties with respect to the rules of life observed by your average human being.

But amorous desire is, after all, nothing but an offspring of desire in the largest sense, and luxury is, by definition, a tempter. It is a well-known fact that our era is obsessed with sex—which, let it be noted, is evidence that we’re not as liberated as we think—and this can lead to all sorts of excesses. It’s hard to see, for example, what an Yves Saint Laurent perfume called Paris hoped to gain by exchanging its previous postcard images, which were fairly unremarkable, it is true, for the no less banal image of a naked woman sitting on a chair, unless it hoped to show that it subscribed to the fantasies of the era, or to those of its short-lived artistic director, Tom Ford. We saw the same thing, the same stylist, and the same fantasies, not long afterward, with the perfume Nu (“naked”) and, for men, M7, accompanied by a full-monty striptease that greatly increased the perfume’s notoriety, which, however, rapidly dissipated once the visual reinforcement disappeared. Also in the Tom Ford era, the image of a female pubis, waxed in the form of a G and unveiled by a man’s hand (known by the name “Public Enemy”) also triggered, to Gucci’s benefit and at its expense, an advertising scandal. But because luxury is a swerve, so long as nudity is transgressive it is logical that some brands use it, even at the expense of what is called good taste, or perhaps for this very reason: in order to re-create a distance from the norm. It is also logical that brands aspiring to enter the exclusive precincts of luxury, like Dolce & Gabbana, should start using it the way one uses a password, while taking the provocation to new levels, like all overly zealous apprentices. Yet another scandal occurred, and much condemnation was leveled at images used by the brand evoking gang rape.

In any event, it is pointless to worry about porn chic’s excesses: the system is self-regulating. Since luxury is a deviation from the norm, once porn chic becomes the norm, luxury swerves away from it yet again. This is what we have recently seen with the ebb in inflammatory images. This state of affairs will last until the compass needle points toward the pole of decency once more, whereupon luxury, as it always does, will work to shake things up by heading in the opposite direction.

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Luxury, Lies and Marketing Beyond the spectacular case of the alliance between luxury and lust, which remains, in many people’s minds, a product of our lowest instincts, another form of depravity illustrates luxury’s tendency to swerve in a downward direction: the moral depravity that it encourages. We’ve had occasion earlier to recall how frequent a theme this has been in public debates since antiquity. It would be wrong to think that the subject has been closed since the well-known clash between Voltaire and Rousseau or Bernard Mandeville’s famous Fable of the Bees. The debate continues even today, and entire volumes are written about luxury by contemporary authors who make no secret of their dislike, their concern, and their disapproval: this is true of Robert Frank’s book, which makes luxury out to be an illness (Luxury Fever), with a subtitle explicitly intended to point up its excesses.45 In the name of morality and political economy, he repeatedly draws parallels between the excesses of some and the needs of others when he evokes the duel between yacht-lovers Aristotle Onassis and Stavros Niarchos— the latter having insisted on his Atlantis being 50 feet longer than Onassis’s Christina—and he adds: “Wouldn’t it have been better for both boats to be a little shorter and for the money saved to have gone, for example, to provide school lunches for under-privileged children?”

It is true that there can be something indecent about luxury. Its mere presence is an insult to all the have-nots, which explains the unease elicited by the “Luxury Hobos” fashion show at Dior in January 2000, which was just as scandalous as the New Look in 1947, with the famous Tailleur Bar, which took 40 meters of cloth to put together. This was a veritable affront for the housewives of the Rue Lepic, who, not long before, had endured severe restrictions due to World War II, and who, it is said, threw themselves, scissors in hand, on the Dior-clad fashion models who had imprudently ventured into the Butte Montmartre neighborhood for a photo shoot.

The prices charged by luxury brands are sometimes extravagant: a pair of shorts made of spongy cloth—the kind people used to wear thirty years ago in gym class—is worth at most a few euros.

In 2002, Chanel was selling them for 320 euros (about 430 dollars).

Even at half the cost, nothing can justify such a price, not the raw materials, not the style, not some artisanal craftsmanship, still less

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Doing Away with Some Received Ideas an original “design.” Here, the swerve from the norm is maximal and, yes, shocking, not for moral reasons, but because it is an insult to good sense, epitomizing “insolent luxury” divested of all value apart from that of wearing a certain label. There is no cause for complaint, then, about counterfeits: when a luxury brand copies a banal product, like gym shorts, the banal product has no qualms about—and no difficulty—copying it in return, and that’s exactly what the luxury brand deserves. The professionals themselves acknowledge this: “If showing off, artifice, and provocation get the upper hand on what’s simple and true, then prices become obscene.”46 This is the sort of luxury that exposes itself to criticism, when, like a skittish horse, it makes one swerve too many times, and, moreover, is on a downward swerve: a swerve toward the forgetting of the most elementary values and of their hierarchy, which places the survival of the many above the pleasure of the few.

“Luxury? It’s an overrated concept that has no value whatsoever in an era in which poverty and war are rampant,” said Giorgio Armani while introducing his new men’s collection for Emporio, inspired by workers’ clothing, in early 2002. “I want to make young people understand that it is absurd to prostitute oneself or to steal in order to buy a brand-name purse. People who spend half their salary to buy an article of clothing are idiots,” said Miuccia Prada, going still further.47 Of course, it is easy for us to remind them that they are themselves among the leading world players in the luxury sector, and that the idiots in question are the ones who keep their bank accounts in a healthy state. But such bursts of indignation are nonetheless indicative of the downward swerves that luxury is capable of executing. It is inevitable that from time to time these swerves should trigger some healthy—and generally futile—protestations.

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Luxury and the search for meaning

Definitions of value are becoming more complex as the world shifts from an institutional focus to an individual focus and from an economy of things to an economy of ideas.

Brands must evolve from being businesses to being citizens.

New ways of working go beyond following instructions to the kind of open-ended thinking necessary for leadership and creating art.

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Our premise in this book is that luxury brands have an innate leadership capacity. They can build business models that are in tune with the evolving expectations of society and serve as role models for individuals and other companies. Further, by working like artists, beyond the constraints imposed by markets, luxury brands can affirm the very essence of what qualifies them as luxury: the ability to present a point of view that shapes how people think and what they desire. To do so, however, they must shed certain entrenched and outdated assumptions about what people expect of luxury. Class, status, and aspiration are becoming ever more ad hoc notions, anchored more in an individual’s psyche and personal

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values than in the dictates of a social hierarchy. So, luxury firms must think laterally about the value they offer, how that value is encapsulated and communicated through their brands, and how they go about building it through their work.

Value was once contained in the practical function of a product.

Then, in the mid-20th century, companies learned to manufacture demand by playing on consumers’ emotions. Rather than being set by the simple market forces of supply and demand, value started being determined by a wider group of stakeholders.

Suddenly, the transaction dialogue became a peanut gallery of the opinions of friends, family, neighbors, colleagues, and so on. This means that if value used be a reflection of the price the consumer would accept for a given product, today value is an infinitely more complicated calculation, balancing features and perceptions, real and imagined benefits, and financial and psychological costs. What was once a label, a maker’s mark, which then evolved into a point of lifestyle affiliation, is now a signifier of a philosophy, a culture, and a set of values that the consumer can support, ignore, or disparage.

If, in the past, the brand belonged to the artisan, founder, or manufacturer, it is quickly becoming community property.

Tomorrow, the brand will be an even more nuanced corporate identity, based on the company’s role in an interdependent world. It will encompass aspects of being a manufacturer, an employer, and a neighbor – a complete member of society. And, as society’s most visible citizens, brands are expected to show leadership. This is where luxury brands in particular can excel.

Figure 4.1 shows this evolution of value, brands and the nature of work from being imposed by the market to being rooted in art and leadership.

Luxury and the search for meaning

Past

Present

Future

industry

technology

information

set by market

set by stakeholders

set by community

end

means

consequence

Brand

based on product

based on affiliation

based on contribution

Product purpose

utility

experience

fulfillment

labor and production

knowledge and synthesis

art and leadership

immediate

strategic

limitless

Economic driver

Value

Role of money

Work Extent of vision

Figure 4.1

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The evolution of value, brands and work

The abstraction and fragmentation of value Human existence has been characterized by a single theme since the beginning of civilization: the search for knowledge and meaning.

This is true of individuals and society as a whole. The 4th-century Greek philosopher Plato identified the meaning of life as attaining the highest form of knowledge, from which all things derive utility and value. Aristotle, his student, evolved this thinking further to conclude that ethical knowledge is general knowledge, giving people the ability to think and act virtuously. This evolution had parallels in cultures and religions beyond the Western tradition, being at the heart of Hinduism and Buddhism. In the 17th century, René Descartes coined the phrase “cogito ergo sum” – I think therefore I am. His peers, Enlightenment philosophers, applied previous ideas of knowledge and virtue to the relationship between individuals, and between an individual and society at large, leading

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to civic notions of freedom, equality, rights, and citizenship.

Ultimately, with the rise of science over faith in contributing to our knowledge, these streams of thought were integrated into the study of human psychology and neurology in an effort to trace thousands of years of philosophy to its biological origins. That is not to ignore its application in everyday life. Even Adam Smith, the 18th-century author of The Wealth of Nations and founding father of economics as a profession, was not an economist but a moral philosopher. He was not so much interested in money as in the efficient and ethical distribution of resources throughout society.

The pursuit of meaning and knowledge generated two, more tangible phenomena that have direct implications for brands: the abstraction of value and the fragmentation of society, which together diminish the authority of institutions.

Value was originally based on growth because resources were physical. To create value, a society had to conquer new territories.

Richness came from empire building, allowing countries to access and control larger quantities of land and people to extract raw materials, minerals, crops, labor, skills, taxes, and so on. Individual success was also measured in the accumulation of wealth, leading to influence and power over others. Businesses were the machinery of empire building in the colonial era. They followed in the steps of explorers, missionaries, and ideological pioneers to establish commercial control of new territories and administer the transfer of wealth back to the home country. Modern companies are the heirs of this legacy, which explains the continuity of this belief system in business right through industrialization and into the modern era.

Business and, by extension, economic processes and governments are still centered on growth as a means of security, stability, and status. This translates to the individual propensity to measure success according to wealth.

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But, as we established earlier, people are shifting their focus away from material prosperity to a broader vision of quality of life, which balances wealth with ideals of health, happiness, meaning, and fulfillment. At the broadest level, we see how this awakening is changing the way government thinks. New measures are challenging the primacy of GDP for determining the prosperity of countries.

The Kingdom of Bhutan got the ball rolling in the early 1970s with a Gross National Happiness indicator to accompany its economic progress measures. Long considered a curiosity among economists and social scientists, it began to serve as a model for others as the idea of sustainable development gained traction through the 1980s and 90s. The United Nations (UN) launched the Human Development Index in 1990, measuring national incomes alongside life expectancy and education. After the 2008 recession caused many to question the organization of economic systems and the imperative of growth, other measures entered the game of defining more subjective measures of progress. State statistical agencies in Australia, Canada, China, France, and the UK subsequently began to ask their citizens how they were doing emotionally, not just materially. The constitutions of Ecuador and Bolivia identify quality of life as the goal of sustainable development. The OECD launched their Better Life Index in 2011, measuring 36 countries’ performance according to 11 indicators, including income as well as areas such as civic engagement, personal support networks, work–life balance, and self-reported life satisfaction.

The second phenomenon, driven by the pursuit of wellbeing and fulfillment, is the steady drift of civilization from placing value on institutions to placing value on individuals. It is the common thread that binds the emancipation of slaves and serfs, the recognition of fundamental human rights, the rise of republics, universal suffrage, civil rights, the fall of communism, the waning influence of organized religion, right through to the rise of social

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media. Historically, people were dependent on institutional benefactors for their survival, security, and wellbeing. Way back, this role was fulfilled by tribal structures, which eventually evolved into feudal, martial, and monarchic systems with close ties to religious establishments. While even those autocratic systems governed only with the consent of the governed, the disparity in the information, influence, and authority allotted between rulers and their subjects was such that the social contract remained relatively stable. With industrialization, civilian government and business assumed the bulk of political and economic power.

This was the first, great worldwide social upheaval. With varied levels of efficiency and fairness, these new structures ensured that resources were distributed throughout society well enough to maintain order. Through them, a new social contract was born: no longer rigid and hereditary but more flexible, juridical, and mercantile, into which one entered voluntarily and within which one could navigate and negotiate one’s lot.

Now, these too are changing. Developments in IT during the past decade have allowed this fragmentation from institutions to individuals to truly take hold. Since 2000, thanks to the rapid growth of the Internet, its convergence with mobile technology, and the advent of social media, societal structures are breaking down and the established rules of the game are changing. Technology gives us access and the ability to exchange a vast amount of information, which provides a powerful platform for expression, creativity, and innovation. Individual voices now have many more outlets than institutional voices did just a few decades ago. This has changed the power dynamic. It has broken the control of large, established entities over their territory and lowered barriers to entry for even the smallest competitors for political influence and market share.

For example, after less than a decade in existence, The Huffington Post, a “blog of blogs,” now stands shoulder to shoulder as a media

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platform and influencer with venerated, century-old titles like The New York Times and Le Monde, having won a Pulitzer Prize and launched international editions in seven languages.

What we are experiencing now is a fragmentation of traditional structures, which will eventually lead to new social, economic, and political systems. As technology increases transparency, order will come less from structural skeletons, but rather – like the stones in an arch – from the pressures we exert on one another.

As a result of these two phenomena, people are free to design and pursue work they love in the knowledge that passion is a more reliable path to fulfillment than the material success from a series of promotions. Even baby boomers, who had grown prosperous by following well-worn career paths, are not indifferent to new ways of thinking about a more balanced way of living and working. In a networked world, all value has a chance of finding its market rather than having to conform to a role predefined by an institution. Generations X and Y grew up with the opportunities fostered by mass media and the Internet, and no longer feel obliged to aim for the security that a corporate career path provides. To these generations, work looks more like a productive form of play rather than toil. If the baby boomers are thinking about work–life balance, the younger generations are focused on work–life blending, where both form a single, pleasurable existence. If earlier societies and markets depended on the efficient organization and distribution of labor, today people can reorganize themselves into like-minded communities and markets that are independent of geographic proximity and even personal contact. People no longer have to live in big cities and commercial capitals in order to connect to markets and prosper. The opportunities provided by technology offer liberating alternatives with greater personal and professional autonomy. Generation Z, now in elementary school, accustomed

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from birth to having a world of knowledge and possibilities at their disposal, will be even more inclined in this direction.

Value is no longer defined in monetary terms. It is now qualitative, individual, even fluid.

How brands create meaning The importance of this evolution for brands cannot be overestimated.

On the one hand, companies are being challenged to relate to individuals – internal and external stakeholders alike – in a way that responds to their search for wellbeing, meaning, and fulfillment. On the other hand, brands have lost the lock on authority and the ability to control definitive messages.

It is forcing businesses to think long term and holistically about their activities and integrate more sustainable and socially responsible practices that respond to individuals’ concerns. Brands are being asked to behave like fully fledged citizens of the community and not just businesses in a marketplace. What was once a civil society argument from NGOs and consumer protection movements for corporate ethics is now gaining traction within the business establishment. Originally arising from public pressure and social and consumer activism, responsible business is increasingly supported, even demanded, by employees and investors. Companies are realizing that to attract and retain the best talent, they have to offer more than rising career paths and comfortable wages and benefits. They also need to provide meaningful work that gives employees a sense of contributing to the bigger picture. Socially responsible investment funds, such as the Domini Social Equity Fund, the Appleseed Fund, and the Winslow Green Growth Fund, once fringe vehicles, are becoming more mainstream and garnering coverage from the financial media. So are stock market indices, such as the Advanced Sustainable Performance

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Indices, FTSE4Good, and the Dow Jones Sustainability Indices, which help investors track companies’ combined financial, environmental, and social performance.

Beyond that, companies must be sure that these practices are fully integrated into their corporate culture and ways of working, not just projected to enhance their brand image. With institutional trust at an all-time low, individuals are more likely to believe one another than any “official” positions coming from within the brand. The whole of a brand image used to be based on centrally controlled and crafted corporate messages. Through their corporate communications, advertising, and marketing machines they had influence over public opinion. Now, however, they compete with a mass of independent, unaccountable, and even anonymous voices – bloggers, social media followers, and others – who are forever scrutinizing brand messages, comparing them with company behavior, and broadcasting their experiences spontaneously and instantaneously to a vast audience.

Any intern with an Instagram account and a viral capacity in the tens of thousands has the potential to torpedo a well-tended brand image.

Controlling brand image today is a complicated affair, a 360-degree reality check; perilous if there is even a hint of inauthenticity.

Authenticity is therefore a key ingredient of meaning, the search for which is at the heart of the human condition. The luxury customer is even more sensitive to meaning because it is what explains the difference between the physical value of a luxury product and its price. The meaning of a luxury product to the customer is potentially limitless, which is what gives the customer enormous price elasticity and allows luxury brands to charge higher prices.

The uncompromising nature at the origin of luxury brands has allowed them to build the reputations they have today. Their pursuit of perfection was the characteristic that endeared them to their elite customers and, by extension and aspiration, to the

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larger public. The product gave meaning to the brand in those days.

Hermès Sellier and Louis Vuitton Malletier, the complete, original names of two of today’s most powerful luxury brands, speak to their very specific origins as saddlers and trunk makers. The brand was more of a maker’s mark than the brands we know today. If a certain artisan was more sought after thanks to a royal warrant or by being fashionable among a style-setting elite, the benefits were more in the steady stream of commissions rather than the ability to charge a premium based solely on image. Advertising, to the extent that it existed, was focused on raising awareness and stirring desire for one’s own product over a competitor’s. It had not yet evolved to manufacturing a desire that did not already exist. Manufacturers competed on product attributes that were innate to the company and its way of working, not on abstract notions of meaning.

In the postwar period, with the expansion of mass media and the ripening of the advertising and marketing professions, brands developed broader lifestyle value propositions. The widening and diversification of product offerings mandated this change to give meaning to a more heterogeneous brand offering. It was a natural evolution, as houses worked to keep up with the times and integrate the visions of new ownership as they passed from one generation to the next, or took on new investors and creative directors. Coco Chanel, who started out making hats and grew into women’s wear, took her vision of the modern, emancipated woman from clothes to fragrance in 1920, with the launch of Chanel No. 5.

Louis Vuitton followed a natural progression from making trunks to smaller cases attuned to evolving travel and dress styles: air travel, shorter trips, less formal attire, and so on. Bags intended for everyday use eventually became the mainstay of the brand, which went even further in the 1990s, expanding into apparel, watches, even interior objects and books. Younger brands, such as Christian Dior, Yves Saint Laurent, and Ralph Lauren emerged directly with

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a varied product mix, or quickly leveraged their reputations in one field, such as fashion, to conquer others, such as fragrance and cosmetics. Versace, Armani, and Bulgari have stretched their brands as far as the hotel sector. In 2009, Hermès collaborated with Wally, an Italian shipbuilder, on a revolutionary design for a yacht. With products often developed under license agreements, the brand went from being a maker’s mark to a kind of endorsement of the wares produced by others under its aegis. Rather than being defined by a product, the brand became a signifier of a lifestyle. The lifestyle projected by a brand gave it its meaning by representing not just the customer’s possessions, but their values and affiliations.

Today, customers expect brands to provide meaning and social media provides possibilities for audience engagement. This pushes brands further still: many have developed content that takes brand communications from the traditional function of marketing to realms such as exposé and editorial. Whether it is a blog or Twitter feed disseminating a day in the life of a celebrity designer, or elaborate films made in collaboration with artists and directors, product brands are slowly turning into media platforms. As early as 2001, Bulgari commissioned acclaimed English author Fay Weldon to write The Bulgari Connection, a novel that integrated the brand into its storyline about British high society. This effort is almost quaint compared with more recent initiatives. LVMH’s digital magazine, Nowness, describes itself as a “curated destination for the culturally curious, a point of reference for leaders in media and style, and a creative community committed to discovering, crafting and showcasing exceptional work, in collaboration with exceptional artists.”1 Its content is available in English, French, and Chinese.

While LVMH brands do appear in its articles and videos, competing brands, such as Cartier, Gucci, and Chanel, also get an airing. Other topics carry no brand references whatsoever, focusing exclusively on dancers, musicians, novelists, other artists, and celebrities. Setting

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brands into a cultural context by creating a larger universe is the transformation of meaning from a product and lifestyle affiliation to an artistic and intellectual one.

Meaning is a combination of understanding the origins of something with its relevance to an individual in the present moment. For a brand that seeks to be timeless, as luxury brands do, relevance must also be projected into the future, so that the brand and the product can retain their value. This means taking a strong position for the brand today while grappling with the uncertainty innate to the evolution of society. It is impossible to predict future values and tastes. Here, intent matters in creating and maintaining value. Going back to the debates of ancient philosophers, who were preoccupied with the achievement and perpetuation of knowledge as the source of virtue and value, this means that meaning depends on the contribution of the brand to society – its purpose. So what contribution can a luxury brand make?

The work of art The purpose of luxury is contained in its role as an applied art form. Indeed, we established in Chapter 1, given time, luxury goods become artworks by their preservation and transmission over generations until they are eventually displayed in museums.

Art is no mere leisurely diversion. It helps us deal with uncertainty.

Art serves an essential role in boosting the intellectual process by helping us grapple with abstraction, teaching us to analyze complex, even incomplete information, challenging established assumptions about the world.

A work of art is an invitation to dialogue. This is particularly true of modern art. Beginning with impressionism in the late 1800s, and moving through fauvism, cubism, dada, surrealism, and to even more

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radical forms we see today, art has become less about representing the existing world and more about expressing emotional and intellectual ideas. It became less about conforming to rules than about exploring new territories. The modern artist puts out work that is not meant to be definitive but open to the viewer’s own perception, interpretation, adaptation, and appropriation. The art comes from the artist and it is created for the artist, as a form of self-actualization. But it is not about the artist. It is about the world.

With online, visual media making up a greater part of our information intake, the artistic abilities to both create and interpret are now crucial. In many instances, passive education via mass media consumption is displacing more traditional forms of learning.

This gives art a direct and urgent role in helping people accurately understand the world. One study by Australian researchers looked into the use of the Internet by children to educate themselves about human sexuality. The study revealed that driven by natural curiosity, children explore online representations of sex at earlier ages than schools and parents had anticipated. But the very specific nature of the images they discover (we are talking about pornography here) leaves them vulnerable to developing skewed and unhealthy attitudes towards human sexuality – unless they have an underlying ability to contextualize the information. As the study explains: “To be unable to critique imagery is equivalent to being illiterate in the modern world.”2 Alvin Toffler, the American futurist and expert in the communication revolution, puts it another way: “The illiterate of the 21st Century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn.” Here again, art is crucial because it is open-ended and ever evolving. If we are comfortable with art, we are comfortable with subjectivity and uncertainty. These are the two overwhelming characteristics of the increasingly abstract and fragmented society we describe. When information and power

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are completely democratized, when social structures are no longer anchored by institutions, but depend on a vast and complex web of individual interactions, we are stripped of the illusion of a reliable, predictable future. Rather than plodding a charted course, we must be able to adapt to ever evolving circumstances. To do that without getting lost, we must be able to envision what we are aiming for.

Luxury gives us this vision. Luxury’s link to art is based on more than a shared affinity for beauty. It is based in their mutual ability to abstract the meaning of value. Take the example of Ai Weiwei’s exhibition Dropping the Urn, where he transforms 5,000-year-old Chinese pottery by smashing it, dipping it in industrial paint, or applying commercial logos. Here, the link between luxury and art has three dimensions. One, the vessels, by dint of their age and anthropological value, are revered as art. To be able to possess one is a luxury. Two, their transformation (some would say their destruction) strips them of their aura of preciousness only to reapply it according to a different system of valuation … The substitution of one kind of value for another occurs when he displays the transformed urns in a museum vitrine, reinstilling value but replacing historical significance with a newer cultural one.3

Finally, there is luxury in the artist’s use of a rare and precious object towards his own ends. These three dimensions combine to create a comment on the destruction of ancient culture by modernity and call our attention in a dramatic way to what we choose to value. Is it the ancient object or the artistic expression? Which vase would you pay more for as a collector? In both its form and point of view, it also takes the risk of being controversial.

Luxury, like art, is an emotional business. It is one of the few businesses that leaves room for, even indulges and encourages the subjective and irrational. Creating luxury is itself an art form. In that, it is the business that is closest to the human condition. But

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unlike art, luxury is a celebration. Works like Ai Weiwei’s provide a harsh commentary, and so art can focus on a dark vision of reality.

On the other hand, luxury recognizes that taking a holistic view does not negate the importance of beauty and sensual pleasure.

Luxury holds out hope for a better future.

The machinery that has grown up around today’s luxury brands may be coldly calculated finance, merchandising, and marketing.

But desire does not follow algorithms. And luxury does not come from the opinions of focus groups. They can only give us their feedback on what already exists, whereas luxury is in the business of constructing ideals. Luxury depends on much more nuanced, sensitive, and unproven methods. These are key to luxury’s ability to surprise, delight, and dazzle by exceeding our expectations, by having a point of view and taking risk. In a sense, this is the true rarity of luxury. Not just rare in its quantity, but rare within the range of our experiences. Surprising, delightful, and dazzling are not common currency. To consistently provide them takes ingenuity and a vision of what could be.

For this reason, like art, luxury is a dialogue between the creator and the audience. No other category of consumer brands does this. A consumer may have a preferred brand of toothpaste, but the phrase will always be “honey, please pass me the toothpaste,” never “honey, please pass me the Colgate.” People will say “my blue shirt,” never “my blue Van Heusen.” On the other hand, “Who are you wearing?”, Joan Rivers’ famous question to celebrities on the red carpet, makes perfect sense to us. People regularly refer to “my Birkin,” “my Jag,” “my Louboutins,” “my Mac,” rather than referring to the bag, car, shoes, or laptop generically. The same way that a Picasso is always a Picasso. The brand name with the “my” qualifier is a testament to the level of appropriation that people project onto luxury brands, and the brand’s ability to maintain its identity even while being appropriated. As in any dialogue, both parties are

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transformed by the relationship. So, while the user may integrate the brand or product into their lifestyle, because the luxury product retains its identity even as a possession, it exerts an influence on its owner. It changes their perceptions of themselves and therefore their behavior. There is a pride in the object that translates into a sense of self-awareness and self-esteem. But this can only happen if the object is sufficiently significant and respected.

When a brand goes after rapid growth, it runs two risks. First, it is exposed to pressure to do whatever the customer wants. This is a particular problem in fashion, but the fashion cycle has now contaminated other parts of luxury, such as accessories, jewelry, even home décor, which are being pushed to churn out multiple seasonal collections. It started with customers coming into the store asking to see what is new. The desire to meet this demand for novelty took fashion houses beyond designing collections just two seasons a year, to creating bridge collections between seasons, such as cruise and resort collections, as well as capsule collections for specific markets and promotions, which all compete for the time, attention, and resources of creative directors, studios, workshops, suppliers, and so on. They do not have sufficient means to execute the brand’s vision through its product properly. Meanwhile, the fashion journalists, buyers, and even customers become so exhausted and jaded by the proliferation of choice that they lose interest. Quality and substance lose out to quantity, the product becomes meaningless, and the dialogue breaks down.

Sometimes, it is literally a breakdown. Suzy Menkes, now international editor for Vogue, previously editor for the International Herald Tribune, describes an ever accelerating “fashion treadmill,” which she points to as being partly behind “the decline of John Galliano, the demise of Alexander McQueen,” referring to the former’s substance abuse and the latter’s suicide.4 The Galliano incident, in particular, was an interruption of the dialogue between

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the brand and the customer. Following Galliano’s anti-Semitic rant, which had gone viral on social media, Dior were put in the position of having to do damage limitation, while even Natalie Portman, actor and the brand’s celebrity representative, spoke out against the designer.5 Suddenly, the product, no matter how meaningful, takes a back seat to the scandal. Both the Dior and Alexander McQueen brands were able to recover from their respective crises, but for weeks, news about the brands focused on the negative celebrity story rather than the positive associations of the product.

Second, the need for volume causes the brand to lose respect for the object. For example, French luxury brands, part of whose reputation is staked on being made in France, have expanded their production to Italy, Spain, Eastern Europe, even China and Vietnam to meet the volumes and efficiencies required of global business.

Suddenly, the French label is more about having been conceived in France, and even then, perhaps by an American or British designer.

While this is a natural consequence of globalization, the origin of what it means to be a French luxury brand suddenly becomes an abstraction. The headquarters are in France, but what about the rest? This forces luxury brands to create elaborate stories meant to deliver meaning the product itself no longer carries. The brand becomes a pageant of imagery that celebrates the brand’s reflection of itself rather than creating and communicating the meaning of the product. They lose the concrete audience interface of product, and the dialogue becomes monologue.

L’Odyssée de Cartier is a beautiful, animated, short film produced by the brand in 2012, in which a jeweled panther comes to life and explores a surreal landscape that spans Russia, China, India, and Paris. It hits all the brand codes as well as all the cultural clichés. It tells the story of what the brand has been, but gives no indication that the brand has a unique view of the world, nor does it give any indication of where the brand is going – except,

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perhaps, to the same emerging markets as every other luxury brand. In contrast, in Hermès Fingerskate, a live action film by Alexis Milant, a hand skateboards through an urban landscape constructed of Hermès products and packaging. The products are given meaning as the background to a person living their life, not as something to be held central and sacred. Both films magnify the product to superhuman scale. But while Cartier’s dominates the landscape, in the Hermès film, for the magnification to work, you must also magnify the hand into a full-sized person. This reflects the Hermès philosophy that the object is meant to integrate so completely into your life that it disappears, placing the emphasis on the individual. The Cartier film is institutional, monumental, speaking from a pinnacle to a massed audience. It is an address, a monologue. The Hermès film, perhaps partly because of its amateur style and technical imperfections, creates intimacy and dialogue. A brand needs both kinds of communication. When it communicates only as an institution, it risks losing the audience’s buy-in, especially at a time when consumers are more wary of overly manufactured brand image and more consciously aware of their own desires rather than those being fed to them by marketers.

Cultural critics point out how a disconnect between brand and audience is happening with art. Camille Paglia, author, scholar, and social critic, writes: “Unfortunately, too many artists have lost touch with the general audience and have retreated to an airless echo chamber.”6 Similar criticism has been levied against luxury brands for having retreated from their original positions of leadership and innovation into the insular world of glamour, fashion, and celebrity.

And while luxury brands increasingly rely on modern art to demonstrate contemporary relevance, the end result is that the two fields are only reinforcing their sequestration. As they get further removed from real-world interaction, they get separated from the inspiration that comes from the exchange of ideas. Art loses out to

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popular culture as a social influencer. And luxury cedes its leadership position, reduced to just so much expensive product. As they lose stature, they grasp for attention in other ways. Art critics complain of the endless stream of contemporary pieces that offer little more than the shock value of eroticism or desecration of religious images with excrement. Luxury pursues its own excesses with publicity grabbing baubles such as a $10,000 gold-plated Xbox video game console available at Harrods or the History Supreme, a $4.5 billion gold and platinum covered yacht by designer Stuart Hughes.

Despite the allusion to timelessness in the yacht’s name and despite the artistic ambitions, gestures such as these look increasingly like an extravagant lashing out rather than the true creative genius that gets incorporated into human posterity. Beyond the original media blitz, they do not stand even the shortest test of time before falling into anonymity or even derision. If luxury products lose the intellectual respect of worldly elites, so will the brands that make them. And the long tail of aspirational customers will fall away.

From labor to art Most brands are content with revisiting old concepts and jumping on fashion trends. But an abstract and fragmented world calls for leadership. This has two important implications for luxury. First, luxury brands, at the top of their league, must lead. Second, like luxury, leadership is an art form. In his book, Linchpin: Are You Indispensable?, Seth Godin, a leading thinker on management and marketing, provides a compelling description of how any job can be turned into the making of art.7 In mechanics, a linchpin is the crucial piece that keeps parts of a complex machine together.

In management speak, it is a person who is a pivotal part of an organization. While this function might be easy to define in a machine, the shifting dynamics of an organization mean that the

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linchpin has to be a good listener, a creative thinker, and a rapid adapter. A linchpin cannot afford to ossify in a fixed vision of their role. They have to look forward and anticipate what is coming.

Thus, a linchpin is a combination of artist and leader. A linchpin, like an artist or a leader, has no map to follow. To be a linchpin takes passion and the willingness to connect with others. They are driven by a sense of purpose, and rewarded by a sense of meaning in their work, which in turn provides fulfillment. This means that, more and more, people are looking to be linchpins.

To flourish, a linchpin needs an environment where they have the autonomy to take responsibility for risks and the criticism that comes with proposing something entirely new and unfamiliar. Because luxury does not follow the rules of other types of business, luxury brands are perfectly placed to provide this kind of environment.

Instead, too many companies rely on instruction, evidence, and rational arguments, anything that will reassure them with pre-existing proof of their future success. But what has worked in the past or for another luxury brand will almost certainly not work again. Tom Ford and Domenico De Sole were able to orchestrate a spectacular revival of the Gucci brand in the late 1990s. But Bally, which tried to follow the Gucci model, did not have the same effect.

For one thing, Bally and Gucci drew on different origins of heritage, biography, and affiliation, which means they need different routes to contemporary relevance. For another, the luxury customer is not looking for multiple replications of the same ideas.

Thus luxury brands are forever challenged to stake new territories with their own unique way of doing things. Luxury firms in their entirety must work like artists and leaders. Luxury brands need linchpins. It is accepted and expected that designers, artisans, artistic directors, even communications and marketing people will work like artists. Now they must be leaders as well. Fashion shows are elaborate theatrical or performance art productions. New product

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launches are accompanied by highly creative videos, advertising campaigns, and events. But this is not enough. Through their artistic expression they now must contribute to luxury’s purpose of engaging in a dialogue with society at large. Like artists, they cannot afford to segregate themselves into a self-congratulatory bubble of glamour and celebrity.

Furthermore, the whole of the organization that supports them must be geared to art and leadership. The administration of luxury – the finance, merchandising, and distribution aspects – is often oriented towards the brand as a business. But, as we said, the market now expects it to be a citizen. Personnel in these roles must have the ability and the authority to look beyond their defined roles and find solutions that support the purpose of the brand. Rather than looking to reinforce the brand by protecting its processes as an institution, they have to be looking for ways to integrate it into the community as a contributor to and leader of values, opinions, and practices. This is where art and leadership become intricately intertwined. Both art and leadership have the responsibility to break new ground. The goal of luxury is to be ahead of its audience.

If established and familiar brands are unable to recognize and respond to this, consumers now have a wealth of new, small, and eager substitutes from which to choose. While big companies struggle to adapt old ways of thinking and working, the competitive threat now comes not from their peers as from an entire universe of agile innovators who have the advantage of incorporating this culture into their mission, process, and communications right from the start. Smaller, niche, and local brands now have access to a global customer base thanks to information and e-commerce technology. Large established brands must compete with these new players for market share. This is especially true for luxury brands, which compete not just for

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consumers, but specifically for consumers who want to distinguish themselves from the herd. They are subject to the Veblen effect, which eventually drives luxury customers away from brands that are too present. The value of a luxury brand for these customers is not in the weight of popular endorsement, but in their own ability to claim to have discovered something rare and unique.

They are less motivated by the tried and trusted, and more willing to trust their own instincts in taking a risk on the unknown.

Discovery gives the consumer status linked to knowledge, and the opportunity to establish a personal connection with a brand that is not already surrounded by a mass of followers. It helps them feel like they were part of the process of introducing that brand to the world.

The challenge for luxury brands, then, is to find the true art in their work. This means that they must develop a nuanced understanding of the world. Not just its economic and retail trends, but a sociological and psychological understanding of human behavior – our changing notions of value and success, our evolving ambitions and fears. It is the behavior that creates the trends. Luxury brands must then use this understanding to propose a vision of the world, not just of themselves. Luxury brands have struggled with this last part in particular. They have put so much emphasis on guarding their precious reputations that they have most often chosen to play it safe, relying on old formulas, but becoming less and less impressive or compelling in the process. They trade on product, but in a world of ideas, that will not last much longer. To be sure, this means going out on a limb, exposing oneself to critique and counterarguments.

It also means being able to admit when they get it wrong and being grateful for the learning opportunity. This is true innovation, true leadership, true art. It has always been the key to business success.

In a world where everyone is expected to lead, and where everyone is becoming an artist, it is now utterly imperative.

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Notes 1

www.nowness.com/about.

2

Crabbe, M. and Corlett, D. (2013) “Eroticising inequality: Pornography, young people and sexuality?” Australian Institute of Family Studies seminar, April.

3

Gilsdorf, B. (2010) “Ai Weiwei: Dropping the urn.” Dailyserving, July 31.

4

Menkes, S. (2013) “Sign of the times: The new speed of fashion.” T Magazine, August 23.

5

White, B. (2011) “Dior ambassador Natalie Portman speaks out on Galliano.” The Telegraph, March 1.

6

Paglia, C. (2012) “How capitalism can save art.” The Wall Street Journal, October 5.

7

Godin, S. (2010) Linchpin: Are You Indispensable? Piatkus.

Luxury Fashion Branding: Trends, Tactics, Techniques Uche Okonkwo 9780230521674 | May 2007 | ÂŁ38.99 | $65 | $75 CAN | Hardback | 320 pages

This bestselling luxury fashion branding and management text brings an analytical business dimension to the marketing and corporate techniques of the luxury fashion goods industry. It will make engaging reading for anyone who wishes to learn about the captivating business of turning functional products into objects of desire.

Available to order at www.palgrave.com

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78

Luxury retail design and atmosphere ‘Only ever make splendid or awful impressions. The rest are forgotten.’

Alison Mosshart, musician

Luxury retail location The most popular slogan in retail is the following: The three most important things in retail are: location, location, location.

This watchword is used to emphasize the indispensable nature of an appropriate location in retail. Retail location involves more than physical space but includes the choice of a place that is most suitable for the sale of the products or services in question. An inappropriate retail location is difficult to overcome, irrespective of the feasibility of the rest of a company’s overall strategies. Poor retail positioning can also negatively affect a store’s accessibility and attractiveness to shoppers, regardless of the brand’s positioning. This factor is even more crucial for luxury brands because in addition to visibility and accessibility, luxury brands ought to be situated in the most elite and prestigious locations of the cities where they operate. Retail location is therefore of paramount importance to the luxury goods sector.

In general goods retailing, the choice of store location is determined through utilizing socio-economic pointers like population, geography and consumer disposable income. Other factors include human-traffic flow and in some cases, tourist-traffic flow. In addition, technical business models that aid the choice of store location have been developed by experts, including the ‘Catchment Area’ method and the ‘Central Place Theory’ method. The main aim of these techniques is to identify the most commercially viable store locations for optimal sales turnover. These models are, however, more appropriate for general goods retail, so they will not be discussed in this book.

Luxury brands have a central requirement for retail location choice. This is the ‘Prestige’ indicator. The main distinguishing factor between luxury retail location and that of mass-market retailers is the requisite need that luxury

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Avenue des Champs Elysées, Paris, a luxury retail heaven

brands have to position their stores in exclusive and high-status districts and cities, which are at the same time commercially feasible. The prestige store location reinforces the core brand values and the differentiated brand status of luxury brands. Prestigious retail locations also attract and retain a nichecustomer base while satisfying their ego needs during shopping.

In Paris, prestigious luxury retail locations can be found at Avenue des Champs Elysées, shown in Figure 4.1, and its environs, including Avenue Montaigne and Avenue George V. This district is also known as the ‘Triangle d’ Or’ or the ‘Golden Triangle’. Other locations are the historical Rue Saint Honoré, which is considered the global luxury fashion industry’s foundation, and its extension on Rue du Faubourg Saint Honoré and their environs. These streets are lined with several luxury brands.

The same pattern follows in other cities such as London, where the Knightsbridge area, including Sloane Street and Bond Street, is considered the epitome of luxury store positioning. In Milan, the ‘Quadrilatero d’Oro’ or ‘The Golden Rectangle’, which runs between Via Monte Napoleone and Via Della Spiga, is the luxury retail district. It features the stores of Gucci, Armani, Prada, Tiffany and Louis Vuitton, among others. New York’s prestigious shopping streets include Madison Avenue and Fifth Avenue and their environs, while in Los Angeles, Beverly Hills is the location of luxury fashion brands. Tokyo’s Omotesando district represents the equivalent of luxury store positioning in Japan, while other examples abound in several cities around the world.

In addition to being located in high-status districts, luxury brands need to be in the fashion cities of the world to ensure both brand visibility and commercial viability. The fashion cities are those that have the highest catchments of luxury consumers in terms of indigenous population and visitors.

They include Paris, Milan, New York, London, Tokyo and increasingly Los

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Figure 4.1

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Angeles and Hong Kong. Luxury brands usually begin their global expansion in these cities irrespective of the brand’s origin. In addition to these locations, other rising ‘fashion cities’, in terms of style and commercial returns, include Moscow, Shanghai, Bombay, Dubai and Johannesburg.

Strategic store location guarantees a brand’s visibility, which reminds the consumer of the brand’s existence and core attributes. The store location also acts as an extension of the brand’s personality and is used as a tool to ensure the vitality of the brand. Although luxury brands ought to be at the right locations to reflect their ‘prestige’ status, careful attention should also be paid to hasty store expansion at the same location in order to avoid over-exposing the brand. For example, Japan is host to numerous luxury fashion stores which often have multiple stores within the country, like Coach, which has more than 100 stores in Japan. This strategy ensures high sales returns, but at the same time it is important for luxury brands to attain the right balance between commercial feasibility and brand over-exposure. This can be done through a continuous evaluation of the costs and benefits of extensive store openings against the long-term effect on the brand equity. The ‘prestige’ brand attribute of luxury brands should be maintained through the store location choice, while pursuing global growth and expansion.

In addition to exclusive stand-alone stores, luxury brand store locations are also found in high-end departmental stores, where they rent retail spaces.

Such department stores include France’s Galeries Lafayette, Printemps and Le Bon Marché; America’s Bloomingdale’s, Sak’s Fifth Avenue and Macy’s; the UK’s Harrod’s, Selfridge’s and Harvey Nichols; and Italy’s The Galleria Vittorio Emanuele in the Piazza del Duomo. Others are Japan’s Mitsukoshi, Core, Matsuya, Seibu and Matsuzakaya in the Ginza district of Tokyo; and Hong Kong’s Lane Crawford. Other parts of the world also have impressive high-end department stores, which are emerging so fast that the level of competition has more than doubled in the last five years. Notable examples are the world’s tallest building, Taiwan 101, where brands like Chanel, Prada, Loewe and Yoji Yamamoto have stores; and the highly publicized Dubai Mall also known as the Burj Dubai building, still under construction, set to become the world’s largest shopping centre on completion. Other retail monuments in the Middle East include Dubai’s Mall of the Emirates, which houses almost every major luxury brand as well as a five-star hotel and a ski slope; and the Villa Moda store in Damascus.

In Russia, luxury department stores include the Grand Palace in St. Petersburg and the new ‘Luxury Village’ in Moscow. India is also not left out in prestigious department stores, with its opulent shopping area at Mumbai’s Taj Mahal Palace & Towers and the Hotel Oberoi. Also, countries that are usually classified as the ‘rest of the world’ or ‘other countries’, by luxury brands, where luxury retailing is still in the introductory phase, are catching up with the construction of retail and entertainment malls. For example, British luxury departmental store Harvey Nichols recently opened a store in

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Store concept The store is an integral aspect of luxury retailing and is crucial in representing the brand identity and meeting the expectations of visitors. The store is often the first point of real physical contact between consumers and brands.

A brand’s identity is mostly projected through the store concept, from where an image is either crafted or harmonized. This image leads on to a mind positioning and internal judgement of the brand by consumers. For example, if a consumer sees the advertisement of a luxury product in the print media and visits the store afterwards, they would expect synchronism between the image that they already have in their minds based on the advertisement and what they see and experience in the store. The advertisement is like the cover of a

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Istanbul, Turkey, and plans a Russian expansion. Also South Africa’s largest city Johannesburg has the Sandton City Shopping Centre, often described as a ‘World of Splendour’, where Louis Vuitton has a store. In addition, the Nigerian city of Lagos has just seen the completion of two high-end retail shopping centres, although luxury brands are yet to enter this market. At the South American end, Brazil has witnessed the growth of independent retailers of luxury brands like Daslu in São Paulo, in addition to other luxury departmental stores in Brasilia and Rio de Janeiro. In most cases the retail spaces in these departmental stores are leased by major international luxury fashion brands.

Retail location techniques can also be exploited in order to create a more viable niche for luxury brands. This can be done by creating ‘special products stores’, which retail specific goods not usually found in the brand’s permanent collection range. These goods could include limited edition products, special order goods, bespoke products and co-branded goods. Several brands have adopted this strategy, in following with the current consumer needs of constant delight and individualism. A notable example is sportswear brand, Puma, which currently has a New York flagship store called the ‘Puma Sports Fashion Lab’, devoted to its collaborative product ranges with Alexander McQueen, Christy Turlington, Philippe Starck and Neil Barrett.

Nike also has a concept store called the ‘Nike-ID Lab’, which retails only limited edition products. Although several luxury brands have stores which retail specific products from the permanent range, the luxury sector is yet to make the concept-store retail location technique an important aspect of its retail strategy.

Retailing is a core aspect of the luxury fashion business. However, retailing doesn’t end when a brand has successfully found a location. There are several additional tactical factors that determine retail success, and which make up the retail strategy. The retail location choice is the first step to the retail strategy, followed by the store concept.

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book and the store is the actual book contents. The story should be in accord with the cover.

The store concept comprises the design, the atmosphere, the size and impersonal selling techniques.

Design The design function is one of the most visible fundamentals of retail store strategy. It refers to the store layout and elements of its aesthetics such as its colours, decorations and lighting, among others. The effective combination of these features often result in enticing and captivating consumers and, of course, higher purchase probability.

The layout of a store greatly contributes to its image and manipulates traffic flow. In the conventional retailing of consumer goods such as supermarket retailing, the store layout choice follows the most commercially realistic pattern, which is often an outline called the Grid-Flow Layout. This layout features long vertical and horizontal rows of display units of goods with a single entrance and a separate single exit. Another general retailing pattern is the Guided-Flow Layout, with a pre-determined long path from the store entrance to its exit, as found in several furniture stores. In mass fashion retail, the most common and most feasible store layout is called the Free-Flow Layout. This pattern features several entrances and exits to the store and allows free movement of customers. It also provides the store with a better image and enhances the consumer’s mood and feeling. An additional advantage of this pattern is that shoppers are likely to stay in the store for a long time if the atmosphere is complementary. However, its disadvantage is that shoppers might fail to spot several products as a result of the lack of a main entrance and a central exit.

In addition to these essential layout considerations, there are other factors that are essential in the selection of the luxury store layout. The first factor is to ensure that the layout best reflects a prestigious image and complements a luxury atmosphere. The second factor is to ensure that the layout optimizes the surface area while providing the customer with adequate comfortable space and distance to appreciate the store and the brand. The third factor is that the retail layout choice ought to provide room for a form of in-store animation and entertainment which enhances the image of the brand.

Although each brand has a unique store arrangement that best reflects its brand personality, the luxury attribute is best shown through variations of the Free-Flow Layout and the Boutique Layout represented in Figure 4.2.

In addition to the store layout, the colour scheme that a brand adopts in its store design is essential to its image and positioning. This ensures synchronization of the brand’s identity with the store representations, and cannot be over-emphasized. For example, the dark colour tones found in the stores of Alexander McQueen evoke a smouldering sexiness which is associated with

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Figure 4.2

(b) The free-flow store layout

Store layouts

Note: Lines and boxes represent product shelves.

the brand. Also the gold and brown colour tones found in Louis Vuitton stores are in harmony with the brand’s visual identity and luxurious brand appeal.

The Chanel monochrome black and white, which evokes classic chic, is felt both in the stores and in the other aspects of the brand’s communications.

Colour can also be used in retail stores to influence shoppers’ moods and increase purchase probability. The appropriate management of colours through knowledge of colour functions often complements an effective store design. For example, the colour red is considered to be exciting and escalates the body’s metabolism, and yellow is believed to be the colour of intellectual and mental stimulation. Blue is considered as the colour of calm and dignity while green fosters harmony and uplifts spirits. Brown is considered calming and wise; black is sexy and sophisticated; while white evokes purity, innocence and agelessness.

Another crucial aspect of retail store design is lighting. It is highly essential as a tool for the manipulation of space and enhancement of colour and visibility. Effective lighting can influence the size appearance of a store, making it appear large, small or long. Lighting can also affect the way a store’s decorations are viewed, affecting the colour tones of both the store and the products displayed within the store. It is important to place strong lighting in the product display sections of the store, irrespective of the overall mood and atmosphere. Other design tools such as mirrors and glass are used to manipulate lighting to create an impression of a larger space. For example, large well-positioned mirrors can reflect lighting from one window, creating the appearance of two windows in a store with only one window.

Decorations within the retail store are also vital in luxury fashion retailing. The luxury store is more than a selling channel, it is also a means of artistic projections that present expertly crafted goods and an appealing brand image. The aesthetic appeal of a luxury fashion store is one of the major

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(a) The boutique store layout

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differentiating factors between a luxury store and a mass fashion store.

Luxury store decorations may be in the form of the now commonly used wallmounted plasma televisions featuring videos of the brand’s fashion shows and product care guidance. Store decorations may also be thematic or seasonal.

Luxury fashion stores are expected by consumers to have highly appealing store decorations that add to the brand’s cachet. The messages of the store decorations should therefore go beyond the surface beauty and appeal of the products to the inner subconscious and psychological levels of the consumers’ minds.

An example of an impressive store design concept is Louis Vuitton’s flagship store located at Avenue des Champs Elysées, Paris. The store, which covers 1,800 square metres of retail space, embodies both high artistic and architectural design and has been described as ‘Art à tous les étages’ or ‘Art on all floors’. The concept of art and architecture has been transferred to every aspect of the store design and layout including the elevator. Unlike most retail stores where the elevator is a functional instrument that transports consumers from one floor to another, Louis Vuitton’s store uses its elevator as a statement of creative imagination. The elevator, which is essential for the store’s seven floors, is completely decorated in black and is empty of any signal, light and sound. As the lift transports visitors from one floor to another (with an escort), the total darkness and stillness that envelops the passengers is a powerful force of art and imagination. Its strategic purpose is to stimulate the loss of the senses of vision and sound. The effect of this sensory loss is the invigoration of the imagination of the person travelling in the lift because they find themselves in a space that is the opposite of the high visibility of the store. The intent is that when they eventually arrive at their desired floor, they will be likely to look at the products differently and appreciate them better. Although physically and sensually empty, the lift space is abundantly rich in the imagination, experience and psychological space of the customer riding the lift. Such is the level of interactivity expected between luxury stores and consumers.

Another example of a notable luxury store design is the Hong Kong boutique of Chanel. The store concept is an emulation of Coco Chanel’s Parisian apartment, and its design displays include all the style elements associated with Coco Chanel during her lifetime, which have formed signature elements of the brand. These range from a 32-metre strand of pearls hanging down through three floors; tweed-replicating black and white lacquer panelling; chandeliers; and a diamond-dust portrait of Coco Chanel. The strategic reasoning behind this store design is to create a space where all the attributes associated with the brand’s founder, Coco Chanel, are featured.

Mass brands such as Nike are also capitalizing on using the store concept to appeal to the lucrative upper-end market. The sportswear brand’s Nike-ID store on New York’s Elizabeth Street is designed to resemble an atelier where bespoke goods are manufactured. The store also retails only limited edition goods.

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Figure 4.4 The André Ross store exterior, Hong Kong, harmonizes with the brand’s personality and image (2006)

Luxury fashion stores are required to have magic, energy and life in order to inspire consumers and also become embedded in the consumers’ memories.

Atmosphere In simple terms, atmosphere is the sum of the feelings that consumers experience within a store interpreted through their senses. It is a blend of sensory communications that exists on the subconscious and psychological levels of consumers, and is associated with terms like ambience, mood, impression, background, character and sensations. Atmosphere is connected with the five human senses: visual, aural, tactile, olfactory, and taste; and an additional sixth sense, ‘emotion’. Appealing to consumers’ visual and aural senses is essential in creating the appropriate atmosphere, but it is not sufficient in the current luxury marketplace. A complete sensory package comprising all the senses is required in luxury retailing.

Luxury goods are categorized as sensory in nature, which means that they rely heavily on intangible factors to ensure sales and to promote the brand.

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Figure 4.3 Le Bon Marché departmental store, Paris, combines the free-flow and boutique store layout patterns (2005)

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Since sensory elements such as the visuals, touch and smell are intangible in nature, they ought to be manipulated to complement the intangible qualities of the brand like the brand personality and image. This will ensure that the atmosphere of the selling space harmonizes with the brand and reduces the risk of the brand losing its cachet.

Consumers mostly remember their experiences in a luxury store based on the feelings they had during and after the store visit. These feelings are shaped by their perceptions, which are influenced by the store’s atmosphere through visual and other sensory elements. The visual aspect of a store is affected by its colour, lighting, size, shapes, packaging and so on, and visuals play a key role in defining the mood that a store evokes in consumers and has the highest level of impact on consumers’ interpretation of a store’s atmosphere.

The aural sensory element connected with sound (or in some cases noise) in a store also contributes significantly to the mood and ambience of the store.

Sound considerations include music, volume, pitch, jingles and noise distractions. For example, in conventional fashion retail fast music such as pop is used during peak shopping hours to encourage high expenditure and impulse purchases while at the same time unconsciously promoting quick exits in order to accommodate more shoppers. Slow music on the other hand is used during low shopping hours to encourage shoppers to linger in the store, thereby increasing their purchase probability. Luxury brands could replicate these features through a higher level of application. For example, the choice of sound should not only focus on sales returns, but must complement the brand personality. In addition, luxury stores ought to avoid every possible noise distraction and retail gaffe that could disturb shoppers, including telephone exchanges of sales assistants.

The sense of touch or tactile sense is highly important in the luxury fashion store atmosphere. Luxury consumers have a strong need to touch and feel luxury goods before purchase. As indicated earlier, luxury goods are sensory in nature and consumer responsiveness to retail and product design is particularly connected with the sense of physical touch. The tactile sense is also described by the words ‘emotion’ and ‘feeling’. This indicates that the sense of touch is linked with the emotional response that luxury brands strive to arouse in their consumers.

The olfactory sense or the sense of smell is also an important influential factor in luxury goods retailing. The sense of smell has become more crucial in luxury goods retailing because several luxury brands have extended their product range to include fragrances and cosmetics, which rely heavily on the sense of smell. Often these products are sold in the same stores as apparel, leather goods and other products manufactured by the brand, which emphasizes the importance of the sense of smell in luxury goods retailing.

Also, every brand has an associated scent and this should be perceived in the store. Consumers do not expect to visit a Hermès store and find that it smells of Chanel No. 5; or to visit the cosmetics section of a luxury brand’s

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The store size Store size is an important consideration in the store concept of luxury brands.

In choosing the luxury fashion store size, the unspoken rule of thumb among luxury brands seems to be ‘the bigger the better’. Luxury brands currently vie to outdo each other in the development of colossal stores mostly within flagship retail centres. For example, Louis Vuitton’s flagship store in Paris covers 1,800 square meters over seven stories, while its New York store is set in a 20-storey building. Chanel has a 10-storey size store as its Asian flagship in Tokyo. Armani’s planned Tokyo store opening in 2007 will cover 86,000 square feet over multiple floors. Also, Chloe’s flagship on Paris’ Avenue Montaigne is 2,000 square feet, while Fendi’s largest store is located in a seven-story palazzo in Rome. Pucci’s flagship store in the brand’s hometown of Capri is 324 square feet. And the list goes on. In some cases, the store sizes of luxury brands are even larger than those of department stores, where space is a crucial determinant of retail prowess.

Adequate store space is crucial in luxury goods retailing and the largesized stores have the additional role of making a bold statement of the brand’s strength, austerity and personality. These factors are essential in the image development and preservation that makes luxury brands appealing to customers. Accordingly, although a giant store serves commercial purposes (because more goods can be displayed), large retail spaces also have underlying importance in luxury goods retailing. So, large retail space is a positive selling point and should be implemented wherever possible. However, the

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store to find that it smells of leather. The minimum olfactory requirement for luxury stores should be to smell fresh, clean and distinct.

The sense of taste is also increasingly being featured in the luxury fashion arena. Luxury brands like Giorgio Armani, Roberto Cavalli and Pierre Cardin have extended their offerings to include products that require the use of the sense of taste, such as sweets, chocolates, wine, champagne, vodka and coffee. Although these products highlight the increasing relevance of the sense of taste in luxury retailing, taste remains the least relevant of the senses in the overall retail of luxury fashion goods. Also, products that require taste are often distributed through other more appropriate channels like restaurants and food halls of major luxury departmental stores.

The additional sensory element of ‘emotion’ is also critical in luxury goods retailing. As indicated earlier, luxury brands present and retail their products through reinforcing the brand’s aura and appeal, which produce emotional responses from consumers. This emotion stems from the consumers’ overall feelings in the store and encompasses all the elements of the retail space, the products and the services. The feelings are then transformed into longing and are stored in the consumer’s ‘memory bank’. They are pulled out when decisions regarding the brand are required, which is often.

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strategic question related to luxury store size is whether ‘bigger’ automatically translates to ‘better’ and whether the size of luxury stores influences luxury consumers.

Impersonal selling This is the art of product display and store layout manipulation that promotes the customer’s independence during shopping. Impersonal selling encourages the customer to move freely within the store and to spend as much individual time as possible without relying on the assistance of sales staff. It is a tactic that aims at providing a total brand experience and encourages impulse purchases.

Impersonal selling is the opposite of personal selling. It enables customers to request personal selling services when they actually need them, without feeling that sales assistants are crowding them. In several cases, unsolicited personal selling services come off as hard selling, which is often a put-off for consumers. Impersonal selling on the other hand empowers customers and in most instances is also more convenient for customers.

In addition, impersonal selling can be used to dispel misconceptions and put consumers at ease. Some luxury consumers feel intimidated by luxury stores because of the notion that such stores and staff have a cold and superior disposition. Impersonal selling is a way to counter this perception.

Although the luxury store should have adequate sales staff on hand to assist shoppers, personal service is most effective when it is granted on request.

The additional benefits of impersonal selling include lower labour costs for the companies that own the brands and, in some cases, less floor space utilization. Impersonal selling techniques include product grouping, product spread, space liberty and hot-spots for bestsellers or new products, among others.

In designing the store concept, luxury brands are required to maintain the attributes of creating a desire and an aspiration, while ensuring sales feasibility. These will ensure that the consumer benefits from both the functional and socio-psychological gains of using luxury products.

Retail extension The retailing scene has undergone dramatic development in the last three decades and continues to evolve. The current consumer culture has embraced shopping as more than an act of necessity. Shopping is now a leisure, cultural and entertainment activity in several parts of the world. For example, ‘Mall Shopping’ is currently a major pastime in Dubai, London and most American cities, and has become a strong competitor for other forms of arts and cultural activities. The phrases ‘Meet me at the mall’ or ‘Let’s do the mall’ is becoming as common as ‘I need a glass of water’.

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Retailers are also responding accordingly through providing consumers with what has been dubbed in marketing circles as ‘Retailment’, a combination of the words ‘Retail + Entertainment’. This concept involves the combination of retail, leisure and entertainment services in a commercial location.

Most retail establishments such as shopping centres now also have leisure centres, restaurants and cafés used as relaxation, refuelling and meeting points. Retailment has also been adopted in the luxury goods retail sector. For example, British luxury retailer Harvey Nichols is known for both luxury goods retail and gastronomic expertise. Also, The Mall of the Emirates shopping centre in Dubai has a ski slope although the mall is located in the middle of a desert. Other luxury departmental stores like Printemps in Paris also provide in-store entertainment for shoppers and spectators alike.

The use of retailment as a retail extension tactic is necessary to enhance the status of luxury brands. The method has been used by the luxury sector in the nineteenth and twentieth centuries through associating luxury fashion with different leisure aspects of society like arts and culture. As far back as the early part of the twentieth century, haute couture designer Elsa Schiaparelli collaborated with artists Jean Cocteau and Dali in fashion design.

This blending of artistic and fashion talent is currently being adopted by several luxury brands and extended to other aspects to form an integrated luxury retailment offering. Luxury brands are placing a strong emphasis on the fusion of luxury retail with retailment forms like art, literature, music, film, sports and gastronomy. The association of luxury brands with an appealing form of entertainment has become a necessity in the current challenging luxury market because consumers increasingly seek substance from brands in the form of background stories, fulfilled through retailment collaborations.

Providing consumer satisfaction through retailment links ought to feature as a prominent aspect of the luxury retail strategy.

Retailment is also an effective means of generating positive publicity for a brand through showing the brand’s commitment and interest in its community. This also forms a part of corporate social responsibility, which improves the brand’s public image in the long term. Retailment also offers a powerful means of linking the world of fashion with intellect through literature. An additional benefit of luxury retailment through art initiatives and sponsorships is the chance to project the brand as not merely ‘profit-driven’ but also able to share its financial gains with the wider society.

Several examples of art sponsorships and other related retailment initiatives abound in the luxury fashion sector. They provide evidence that luxury brands have recognized the importance of extended retail practices to include several forms of entertainment. An example is Louis Vuitton, which launched an Art Exhibition Centre named ‘L’Espace Louis Vuitton’ within its flagship store on Paris’ Avenue des Champs Elysées in 2005. The centre is a means of artistic and cultural expression and showcases the works of avant-garde artists such as Vanessa Beecroft. Pierre Cardin also has a private museum at his Maxim’s

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Paris restaurant, which showcases artistic furniture and paintings from the eighteenth and nineteenth centuries. Also Italian high-end brand Furla supports art through an annual young artists award called ‘Furla per l’Arte’, which it set up in collaboration with the Italian foundation for art and culture, Querini Stampalia. Another notable example is the Bally Museum owned by the Swiss brand, where visitors can find shoe displays from the early twentieth century.

Other brands such as Bvlgari, Cartier, Rolex and Ermenegildo Zegna are all connected with several art initiatives, providing a link to retailment.

The fusion of art and fashion can also be extended to product development and often leads to success when effectively managed. For example, the 2005 collaboration between fashion designer Lulu Guinness and British sculptor Ann Carrington to create a limited edition collection of handbags was highly successful. Also, the famous Louis Vuitton monogram multicolour range is a result of the collaboration between the brand’s Creative Director Marc Jacobs and Japanese artist Takashi Murakami. Several other examples can be found in the works of other luxury brands.

The combination of fashion and art, however, requires strategic direction.

The strategic challenge lies in incorporating the brand’s collaborations within the brand story and effectively communicating them to the public, rather than treating them as part of the periodic ‘News & Highlights’ of the brand.

In the literary entertainment sphere, British accessories brand Jimmy Choo provided a link with the art of photography and writing through its Coffee Table photography book, titled Four Inches. Other publications that are aimed at both informing and entertaining the public are the 20-years chronicle book of Dolce and Gabbana titled 20 Years: Dolce & Gabbana published in 2005; the 150 years anniversary publication of Louis Vuitton in 2005; and the book that chronicles the history of fashion brand Diesel, titled Fifty, which was published in 2005 to coincide with the 50th birthday anniversary of Diesel founder Renzo Russo. Louis Vuitton has also incorporated a bookshop at its Avenue des Champs Elysées Paris store, where Louis Vuitton travel guides are sold.

Figure 4.5 Vanessa Beecroft exhibition poster at L’Espace Louis Vuitton, Paris, January to March 2006

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The blending of sports and fashion is another means of retail extension through providing luxury retailment. Examples include the collaborative design ranges between sportswear brand Adidas and Yoji Yamamoto and Stella McCartney respectively. Other collaborations have been between Puma and fashion designer Alexander McQueen and model Christy Turlington.

While the fusion of luxury fashion with sports is unconventional, the synergy of tradition and technology that the two sectors offer often results in a highly creative collection. However, this strategy should be meticulously managed in order not to lead to the depreciation of the luxury brand’s value.

Product merchandizing design Merchandizing means the process of managing the methods used to push products into the market. It utilizes several methods to make the offerings of a brand attractive to consumers and increase purchase probability, and is therefore a push-marketing medium as it pushes consumers to make purchases. Merchandizing involves selling goods at the point of sale, which in most cases is the physical store. It utilizes visual representation, which is of paramount importance in luxury fashion retailing and is a constituent part of branding.

Effective merchandizing techniques are important in luxury fashion retail especially with the more demanding nature of consumers and the increasing level of competition among luxury brands. The merchandizing techniques and product offerings of luxury brands should be realistic, delightful and relevant to the lives of consumers, since luxury consumers now have multiple product choices and a multitude of fashion trends every season from a growing number of designers. As a result they can compare products and trends and make more informed choices. They also have information and choice overload, which

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Figure 4.6 Brazilian carnival in-store entertainment at Printemps luxury departmental store, Paris, April 2005

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sometimes leads to confusion and conflict. The result of these factors is that consumers are likely to lose trust for brands that have only surface-level offerings. This means that luxury brands need to differentiate themselves through creating desirable products and selling them with effective techniques.

Merchandizing involves product display and layout, pricing and ticketing display, product packaging, point-of-sale advertising, product zoning, trafficgeneration techniques, product hot-spots and inventory control.

Product and price-ticketing display is driven by imagination. A large number of luxury brands often fall into the trap of sameness through lack of creativity in product presentation. For example, the product packaging of several luxury brands such as shopping bags and product boxes have a uniform look in style and concept and little differentiating features. Also the point-of-sale product display in the stores of numerous luxury fashion brands is often bland and uninspiring. On the other hand, the point-of-sale could be used as an advertising medium to introduce new products, showcase best sellers or display ‘take-away’ complementary goods such as small leather goods.

However, when customers find these goods unappealingly displayed or encounter employees that show a lack of enthusiasm in promoting these goods, then the target of purchase probability will be lost.

Additional merchandizing techniques include ‘Product Zoning’, which involves the placement of complementary products side by side; and ‘Traffic Generation’, which features the positioning of high-demand products towards the centre or rear of the store thereby obliging customers to walk through the store to reach them. For example, leather goods such as bags and shoes are logically placed close to apparel, which are positioned close to other accessories such as belts and scarves. Jewellery and timepieces go together while cosmetics and fragrances complement one another. Eyewear and other high touch-based products are often grouped together. Other merchandizing techniques include ‘Product Hot-Spots’, which display new products or interactive products like fragrances, cosmetics and promotional goods. These products are usually presented in groups or categories as well as in rankings of importance, demand, relationship or interaction.

Window display is another important consideration in product merchandizing, as both a sales medium and a communicative medium. It is an important brand image projection tool because it addresses the public, which includes luxury consumers, potential luxury consumers and non-luxury consumers.

Window display merchandizing techniques currently require strong differentiation. This is a result of the visible convergence of retailing tactics of luxury brands with those of mass fashion brands, as a result of continuous evolution of the fashion industry. For example, fashion brands that do not advertise in the mass media, such as Zara, use their window displays as a communicative tool and therefore place great emphasis on its design and message. This is similar to luxury department stores such as Macy’s or

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Figure 4.8 The store window display of mass fashion brand H&M at Knightsbridge, London, April 2006

Harrod’s. The result is a greater level of creativity and imagination in window displays among luxury fashion brands, departmental stores and mass fashion brands. This factor has contributed to increased expectations of consumers from luxury brands, which therefore need to show greater creativity and imagination in window displays at all times. For example, there is little difference between the window displays of the two stores, Harrod’s and H & M, Knightsbridge, London, shown in Figure 4.7 and 4.8.

Another crucial element of store image projection through merchandizing is the synergy between a store’s interior and its exterior in terms of display, design and aesthetics. A store that habitually changes its exterior design motif should also routinely change the interior to maintain a consistent message. An example of a luxury store that has maintained interior and exterior design consistency over its long history is French department store Galeries Lafayette (Figure 4.9). The store often uses a thematic concept both indoors and outdoors to enhance its appeal.

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Figure 4.7 The store window display of luxury department store, Harrod’s, Knightsbridge, London, April, 2006

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Figure 4.9 Luxury department store, Galeries Lafayette, Paris, maintains consistency between its interior and exterior designs

Figure 4.10 Louis Vuitton’s creative giant monogram trunk façade covering the renovation work at its Paris Champs Elysées flagship store, 2004

Figure 4.11 Cartier’s giant replica of its packaging box, covering the reconstruction work at its Paris Rue de la Paix store, 2005

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New selling techniques In order to gain competitive leverage in a more demanding retail climate and satisfy a more impatient consumer group, new and creative forms of luxury retailing are required. Luxury consumers have increasingly busy lifestyles and their shopping for luxury goods has become more challenging as a result of a crowded luxury market and the unavailability of online luxury shopping.

This means that they are restricted to shopping in stores in most cases.

However, several consumers no longer desire to go to stores but they want the store to come to them. As a result, several additional techniques have either emerged or are being revived to complement existing retail store practices.

Among the new selling techniques are: 1 2 3 4 5

Trunk shows Pre-season shows Post-season sales Personal stylist shopping Shopping lunching

Trunk shows originated in America’s mid-west as a shopping means where individual retailers took goods in their car trunks to wealthy housewives in the suburbs of major cities. Presently, several luxury brands like Burberry, Chanel, Celine, Alexander McQueen and Yves Saint Laurent have adopted the concept of trunk shows and modified it to suit a sophisticated clientele by giving it a prestigious aura.

In the luxury context, trunk shows are privately held fashion shows where the new season’s collections are previewed to a select clientele prior to being displayed in stores for the public. Trunk shows offer customers the opportunity to shop privately in an uncluttered environment. They also provide access to products that are only available by pre-order, helping the clients to avoid being on long waiting lists. Another important benefit is the availability of expert advice and individual attention through style advisers and fashion consultants, which are often lacking in the stores. This personalized service leads to a higher purchase probability and increased customer satisfaction. Customers who attend trunk shows are generally likely to spend

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Finally, the exterior design of a store can also be a creative tool in all circumstances irrespective of condition. For example, during the renovation period of the Cartier and Louis Vuitton flagship stores in Paris, the stores’ exteriors were covered with giant-sized reproductions of the brands’ products and packaging. This is a creative communications tool that reminds the public of the presence of the brand and also a landmark and in some cases a tourist attraction (Figures 4.10 and 4.11).

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substantially higher amounts of money than they would during conventional shopping. This leads to higher sales turnover for the brands and a stronger attachment between the customer and the brand. Trunk shows are often held in the luxury store on a specific day, usually after the runway fashion shows and are mostly attended by appointment. However, brands like Ralph Lauren and Burberry are making trunk shows more available to a mass consumer public by providing information and access to them through their websites.

Pre-season shows are an extended form of trunk shows. The distinguishing factor is that pre-season shows are mostly by invitation and attendance is exclusive to the clients the luxury brands select. Also, pre-season shows focus on the sub-collections that are launched just prior to the main season’s collections, while trunk shows are held as a preview of the next season’s complete collection. The sub-collections are called Cruise Collections by some brands like Gucci and Jimmy Choo, while Dior refers to theirs as the Capsule Collection. Pre-season shows also provide the same benefits that trunk shows provide to both luxury brands and luxury consumers.

Post-season sales is the equivalent of price discount sales normally held by mass fashion brands or brands in other product categories. However, in luxury fashion, post-season sales are private and are mostly by invitation.

They involve the sale of a luxury brand’s previous season’s collection at discounted prices, often up to 50 per cent of the original retail prices. Since luxury brands need to remain exclusive in order to maintain their brand equity, post-season sales have not been widely adopted by several luxury brands. The brands that practice post-season sales retailing do so exclusively for selected customers and on a restricted number of shopping days.

Personal stylist shopping is a selling technique that has been in existence in both luxury goods and conventional goods retailing for decades. However, shopping with a personal stylist was restricted to VIP clients but is now being required by a broader consumer base. Personal stylists are currently found at luxury brands, luxury departmental stores and also at major fashion magazines. Some of them also work independently such as the New York-based company, Paris Personal Shopper, which caters to the needs of clients intending to make shopping trips to Paris.

Personal stylists provide shoppers with invaluable advice on the season’s trends and also how they can combine products in the store with the complementary products the clients already own. They also help less fashion-savvy clients define their tastes and choose the right goods to balance their looks. The ultimate goal of personal stylist shopping is to satisfy the customer, enhance their experience with the brand and develop a deeper relationship that often leads to brand loyalty. Personal stylist shopping is an important aspect of client relations, which also provides an opportunity for one-to-one marketing.

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The shopping lunch is a relatively new retailing technique in luxury fashion retail, pioneered by innovative luxury brands such as Fendi. This method mixes the art of entertaining and socializing with shopping in a private setting. Shopping lunches take place when luxury brands invite a specific number of clients to an afternoon of eating, socializing and shopping, at a private venue. Fendi currently hosts four shopping lunches annually in the UK, each time in the home of a different Fendi client handpicked by the brand. The guest list is a chain of invited guests who are asked to invite other guests until all available slots are taken. The invited guests are shown a collection of products that include pre-order-only goods as well as collections that are yet to be displayed in the stores. The benefits of shopping lunches are similar to those of trunk shows, personal stylist shopping and pre-season shopping. These include the comfort of exclusive private shopping in a relaxed environment; expert and individual style advice; high customer satisfaction; high purchase probability; enhanced brand relationship; convenience for the shoppers; and increased sales turnover for the brand.

The case of designer outlet shopping villages Discount shopping is a major retail feature that attracts consumers to brands.

In pursuit of the best value for their money, consumers are ready and willing to go an extra mile for certain types of products including fashion goods. It was on this premise that the concept of discount outlet centres was developed for fashion goods. In the early days of this phenomenon, discount outlets were found mainly in North America, and were often warehouse-style retail centres on the outskirts of major cities where mass fashion brands often went to ‘dump’ their old stock that was no longer desirable in the main stores.

These goods were sold at exceptionally low prices to attract consumers and to clear the stock. This concept was highly successful as consumers were often willing to travel the extra kilometres for a good bargain. However, discount or outlet shopping was for a long time the domain of mass-market retailers. Today, this concept has encroached into the luxury fashion scene.

It began when Prada purchased a mass piece of land in the small town of Montevarchi, Tuscany, located between Milan and Florence in Italy, and began developing a shopping mall that would later serve as a discount village for the brand. Today, the outlet mall officially named ‘The Space’ retails Prada and Mui Mui products, including apparel and leather goods, at prices

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Previously, the luxury fashion sector had the reputation of poor customer services provided by cold and aloof sales staff. However, several luxury brands have realized the importance of client relations and are investing in smart and stylish sales staff with dispositions to be responsive to customer needs, with the right personality to embody the aura of the brand.

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that are sometimes up to 60 per cent below the main store prices. Gucci caught on shortly after this and purchased an equally massive piece of land in nearby Leccio Reggello, Florence in 1999. There, the company developed a shopping outlet named ‘The Mall’ where the products of 20 exclusive luxury brands including Gucci and all the Gucci Group-owned brands are retailed at discounted prices, sometimes up to 50 per cent lower than the original prices.

Unlike the Prada-owned mall, which retails Prada and Mui Mui goods, the Gucci outlet mall retails a wide range of ‘outside’ luxury brands like Burberry. The Mall, however, focuses exclusively on luxury brands that desire to sell their end-of-season stock at discounted prices and doesn’t retail the goods of non-luxury brands. Giorgio Armani also has a factory outlet store in Vertemate, near Como, while Jill Sander’s outlet store is located in nearby Cirimido.

The common factor these discount outlet shopping centres have is that they do not advertise themselves as Prada-owned or Gucci-owned or Armaniowned spaces. This is because the strategy of discount shopping centres is in contrast with the brand attributes that form part of the desire for luxury goods, like ‘exclusivity’ and ‘enhanced image’. Also, luxury brands do not include the addresses of their discount stores as a retail location in their media advertisements, for the same reason.

Luxury fashion discount shopping has, however, been made more popular by the founders of the Value Retail Chain, which owns designer outlet shopping villages on the outskirts of 11 cities around Europe. The shopping villages include Bicester Village, located between London and Oxford (Figure 4.12), La Vallée Village close to Disneyland Paris (Figure 4.13), La Roca Village in the outskirts of Barcelona, and other shopping outlets on the outskirts of Milan, Bologna, Brussels, Dusseldorf, Munich, Frankfurt, Dublin and Madrid. The group currently has a portfolio of 300 fashion brands and more than 600 stores across its network of villages. The target consumer group is the upper-income fashionable consumer set aged between 25 and 55.

The Value Retail discount shopping villages are built to resemble small towns, but instead of housing they feature only shops and restaurants. More than 60 per cent of the brands that occupy the stores are international brands such as Versace, Kenzo, Max Mara and Givenchy, although exclusive domestic brands are also promoted. The discount outlet villages focus mainly on retailing fashion goods although cosmetics, house wares and interior decoration brands are also well-represented. The goods are usually end-of-season products marked down at prices ranging from 30–70 per cent of the original store prices. Although discount luxury fashion retail dominates the activities of the Value Retail villages, there is also the presence of mass fashion brands such as Mexx, Puma and Reebok. This raises the following question: Do designer outlet shopping villages dilute the luxury brand image? Is this a luxury brand killer?

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Figure 4.12 Discount shopping outlet, Bicester Village, near London, 2004

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Figure 4.13 La Vallée Village discount outlet village, near Paris, 2006

The sale of luxury goods at discounted prices is not a new practice, although it is not widely publicized, and is a practice that has amplified in the last decade. The adoption of the mass discounting strategy for luxury goods is a result of several factors in the changing environment of luxury fashion retailing. These factors have placed an emphasis on sales returns and commercial results, driving luxury brands to adopt discount selling strategies.

Notable among these factors are the following: 1 Consumers have become wise to the variety of choices they have in terms of luxury and mass fashion goods. They increasingly know where to go to find what they want and are ready to reject the brand that doesn’t meet their expectations in terms of value for money and product design.

2 The luxury market is expanding rapidly and the competition level has more than doubled in the last decade. This has put a lot of pressure on luxury brands.

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3 The ownership structure of luxury brands is changing as several nonluxury companies have acquired luxury brands. This has increased the performance pressure on luxury brands with more emphasis on sales turnover, return on investment and shareholder value.

The answer to the question: ‘Do designer outlet shopping villages dilute the luxury brand image?’, is yes, placing luxury brands in discount outlet shopping villages undoubtedly affects the ‘exclusivity’ attribute associated with luxury brands. This is even more enhanced at the discount centres that mix luxury goods discounting with mass fashion discounting.

The answer to the question: ‘Is this a luxury brand killer?’, is no, the presence of a luxury brand in a discount outlet centre is not a brand killer.

However, this strategy needs to be meticulously managed by luxury brands to ensure that the long-term benefits outweigh the costs in relation to the brand equity.

So how should this delicate strategy be handled? The following points act as guidelines for luxury brand retail positioning in discount shopping centres:

• •

• • •

Select the discount outlet centres that only retail goods from luxury brands.

This factor retains the exclusive location attribute associated with luxury brands even though the prices of the goods have been lowered. It also minimizes the shoppers’ impression of shopping among ‘junk’ goods.

Provide only end-of-season goods at the discount shopping villages and avoid goods that are in the current collection in the main stores. This way, when consumers travel the several kilometres to the discount villages, they know that they are getting the previous season’s goods at reduced prices only because the goods are ‘last season’ and no longer available in the stores, and not because the brand is a ‘discount brand’.

Provide expert and unparalleled in-store customer service at the discount store. This will give shoppers the impression of being in a special place and among highly crafted goods although they’re being sold at reduced prices.

Provide in-store animation and entertainment. The main stores of several luxury brands such as Roberto Cavalli and Chanel have plasma TV screens that showcase the fashion show of the latest collection. These features will enhance the atmosphere of the discount store even more.

Maintain the brand personality and aura. Discounting is not an excuse for luxury brands to forget who they are and what they represent to the public.

Consumers that visit outlet centres also shop in the main stores so the same attributes that are found in the main stores should be extended to the outlet stores.

In conclusion, store location, store merchandizing and atmosphere are intricate aspects of luxury fashion retailing that contribute to the public image

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projection of the brand. These aspects of retail need to be constantly innovated in the rapidly changing luxury market. Also, several aspects of fashion retail strategies like the convergence of both luxury and mass fashion brands need to be meticulously monitored and managed. For example, Avenue des Champs Elysées, Paris, which is considered as the epitome of luxury location, currently has stores of non-luxury brands Zara and Naf Naf, among others, in addition to Louis Vuitton and Cartier. In the same manner, London’s Knightsbridge is the location of Burberry and Harrod’s as well as H&M, Zara and several other mass fashion brands. The Sloane Street area which was previously exclusive to luxury brands has also seen the encroachment of nonluxury brands like Zadig & Voltaire, which recently opened a 1,300 square foot store on the street.

The implication of these changes is that luxury brands need highly refined retailing techniques more than ever before. Luxury brands are expected to develop creative and innovative retail techniques to add to a more meaningful relationship with consumers. The strategic goal of luxury retailing should not only be to reach sales targets, but also to satisfy customers through implementing strategies that enhance brand value. This means that it will take much more than the brand name and product designs to maintain the long queues in front of luxury fashion stores.

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Ways of Winning Over the Sales Force in the Digital World

The omnipresence of digital tools in our lives is fundamentally changing the retail environment, its rules and actors. It is one of the megatrends of the 21st century, heavily influencing and modifying the given structures of shopping and consumption. Digitalization is invading all areas of our lives at such speed that many companies have trouble keeping up.

Customers consuming exclusively in physical stores belong to the past.

Shopping and navigating across multiple online and offline channels has become the norm, and customers have been faster at adapting to the new environment of technology than most luxury brands. Many brands remained skeptical for a long time, believing that the traditional luxury world and the digital world were incompatible. Today, however, they realize that they need to catch up if they do not want to lose sight of reality. Internet Pure Players have taken the opportunity of filling the gap and giving the luxury customer what luxury brands themselves could not offer: a unique digital shopping experience across multiple channels with fully integrated customer data.

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Luxury brands are now starting to jump onto the digital train that is already moving at high speed throughout the world. In some countries, such as China and the USA, it is at its peak speed.

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While luxury brands have understood that digitalization is no longer an option but a must, they are now confronted with three major challenges (Figure 19):

One challenge is, of course, to develop all new sales channels that are requested by the modern customer: mobile and desktop shopping platforms which provide technological efficiency, safety and also a unique brand-related shopping experience. At the same time, physical stores are still an essential retail channel, since customers constantly cross borders between the online and offline world. Companies need, therefore, to find ways of intelligently integrating and interconnecting all retail realities within one common ecosystem.

2. Integration and management of customer data Another challenge is to integrate the customer into the brand’s communication flow and structure and analyze the data in the best-targeted way in order to favor a one-on-one marketing approach. As communication switches from being a one-way brand–customer interaction into a twoway brand–customer–brand flow, brands are beginning to get to know their customers again. But such a massive concentration of data needs to be prepared and used in the most appropriate way according to the brand’s positioning. This fundamental change also alters the way companies practice marketing, since larger and larger budgets are being allocated to digital channels. These channels have their own laws, which are not terribly well known and are rapidly changing environments.

3. Association of the sales force Changing customer habits and the emergence of new retail channels have had a considerable impact on the sales force. Salespeople find themselves confronted with customers who are perfectly informed about the brand since they have found accurate data online. It has become common to go online to get a perfect overview of the market before shopping offline. Sometimes salespeople even find themselves less informed than their customers.

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1. Interconnection of retail channels

Furthermore, compensation strategies are not currently well adapted to the new retail reality. Consequently, salespeople have trouble integrating the

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RETAIL CHANNEL

DIGITAL CHALLENGES CUSTOMER DATA

INTEGRATION fig 19

SALES FORCE

ASSOCIATION

The digital impact on retail channels, customers and sales force

digital shopping environment with their own retail scope. Many find that helping their brand develop digital channels isn’t in their interest, since this might have a negative effect on their own brick-and-mortar sales results.

From a management point of view, both worlds are still treated separately, which does not help when attempting to merge online and offline channels.

It is therefore important for companies to fully associate their sales force with their digital projects instead of treating them as the “offline sales team.”

While brands are confronted with these major challenges, which stem from the increasing omnipresence of digital reality, the question is: How can digital tools help to strengthen salespeople’s relationships with their brands?

To answer this question, I want to illustrate my vision with the example of the five rings of sales force–brand relationships, which are essential means by which to tie salespeople to your brand.

3.1 Love-booster: Digital media to pass on the flame

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INTERCONNECTION

In order to enflame salespeople’s love for their brand, communication must be fluid within the entire organization. Internal communication structures must be set up and clearly defined in order for employees to be informed, to learn, to exchange and to share. Let them know immediately anything that concerns your brand, its values, strategies, ongoing changes, events, new products, new people, as long as this information

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1.

2.

3.

4.

honesty transparency accuracy fluidity.

The time factor is essential in order to make sure that your employees, including your sales force, are always the first to be informed, well before anyone else, such as customers or the press. Unfortunately, salespeople are too often unable to give precise information on their brand’s online shop.

The brand managers therefore need to stimulate salespeople’s awareness of the fact that this sales channel is also part of their concern. This requires the setup of fast, efficient and interactive communication devices. Digital tools are invaluable in helping companies spread messages faster than ever before and ensuring that departments on different hierarchy levels are interconnected. Just as communication between brands and their customers becomes increasingly interactive, we can observe the same trend within companies. One-sided, top-down communication patterns belong to the past – interactivity is the present and future (Figure 20).

When I was a retail manager for Yves Saint Laurent, I always dreamt of using the iPad to connect the retail space of all our boutiques to the head office. I imagined a platform where we could upload merchandising visuals, training tools, brand visuals, logos, presentations and so on.

It would have been great to bring everyone closer together, accelerate exchanges between all departments: managers, buyers, merchandising, communication and sales. This would have been extremely convenient, especially for stores that are far away from the head office, in Cannes, Monaco or anywhere else in the world. Sharing information via the iPad would have allowed us to gain time and to increase real face time. ( Jean-Charles Champey, former Store Manager at Yves Saint Laurent)

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is not fundamentally confidential. The communication style that is most valued corresponds to four criteria:

Social media such as Facebook and Twitter are not only useful to make customers like your brand and share exciting brand content. They can also be fabulous tools with which to foster internal communication.

Our new communication director put in place daily teasers the week before our big fashion show. The teasers, like a countdown, were sent

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PAST

FUTURE

TOP MANAGEMENT

TOP MANAGEMENT

COMPANY EMPLOYEES

Unilateral communication

fig 20

Network communication

Changing company communication patterns

to the entire company, including the sales force. They contained little videos, barely longer than two minutes, to attract our attention to the brand-related content: words, sentences, interviews in which Sonia Rykiel explained her vision, style, her way to design. These were remixed extracts of existing documentaries. Sometimes, he also sent some of Sonia’s drawings before she finalized her creations. This was an amazing means by which to bring us closer to the brand’s origin in a visual, modern and interesting way.

(Shayda de Bary, Store Manager at Sonia Rykiel)

Salespeople constantly need to share. Because of the nature of their profession and the type of personality it attracts, salespeople should be good listeners and communicators. By allowing them to interconnect through an internal digital platform, they would have the opportunity to exchange information on customer experiences, best practices, ideas, failures and learnings. Such a social platform would allow them to realize the fact that they all have similar experiences and somehow belong to a big family. By forming a genuine digital community, an internal social

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media platform could help strengthen your salespeople’s relationships among each other and with your brand.

The next generation is going to grow up in a digital world. And they speak social. Whenever you are talking to customers or employees, you have to do it on a social platform because that’s the language they speak.

We were one of the first to customize the chatter platform – we call it Burberry chat. Christopher and I chat with the entire organization once or twice a week. It also gives each associate a platform to talk to us. Most importantly, it has been the greatest unifier of our culture in comparison to any other platform we have ever put in place. (http://www.youtube.com/watch?v=DzBIYwZsut0)

Instead of using traditional e-mail, instant messaging systems are becoming a more and more common way for employees to relate to each other.

They allow quick question and answer exchanges without taking the time to formulate long, polite sentences. While form used to be extremely important in former company communications, the instant content, quick messages and fast answers are much more valued today. In internal communication, love for the brand will not be kindled through romantic words but rather thanks to the message’s accuracy.

3.2 Identification-booster: Explaining omnichannel strategies Over the course of my interviews, I came across two kinds of salespeople: the people in favor of digital improvements and those against.

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One of the first brands to put in place a digital platform for salespeople was Burberry. Angela Ahrendts, former CEO of Burberry, talked about this positive achievement in the mini movie “Burberry’s Social Story,” saying:

The people against digitalization are mostly experienced and senior salespeople who have grown up in the company and are perfectly familiar with the traditional brick-and-mortar retail model. The digital world is quite distant from them. They expressed a certain degree of disappointment when their management decided to open a digital

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I feel that e-commerce goes against our profession, since the luxury business is based on relationships, service and human contact. It is always frustrating for a salesperson who spends a lot of time advising the customer and providing high-quality service, to finally find s/he has bought a product online based on the advice s/he received at the store.

(Store manager at a luxury jewelry brand)

The people that are pro-digitalization are mostly younger salespeople who already are digitally connected in their personal lives. They consider e-commerce to be complementary to their own stores and are fully aware of the advantages of digital commerce. For them, online shops have the capacity to attract a new customer base that may have remained untouched because of geographic or psychological reasons.

I believe that e-commerce represents a complementary sales channel to our stores. Many customers check out the new and existing collections online before they come to us. They have done half of the work we used to do, since they are perfectly informed. In our stores, they want to get a confirmation that they are making the best choice in terms of materials or colors, since images online are not always identical to reality. Before buying, customers love to touch their product. They come to confirm their choice rather than to get more information. This shift in customer habits is a big change compared to the past. We also have customers who come to our stores but are still hesitant to buy, mostly for money reasons. They think they might have a higher budget in the coming month in order to purchase the bag they like. So instead of having to go back to the store, they have the second option of buying online, which is very convenient. And, finally, we have customers who simply don’t dare step into our stores and prefer buying online in order not to be seen.

(Longchamp store manager)

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store and advocate e-commerce as the core focus of tomorrow. To these salespeople, the digital world is the enemy of the physical world. They regard e-shops as competitors of traditional retail and are therefore fully against it.

I don’t believe that e-commerce is a threat, since, at least for jewelry, customers need to come to our stores to try the products on before they purchase.

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Even though more and more salespeople have a favorable attitude toward their brand’s digital stores, they are still far from identifying with them.

Their brand reality is the physical stores where they welcome, advise and serve their customers. The e-shop is, for most of them, far away; somewhere at the brand’s head office (Figure 21). Yet in order to successfully implement multi- or omnichannel strategies, salespeople must bring both spheres together. They must understand that their entire sales area can be considerably expanded if online and offline environments are merged. It is not only technology that brings databases together and delivers products to all sales channels. Omnichannel success also happens when salespeople are involved. If they begin to understand that their sales environment goes beyond their physical store, the brand will make a huge leap toward the retail reality of tomorrow.

E-shop

fig 21

SALES FORCE IDENTIFICATION SPHERE

Physical Store

The Sales force Identification Sphere (SIS)

What should brands do in order to expand salespeople’s identification sphere from the physical to the digital shop? This question is essential since we know from the previous chapter that salespeople’s hearts can be won if they identify with their point of sale. It’s only if salespeople identify with the brand’s online shops that these digital stores can help strengthen the relationship between salespeople and their brand (Figure 22).

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Then they have two options: to buy online or offline. But they have at least come to us once, to the base, to find the best fit.

(Fred sales associate)

The first step toward salespeople’s e-identification is to explain the real online retail benefits through intense digital training. Even if salespeople already use digital tools, they may not have a clear picture of the true advantages, opportunities, challenges and strategies that will help the brand to grow. Every brand today should offer its salespeople general digital training

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E-shop

Explaining online retail benefits

fig 22

Sales Force Identification Sphere

Mutualizing online and offline customer data

Physical Store

Changing compensation systems

Factors influencing the Sales force Identification Sphere (SIS)

including a particular focus on their brand’s digital strategies. Experts need to explain to salespeople how omnichannel operations work and why they are in the brand’s best interest. Provide relevant best-practice examples drawn from your competitors and other industries. Share facts and figures from existing digital studies. Lack of identification or even fear often derives from a lack of knowledge. It is therefore essential to close the knowledge gap before starting to implement digital channels and tools across the board.

All salespeople should know their brand’s online shop by heart.

The second step is to help salespeople understand that the brand’s business can only grow if customer databases are shared. Until now, most salespeople have carefully protected their customer base and see it as their own asset. In the future, databases will need to be shared if brands want to access the customer’s world, which is both online and offline. It’s only when salespeople start thinking about the global benefits and not simply their local private business that they will begin to identify with the digital world.

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The third step to sales force identification with e-commerce requires a radical change in compensation systems. As long as salespeople don’t feel there is any benefit in advising customers to shop online or in sharing their offline customer database, there will probably be no progress in this identification process. Thus far, few companies have put in place compensation systems that consider the digital aspect of the brand. One reason for this

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is that brands must fully merge their online and offline customer data in order to conduct online and offline observations of their customers. In order to attribute online sales to a physical store, it is important to know to which store the customer belongs.

There is a real conflict between online and offline shops with regard to the management of the customer database. Many salespeople in the luxury industry are not willing to share their precious customer data with other salespeople as they consider their customers to ‘belong’ to them. They defend their territory as much as they can and only enter superficial data into the common database. Having a common, highly profiled customer database, however, is necessary for efficient multichannel operations. Tailor-made marketing activities could be put in place to incite customers to navigate smoothly between the online and offline universes of the brand. Thanks to digital cookies, it would then be easy to know when a person has been exposed to a Facebook, mailing or any other online campaign.

Besides combining customer databases, a brand needs to review its compensation systems, which clearly depend on the possibility of allocating online sales to a specific physical store. In order to do so, brands would have to define an online market radius that leads to a physical store. This could be done by verifying the delivery address, which is provided during the checkout process for online sales.

All purchases made by customers within a specific market radius would then be allocated to the respective stores. Consequently, the additional online sales would help the store increase its overall sales figures. The monthly commission for the entire team could then be based upon the sales achieved online and offline.

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Pierre Laromiguière, President of Baobaz, a web-marketing agency, analyses the situation as follows:

In the luxury sector, it makes a lot of sense for online sales to be allocated to an offline store, since customers tend to inform themselves online before buying offline. Many e-commerce sites therefore have a rather low transformation rate online but contribute to strong additional sales offline.

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The multichannel market radius strategy (Figure 23) illustrates the fact that salespeople should apply new perspectives when it comes to sharing customer data and allocating cross-channel sales. Due to the new retail reality, brand management is confronted with the challenge of explaining the importance of changing mindsets to its sales force with regard to compensation and performance systems. The biggest challenge occurs when explaining this to the Star-salespeople with their giant, high-profile customer database, of which they are fiercely protective.

Online Market Radius Store 1

Store 3

Physical store 1

Store 2

fig 23

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With online and offline shopping becoming increasingly interlinked, it is important to look at the pattern as a whole. In luxury, customers still prefer to check their preselection in the physical store and interact with a competent sales advisor. Consequently, expectations are high when customers do make the effort to go to the store, after having obtained all the information they need about the product they have chosen.

The multichannel market radius strategy

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I believe it is important to set up a multichannel sales approach, encouraging customers to check out the e-commerce site at the end of an in-store purchase: ‘Madame, pretty soon the new collection will arrive. It is not in our store yet, but you can already view it online. I will send you the link of our e-commerce site and I remain available for any additional information. I will register you online so you can create your own personal space on our site. This will allow us to interact in case of questions, send images and simply be connected.’ Not many brands have put in place a true omnichannel strategy. Besides the technical challenge, this new retail approach is complicated to set up due to questions related to sales commissions. Many salespeople today still see e-commerce as a real threat and not as a business opportunity. And since online shops can easily become as big as a flagship store, they are seen as fierce competitors. Whenever an offline customer shops online, it is considered as ‘losing sales to the e-shop.’ ( Jean-Charles Champey, former Store Manager at Yves Saint Laurent)

In order to encourage salespeople to orient their customers proactively towards the brand’s e-commerce site or to order a product online for a customer, it is also advisable to link such actions to individual sales bonuses. This, however, is only possible if you can identify each salesperson online. It is therefore necessary to give a personal login and password to each sales associate as soon as s/he enters your brand’s digital sales environment. Doing so will enable you to track salespeople who sell online or who add a customer to your brand’s digital database. These actions are now part of modern selling rituals and need to be rewarded. If you don’t do this, your sales force won’t identify with your digital space and will always strictly separate the online and offline worlds.

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3.3 Trust-booster: E-learning for faster knowledge Training enhances salespeople’s trust in their brand. This is what the previous chapter clearly demonstrated under heart-winner 8. Salespeople who

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The difficulty with the omnipresence of digital tools is that customers have multiple sources of information at their disposal. Before purchasing a luxury brand, they want to check out the collection, new arrivals, get detailed information on the new benefits and styles, and also compare prices. It has become natural to go online before buying offline. At the same time, customers trust brand-marketing statements less. They therefore need to know as much as possible before spending money. They simply don’t want to be fooled.

Consequently, salespeople are confronted with customers who are already brand experts. Customers are extremely knowledgeable – at least on the product they intend to buy. This can be quite unpleasant for salespeople since multichannel luxury shoppers tend to test the sales force. Who is the bigger expert? What do I know that you don’t know yet? In the worst case scenario, the customer doesn’t even want any further advice since they already think they know everything. They have simply come to the store to see and handle the product in reality. This is unfortunately becoming more and more frequent, leaving salespeople somehow lost in translation. They begin to feel useless and incompetent, and lose faith in the brand that is supposed to provide them with relevant training.

The customer nowadays is ultra-informed thanks to the Internet. If he wants to access any kind of information, he navigates online. He tends to ask a lot more questions than several years ago. If the salesperson is not able to answer sophisticated customer questions, this reduces both the brand’s and the salesperson’s credibility.

(Alexandre Fauvet, former Executive Vice President at Lacoste)

In order to avoid such embarrassing situations, brands must intensify and anticipate their training on brand- and product-related issues. They must make sure that salespeople are the first to be informed, before the press or customers. While the geographic disparity of salespeople was a reason that once prevented them from all being updated at once, this is no longer an issue. E-learning tools allow all salespeople around the globe to find out about new products at the same time.

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have been perfectly trained by their brand in terms of sales arguments, products, the brand philosophy, sales objections and the sales ritual feel they can trust their brand. This creates a stronger relationship and leads to the development of a certain salesperson–brand loyalty.

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Before recent technology advanced in mobility and Cloud Commerce, sales associates used huge product books to learn about the features and benefits of the brand’s merchandise. The books were labor-intensive to create and costly to distribute, and they often arrived in the store after the actual products. On top of that, the books were not convenient to use. As a result, product knowledge became lore, a word-of-mouth exercise with tenured associates teaching the new ones. Invariably, the lore changed a little with each telling, which led to a divergence from the original product script. Thanks to real-time product information available in the Cloud, e-learning applications on iPads can deliver all the necessary product-selling information on a single device in a fraction of the time. Any associates can use the information when they are in a selling situation with a customer or when they need to familiarize themselves with new product assortments.

Product-training departments can keep information accurate and timely, which is very important since product assortments change frequently. Dynamic brands are always on the move.

(Lawrence Grodzicki, Director Product Management Demandware, former E-commerce Project Manager and Retail Systems Expert at Timberland)

Yet, in order to make product training through e-learning efficient, it must be carefully organized and structured. It is the store manager’s role to develop e-learning schedules which ensure that everyone is taking the necessary time to undergo the training.

In the USA, Tiffany has put in place a very sophisticated e-learning program. This is necessary if they want to reach many stores at once.

Everything is available online. A rigorous structure has been put in place to make sure that every salesperson experiences this self-training tool.

(Tiffany shop manager)

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Beyond the structural element, the brand’s training department must develop online training programs that include many different approaches, in order to make the training entertaining and fun. When I held interviews with salespeople in Sephora stores, they were keen to show me

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the e-learning tools that had the highest entertainment potential. Some of them were so well designed that salespeople used the training tool several times voluntarily. When I had a closer look at these heart-winning e-learning tools, they were all very colorful, contained videos, brand creator interviews, were very interactive, included music and sometimes almost appeared to be online games. When I designed an online e-learning tool myself for an exclusive skincare brand at Douglas, they asked me to structure it as a quiz. This encouraged people to complete the entire training program, to memorize content and to reduce the number of mistakes, since attractive prizes could be won if you made zero mistakes. Salespeople love challenges. You can therefore transform your training programs into stimulating competitions. And this works!

However, my encounter with hundreds of salespeople and store managers also revealed that e-learning alone was not the solution. It needs to be used as an additional training tool, especially for new product launches where the salesperson must be the first to know about the product. Many salespeople consider e-learning to be an efficient but dehumanizing training method.

They benefit greatly from training sessions that favor team experiences.

The way we perceive e-learning tools might also be related to our culture. In the USA, for instance, e-learning is already very common. No one would question its usefulness or consider it dehumanizing. In Latin cultures, I think this is different. Having personal contact with a trainer is very important; a real person standing in front of an audience can transmit a lot more emotion.

(Tiffany shop manager)

I personally remain convinced that the real brand experience cannot be transmitted more emotionally and convincingly than by highly passionate people who embody and live the brand, whose eyes are sparkling and who will be able to pass on the fire of their passion! Digital training tools, however, are excellent additional channels, especially when time and geography are an issue.

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3.4 Pride-booster: Shine as a digital champion!

The further brands manage to project themselves beyond their stores, the stronger the relationship potential with their own sales force. As we have

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Pride can also be stimulated by making salespeople feel that they are the best: market leaders, trendsetters ‌ always ahead of their time. They want to be modern since they represent the brand they sell to their customers.

So the question is: How can digitalization reinforce the pride salespeople have in their brand?

Hardly any communication or sales channels are more global, wideranging and omnipresent than the digital ones. Since these channels have such a wide-ranging visibility, it is even more important for brands to be well represented. Make sure that your corporate website, e-commerce platform, Facebook page, Pinterest site or whatever digital channel you decide to use, is up to date. The customer and salesperson should not get

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seen before, brands that stand out generate pride in their salespeople. It is therefore very important for brands to develop a strong identity that can be easily recognized worldwide and that contributes to wide-ranging brand awareness.

Salespeople’s pride: when your brand shines in omnichannels

(Source: Albert Dessinateur for Michaela Merk)

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The Lacoste example showed me how proud salespeople can be when the brand’s Facebook page has millions of fans and is one of the “most liked” premium brands. When you are visibly popular with customers, this reinforces the bonds salespeople have with the brand. So, if you work on your popularity, you will see that this translates immediately in terms of sales force loyalty.

Salespeople also feel extremely proud of their brand when the press talks about it. This gives them the sense of working for a brand of global interest, a brand of fame, a star! When does the press talk about a brand in the digital age? Usually when it is among the first to use a new technology, when its stores are equipped with new digital devices, when a communication campaign is released with tremendous success through social media. In order to do this, you must be daring, you must be ready to take some risks, since being a trendsetter also means that you are venturing into unknown waters. Yet only those who are first can become leaders and garner global press coverage.

Burberry can definitely count itself among the brands that have managed to become a global luxury trendsetter in digital retail management. With their digital flagship store in London, the entire luxury industry, full of both admiration and envy, has its eyes on the British brand. Under the former guidance of Angela Ahrendts and her Chief Creative Officer, Christopher Bailey, the brand has become the digital trendsetter in retail among luxury brands. The impact of such an innovative strength on salespeople is huge.

They know that working for Burberry means working for a modern, innovative trendsetter that sets the new digital standards for the fashion industry.

Digital pride can also be generated if you manage to organize events that generate interest in social media or events that your marketing department uses to generate buzz. The more buzz your brand can generate, the higher the relationship-building potential with your sales force.

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the impression that you are second rate. If you develop digital channels, they must be of top quality, fully in line with your brand image, entertaining, innovative, full of interesting content, conversant with the latest technology and never less attractive than your competition.

We organized a pop-up store in the Galeries Lafayette, Paris, for two months during the Christmas period. This kind of temporary store was

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Another great way of allowing your brands to have impact beyond your physical store is to create pop-up stores at huge public events with important media coverage. In the past, products had to be shipped from the warehouse to the temporary store, and storage space needed to be found since it was impossible to know how many people would show up. Today, digital tools can help with sophisticated inventory programs.

Many brands ask for our assistance to help them solve their store retail challenges. For instance, clients may want to set up a pop-up shop at a special event. In this case, they cannot carry the full breadth and depth of the product assortment in these small shops, which leads to stockouts and limits their ability to maximize revenue.

By using Demandware’s Digital Store Solution, store associates can place orders for customers against web inventory on a tablet device, thereby making the sale. The products in the warehouse are always accessible, and the goods are shipped to the customer’s address.

This solution has significant benefits. First, customers will have increased satisfaction because the store can fulfill their purchase desires. Second, the store converts the lost sale into a real sale, maximizing revenue. And third, the web inventory is faster, freeing up the merchant’s option to acquire new products.

(Lawrence Grodzicki, Product Management Director at Demandware, former E-commerce Project Manager and Retail Systems Expert at Timberland)

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announced on Facebook, Twitter and on our website. The store was a huge success, and during this period our online sales literally exploded.

(Fred sales associate)

If your brand operates omnichannels, pride can also arise among salespeople when you start developing products for exclusive online sales.

When we launched our Kate Moss Collection, it included one exclusive product that had been created only for online sales. It was a finger ring

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that was made out of silver with black diamonds instead of being made out of gold with white diamonds. The buzz was huge!

(Fred sales associate)

Heart-winner 15 illustrated that no salesperson’s heart could be won without recognition. The recognition expressed by the customer clearly has the strongest impact. If a brand is able to provide its sales force with clever tools to win the customer’s heart – such as innovative products presented through convincing sales rituals with a high service potential – salespeople would think twice before leaving their position and joining the competition. The question we need to ask is: How can the digital world help salespeople improve their service level in order to increase their chances of obtaining sincere recognition from their customers?

One digital tool that positively impacts and modifies a salesperson’s way to sell is the tablet. I believe that the tablet will become a permanent and indispensable companion to every salesperson since it makes their life so much easier, improves the service level and increases the sales potential for luxury products.

First of all, it is a great tool with which to present the entire product catalogue to customers. In a physical store, space is always limited and an entire collection cannot be exhibited. However, we know how hard it is to sell products that are not openly merchandized. This problem occurs most often with bulky objects such as furniture. Thanks to the tablets, salespeople are now able to show all available and non-available products.

They can highlight their explanations with videos and pedagogical graphics. In fashion, they can illustrate the way products are worn using fashion shows as examples. In cosmetics, they can explain the efficiency of products by accessing scientific results conducted on skin, by using images that show the “before” and the “after” result, or by sharing research testimonials. For furniture, videos can show which materials and colors are available to the customer or how a cupboard can be set up and used. This is why Hermès equipped its sales force with tablets at the Paris flagship store

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3.5 Recognition-booster: Better service, digitally!

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since it was impossible to put the entire home collection on display. With the iPad, the problem is solved and salespeople can show their customers whatever design the brand has to offer, even if it is not physically present in the store.

I always said that we needed tablets. When a lot of people are in the store and want to be served, we could show them videos about dancing, ballets, and techniques, just to get them in the mood. For kids, we could select a funny ballet, for instance.

For professionals, we offered the service of producing tailor-made ballet shoes. We needed to get all the measurements right to ensure the perfect fit. But it was so much more complicated to write all these measurements down on paper than to type them directly into an iPad application. These measurements could then have been transmitted immediately to the production site. This would have allowed us to gain time and be perceived as a modern brand.

This shows us that tablets can also be helpful devices with regard to tailormade product services. Why not have the customer create his personal masterpiece after conducting a detailed analysis of needs, wishes and imagination? It is still quite rare, but some brands in high-end watchmaking are using tablets to build the customer’s dream watch.

When customers don’t quite know what they might like, we use our watch configurator iPad application. It allows us to combine the color of the frame with the bracelet and all the details that make a watch so special. For me it is an excellent tool to accompany customers in their selection process. Yet it clearly does not replace us or generate sales on its own.

(Assistant store manager and after-sales services manager at a high-end watchmaking brand)

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A former sales associate of the famous dancing shoe brand, Repetto, became particularly enthusiastic when I asked him about tablets:

Many agencies are currently working on applications that optimize a salesperson’s daily work.

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We have developed an iPad application that will allow the salespeople to stay with their customers throughout the sales process. We have realized how important this is in the high-end jewelry industry, for instance, to never leave your customer alone. Any minor interruption can disturb the customer and take him out of his dream, back to reality, and end the sales conversation. We wanted salespeople to have all information at hand on one device so that they would never have to leave the customer during the highly delicate process of a potential sale.

As soon as the customer chooses the product he wants, iPads can be used to signal the need in order to bring the final product out of the storage area to the store, which, in high-end jewelry, is often the stockist’s role. In the meantime, the salesperson can remain with the customer, provide him with more details, tell stories about the brand, and inform him of other related products that match the chosen one.

Payment is another moment of truth. In luxury, it is a vulnerable moment. It is therefore important to make this step as smooth as possible. In the USA, it is already quite common to connect your iPad to little devices that allow you to use the iPad or even the iPhone as a cash desk. One of the most developed technologies is called ‘square.’ Even at the moment of payment, the customer doesn’t need to stand up and go to the cash desk. He can remain seated with his salesperson and pay smoothly without queuing.

This little device is the beginning of the end for cash desks.

(Pierre Laromiguière, President of Baobaz, web-marketing agency)

Talking about stock: if brands have developed IT systems that control stock levels in all their stores around the world, iPads can be very efficient tools to share stock information.

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We recently introduced the iPad in our stores. It is amazing! The iPad indicates in real time if the product is available in-house. If not, the device shows us where the stock can be ordered: in Europe or directly from our central warehouse in Italy. This avoids contacting the head office for questions, which need to be answered immediately if we want to serve our customer in the best way. When using the iPad, we gain time and are

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Besides tablets, smart- and iPhones can also increase a salesperson’s service options. Interactions with customers become fluid and instantaneous. The process can start before the customer enters the store and can continue once s/he has left. The service sphere is much broader, since it penetrates both the online and offline worlds.

Presenting new collections to our customers at a distance will become so much easier. If a customer wants to see what a dress looks like and cannot come to our boutique herself, someone from our team can wear it, we take a picture with our smartphones and send it to her. We can also do the same with customers we know very well to whom we can proactively send images of new collections assuming that they might like this.

(Shayda de Bary, Store Manager at Sonia Rykiel)

Another idea would be to set up Twitter accounts for customers so that they can communicate instantaneously with the entire sales force as soon as they enter the store. It is quite annoying, especially during commercially busy times, to have to chase after an available sales advisor in a large store, if staff members are all busy or out of reach. Why not link the tweets that customers send in-store to the sale assistants’ iPhones or iPads so that they are alerted when someone needs help? The customer might send a message such as, “I need your help. Could someone assist me in choosing an item?” Or, “I am in the dressing room and just tried something on.

Could someone bring me another size?” The first available salesperson would come directly to the right spot thanks to geolocalization techniques. In this way, service could be made more reactive, time-saving and transparent thanks to the use of iPhones and access to a Twitter account.

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able to show the entire catalogue to our customers without fearing that the product they like won’t be available.

(Fendi sales associate)

In addition, the salesperson could check in on the geolocalization device Foursquare in order to find out where else the customer shops.

As soon as the customer enters the store, salespeople will be able to know if the person has already bought something in this store, if he has been shopping in my e-boutique and if he is fan of my Facebook page. The aim

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Instore tweets

(Source: Albert Dessinateur for Michaela Merk)

is to create a virtual process in order to design a tailor-made one-on-one customer purchasing experience. This is the future of shopping.

(Christian Radmilovitch, Digital Expert and Consultant)

Besides sending photos to customers, you could also direct them to a visual merchandising department. With this in place, sharing best practices between employees can become much easier, and more accurate and fluid, across the globe. Pictures of beautiful installations in a shop window can become benchmarks for other sales teams. If previous products need to be displayed, there would be a perfect reference available. Service would, consequently, be improved within departments. In order to make things even better, each department should think of ways to improve its service level in relation to other departments.

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Service is perceived as service once customer expectations are met, anticipated or even exceeded. This requires a perfect knowledge of their habits, needs and desires. To do so, data collection, analysis and availability are crucial. Once again, the digital world provides sophisticated solutions that enable retailers and brands to know their customers better. The challenge is

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iPhone or iTouch applications are increasingly emerging, allowing sales advisors to have all existing customer data on hand. Thanks to a highly profiled database, the cosmetics retailer Sephora has developed an iTouch application for its sales force: The application ‘My Sephora’ allows salespeople to access a large customer base by simply scanning the customer’s loyalty card or by typing the loyalty card number. With this device, salespeople have access to all customer-related data, they can see what the last purchases were, the customer’s preferences and his spending power, and can therefore provide a personalized service. They can also offer relevant promotional activities or offer better advice thanks to videos such as product tutorials.

On the other hand, Sephora developed an application for customers, who can view customer-to-customer recommendations and comments from the entire community. Sephora is very innovative in this respect, trying to move forward in sales force and customer relationship management by providing digital tools for salespeople and customers.

(Christian Radmilovitch, Digital Expert and Consultant)

Profiled customer data also allows salespeople to interact more closely and frequently with their clients. Today, VIP customers even expect their preferred brand to offer them a privileged space online, which allows them to interact directly with their personal sales advisor.

More and more luxury customers are keen on having their personal space on the brand’s online site, in order to be able to ask questions at any moment or under any circumstances: ‘I damaged my Louis Vuitton handbag, what can I do? I will spend three days in Hong Kong, can you give me advice on the best outfit to wear?’ It is very gratifying for salespeople to be seen as an advisor rather than a simple salesperson. This is what creates recognition and strengthens salespeople’s bonds with their brands. ( Jean-Charles Champey, former Retail Operations Director at Miu Miu)

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to provide tools for salespeople, who are on the front line, enabling them to identify the profile of their customer from the very beginning of their interaction. These tools enable them to provide a better service, create higher customer satisfaction and obtain stronger customer recognition. And this, we know, strengthens the bonds between salespeople and their brand.

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Training is required to use these digital devices, which are increasingly becoming salespeople’s companions and service assistants. During training sessions, salespeople should gain a better technical understanding of the devices, and should also learn how to use these in interaction with the customer. It is important to avoid situations where salespeople are so focused on their iPads that they forget to concentrate on the customer.

I have seen salespeople fail to greet their clients because they were too focused on their touch screens, which they manipulated in the middle of the store. The selling ritual with digital devices will change. Each industry segment makes best use of iPads and smartphones in different ways, which should be worked out in cooperation with experts. The tools as such are great, but the rules must be clearly defined. Otherwise, the service level will not increase but considerably decrease, and customer relationships will get more and more dehumanized. This is the opposite of what we want.

In order to integrate digital devices more easily into existing sales rituals, the newly designed devices for salespeople are getting smaller and smaller.

Several digital companies are currently designing multifunctional tools that provide everything salespeople need to accompany their customers throughout the sales process: from barcode scan, to payment facilities, to access to customer data, to the inventory and the online shop. Such a device is only slightly larger than an iPhone, and can be combined with an iPad if you want to make impactful product demonstrations.

In order to gain maximum support from the sales teams, organizing brainstorming sessions such as “how to use iPads and smartphones in the store” could be interesting. Such brainstorming sessions could help salespeople identify with their new devices, and give them the feeling of having contributed to the modernization of the brand. Why not choose one store as your pioneer location to test and implement the digital sales ritual, under the guidance of a digital retail expert, before deploying the new approach throughout the rest of your retail environment? In the deployment process, you may even spot some digital savvy salespeople who could help train other salespeople or establish comprehensive handson training tools. Once again, this could be a great opportunity for your sales teams to gain tremendous recognition.

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Customer data collector

Merchandising Memory

Customer Service

Cash-desk for mobile payment Stock control for order and replenishment

fig 24

Location of customer needs

« Showroom » for product demonstration

Tailor-made product creations

The digital service carousel

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Customer Relationship Management

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116 • Chapter 5 from Luxury Talent Management

PART 5

Looking forward: luxury and China 5.1 The special characteristics of luxury in China Greater China (Mainland China, Hong Kong & Macau) was rated in a recent Bain study (China Luxury Study 2011) as the world’s no.3 market for luxury goods in the world – just behind Japan. Many observers believe that China will overtake Japan soon, if it hasn’t already. Regardless of when this happens, European luxury brands should tread carefully when approaching the Chinese luxury market.

Three issues deserve careful consideration: The real size of the Mainland China luxury market is hardly larger than the UK’s: Chinese customers still largely buy their luxury goods outside Mainland China – either in Hong Kong/Macau or when traveling to Europe. In 2012 Bain reports that Chinese luxury customers spent 28 percent of their luxury budget overseas, 34 percent in Hong Kong/Macau and only 38 percent in Mainland China (down from 43.5 percent in 2009). This means that although the Chinese are luxury’s no. 2 customers in the world, Mainland China isn’t. This is linked to the significant price differences that exist between Mainland China and the rest of the world1: • The University of International Business and Economics in China reported that the price of luxury watches sold in China were 161 percent higher than those sold abroad.

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• A survey conducted by the Ministry of Commerce (MOFCOM) revealed that the prices of 20 luxury brands over five categories, namely watches, leather goods, apparel, liquor and electronic products, were approximately 45 percent, 51 percent and 72 percent higher than those sold in Hong Kong, the United States and France, respectively.

It is assumed that current import taxes on luxury goods will be lowered in the coming year. However, luxury brands are known to keep prices high in some overseas market – a policy that has been successful in Japan for years. There is therefore no reason to think that the most important brands will lower their prices in Mainland China if taxes are reduced.

Some luxury brands may be overstretching themselves in China: Boss has 139 stores, Armani 119, Dunhill 107, Montblanc 101. A recent paper in WWD (Dunhill’s China Challenge, March 20, 2012) states that 40 percent of Dunhill’s customers are now Chinese but that the brand is losing its identity and its sense of direction. “I recall seeing Dunhill points of sale in smaller, midend department stores, selling polo shirts, belts and other accessories that did not really seem to be in line with the brand image they want to convey,” said a person interviewed. “They are going downhill,” said an executive of one of China’s leading high-end department store chains. “They are either going to have to close some stores and become top tier or just have a lot of stores and go for sales. We consider them a second-tier brand. They are everywhere, they have lost their exclusivity.” Figures are the best way to understand the danger that awaits these luxury brands : Dunhill has 13 stores in Beijing , 5 in Chengdu and 3 in Kunming.

Brands like Aquascutum, Armani, Cerrutti 1881 (now owned by Li & Fung), Zegna, Gieves & Hawkes have gone the same way.

What about the major luxury brands? Louis Vuitton only has 42 stores; Cartier, 37; Hermès, 20; and Chanel, 8. Contrary to these famous brands, the brands we are mentioning here (Dunhill, Aquascutum, etc.) can soon be viewed more as middle-tier fashion brands than brands that are meant to be the embodiment of European luxury.

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There is a huge talent shortage in China when it comes to salespeople: With luxury brands opening stores at the rate of more than 150 per year (meaning 6 to 20 salespersons per additional store, which equates to around 2000 to 3000 new salespersons per year) and a new focus on second and third tier cities, the talent pool is shrinking rapidly. Meanwhile, Chinese customers are amongst the most demanding in the world when it comes to service. Luxury brands are therefore faced with multiple challenges including people that do not show up for interviews (up to 30 percent!), poor motivation, poor service skills, rising demand for better pay – without necessarily aiming long-term career goals. All of this is well documented and some luxury brands are trying to meet this challenge: the Richemont Group recently opened a Retail Academy in Shanghai and Starwood is creating a mentoring program for its Chinese workers. All luxury brands will need to maintain consistent service levels throughout China if they wish to keep their upscale luxury image and satisfy the demands of their Chinese customers – who may decide to go overseas to get the level of service they seek.

5.2 The key brand competencies the Chinese need to acquire 5.2.1 Chinese companies purchase European premium & luxury brands – but do they have the brand management skills to develop them?

In 2011 and 2012, three successive acquisitions occurred of European luxury brands by Fung Brands Limited – an investment fund (attached to Fung Capital Europe) owned by Victor and William Fung: • The acquisition of 80 percent of Sonia Rykiel, the famous French fashion brand (with annual sales of 90 million Euros in 2010). The brand has 365 employees and manages 65 stores and is sold mostly through wholesale.

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• The acquisition of an 80 percent share in Delvaux, the Belgian leather goods manufacturer, through DLX Holdings, an ad-hoc subsidiary of Fung Brands Ltd. Founded in 1829 in Brussels, since 1883 Delvaux has been an appointed supplier to the Court of Belgium. The brand has three production facilities in Brussels, in Bourg-Argental (France) and Ho Chi Minh City (Vietnam). The company operates 10 stores of its own, and has 220 employees with an annual sales turnover of 17 million Euros.

• The acquisition of 90 percent of Robert Clergerie through a subsidiary, RC Holdings of Fung Brands Ltd. The brand has around 200 employees, independently manages a network of 20 stores all over the world and has a manufacturing workshop and a development center in Romans (its original birthplace, near Grenoble). Its annual turnover represents over 20 million Euros.

Chinese companies are purchasing European brands, a phenomenon that started about five years ago.

• Examples abound in the automotive industry: In 2005 Nanjing Auto bought MG, and SAIC (Shanghai Automotive Industry Corporation) acquired the rights of several Rover models.

These were redeveloped and marketed under the name Roewe, with great success. Since SAIC’s subsequent acquisition of Nanjing Auto, the new group re-launched the MG in Britain in 2009/2010, with models that were well received by critics. The group’s portfolio also comprises the rights to Austin Healy, purchased in 2007. In 2010, Geely bought Volvo from Ford.

• In 2008, Weichai Group, the first Chinese manufacturer of boat engines, trucks and construction equipment, bought Moteurs Baudoin – recognized experts in marine engines. In 2012 they finalized the acquisition of Ferretti – the world’s largest manufacturer of luxury yachts, with brands like Riva and Ferretti to their credit.

• A similar phenomenon is appearing in fashion. In 2008, the Hembly International group bought Sergio Tacchini. In 2009, Zhongfu bought the rights to Pierre Cardin in China. In 2010 Shandong Ruyi (the world leader in spinning and weaving, one of the Hugo Boss sub-contractors) acquired 41 percent of the

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Japanese fashion company, Renown, and, the Italian clothing company, Tombolini.

So far, Chinese companies have been building on the low-cost business model: Low prices made the difference, and some even resorted to dumping to get rid of competitors in the market. They have now clearly understood that owning a brand generates higher margins than being a manufacturer for the brand’s owner.

This explains why over 20 percent of company heads surveyed in a recent study by The Economist2 say they are in search of brands.

This movement is part of the major overseas direct investments made by (mostly private) Chinese companies since 2004, which is, according to the only study available on the topic, “dominantly motivated by seeking technology and other strategic assets – mainly brand names.”3 However, Chinese companies are faced with significant managerial shortcomings, especially where integration of foreign teams and marketing are concerned. The Economist’s survey shows that Chinese companies acquired 298 foreign companies in 2009 (including 13 percent in Europe and 13 percent in the U.S.), but only 39 percent of top managers surveyed believe they have the skills to integrate these acquisitions. The challenges ahead are therefore significant.

“Chinese multinational companies rarely have firm-specific ownership advantages—notably, core technology, organisational and management skills, and brand names.”4 This lack of management skills is nowhere more evident than in the development of global brands. Brand management competencies and skills are not part of the Chinese business culture. As Y.C. Yeh, founder of Tai Ping carpets said “The Chinese are very good at manufacturing, but the culture forbids marketing.”5 Many important dimensions of brand management have yet to be mastered, including building brand consistency, respecting intellectual property rights, pricing, quality control, applying a contract-based culture, managing creators and designers and building affluent customer relationship.

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These competencies can be learned through partnerships with European brands and experts. There are three main methods to achieve this: 1. Buy European luxury brands and create mixed teams with a European CEO (Fung Capital went this route – appointing Jean-Marc Loubier, former marketing Director of Louis Vuitton and former CEO of Escada, as the CEO of their new acquisitions); 2. Adopt the Artistic Director/CEO or COO model of mixing cultures in which a duo manages the brand – one being Chinese, the other being European, for example, Guillaume Brochard, French, Founder/CEO and Dennis Chan, Chinese, Founder/ Artistic Director, the duo behind Qeelin6). Another example is the development of Sheji/Sorgere – a men’s luxury brand set up

by China Garments with products designed by Francesco Fiordelli (Fashion Director) and manufactured by Caruso, an Italian company.

3. Work with European branding experts on (re)developing existing Chinese brands (an approach adopted by Herborist, a beauty brand from the Shanghai Jahwa Group).

These brand management competencies and skills are critical and will be even more so because China is in a transitional phase – moving from ‘made in China’ to ‘designed in China’ (as stated in the twelfth five-year plan adopted early 2012). Regarding textiles, the plan calls for the establishment of between five and ten internationally recognized Chinese brands and at least 100 nationally recognized brands by 2015. It also states that more brand management and brand building education should be instigated in order to bolster China’s fashion industry. As Lin Yun Feng, VP Chinese Chamber of Commerce of Textile Industry said in a recent interview (January 2012): “Chinese competitive companies will go the quality-way. They will work with European designers. I cannot exclude that those that fail to evolve in this manner will go bankrupt.”

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Our advice to Chinese firms who want to create world class premium and luxury brands is simply three words: Buy / Hire / Learn.

1. Buy expensive brand management expertise and/or buy brands (and respect their business culture).

2. Hire international talent in all dimensions of brand management.

3. Learn from competitors with the help of international business schools.

5.2.2 Major luxury brand management competencies and how they are not (yet) mastered

by Chinese brands Based on our experience of working with Chinese companies, the following four real examples illustrate the gap between European and Chinese brands.

Case 1: Building brand consistency The European luxury brand approach: • Buy expert and creative skills for all communication objects (Leaflets, Website, advertising, etc.).

• Manage numerous egos – the Creative Director, the Photographer, the creator of the perfume bottle, the Face, etc.

• Have a dedicated internal team with required talent.

Chinese luxury brand case study 1 The Brand buys ONE brand communication object from an external creative expert. It then uses internal/local designers to create all the others.

Consequence: absence of consistency and poor quality

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Chinese luxury brand case study 2 Despite having a Creative Director and an international architect for its store concept, the Brand decides to work with a local web agency to build its website.

Consequence: no core creative skills applied to the web and poor execution.

Case 2: Setting price levels The European luxury brand approach: • Benchmark the competition; • Set prices based on the brand positioning and not on the cost structure; • Set different prices on different markets; • Have a dedicated internal team with required pricing talent.

Chinese luxury brand case study: It adopts a pricing based on cost structure – with different multipliers for different products in similar lines.

It changes prices erratically – some go up, some go down, without real justification.

It prices similar objects differently, with no justification in the eye of the customer.

It has no dedicated team with required talent: the pricing is done by the CEO and the COO. Consequence: price inconsistency and customers are lost.

Case 3: A shared international business culture The European luxury brand approach: • A contract-based culture: in all cases contracts are drawn (licensing contract, distribution contract, supplier contract, etc.).

• State-of-the-art compliance regulations are required.

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• Dedicated internal teams with required talents (legal, marketing, etc.) exist.

Case study: the co-branding project An international luxury brand and a Chinese luxury brand decide to produce a collection of objects, manufactured by the Chinese brand and sold in the international brand’s stores but presented as a co-branding enterprise...

International luxury brand Could you please sign our compliance regulations (code of conduct, etc.) that all our suppliers are supposed to sign?

Chinese luxury brand We are not a supplier but a co-brander – we will not sign these papers.

International luxury brand Please try to understand, we are buying a product from you – it is a supply chain process – our code of conduct is a document that all companies that we do business with must adhere to.

Chinese luxury brand We have agreed that this is a co-branding project in which both brands should be in an equal position. It is unfair for you to consider us as your supplier.

You took the initiative for this project. If you really intend to keep this collaboration, you should respect our business mode.

It’s a handshake business – mutual trust is its basis.

International luxury brand This transaction is not about trust – what we have to do has to be compliant to the rules and regulations as set forth by our parent company.

Chinese luxury brand We understand that you have your rules and regulations. We have our own manners too. You should have stated that clearly when you first came to us for this collaboration: we would not have wasted our time.

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International luxury brand Please understand that the marketing team has agreed on the co-branding and still wants it. This is an issue with the legal department.

Consequence: the project is abandoned

Case 4: Managing scarcity The European luxury brand approach: • It manufactures products in a given country of origin.

• It benefits from the positive image of this country of origin.

• It accepts not to satisfy customer demand: it adapts the product offer to the manufacturing volume.

Chinese luxury brand case study The brand imports very high-priced European products into China.

Facing a demand that exceeds the offer, it decides to have additional products manufactured in China and to sell them as European products.

Consequence: In its grab for short-term profits, the brand now faces customer dissatisfaction and legal complications for having broken the law.

The Tai Ping case Tai Ping was created in 1956 – under the name Hong Kong Carpets International Limited – by Michael Kadoorie (and seven other shareholders) as a philanthropic organization, both to give work to refugees from mainland China and to safeguard China’s carpet-making skills. This artisan workshop produced carpets for the Peninsula Hotel, one of the major assets of the Kadoorie family. The management was handed over to Anthony Yeh – one

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of the shareholders and a graduate in mechanical engineering from Syracuse University (USA) who developed a new technical process: the mechanization of the knotting system or “tufting” technique. Tai Ping (which went public in 1973) thereby became a manufacturing-oriented company, with factories in mainland China (Nanhai) and Thailand, targeting the hospitality market, offices, convention centers, golf and country clubs, casinos, and restaurants in Hong Kong and South East Asia. In 1989 Anthony Yeh was succeeded by his son Kent Yeh –a graduate of Berkeley (Industrial Engineering) and Wharton (MBA). Following the opening-up of China’s economy, the new Managing Director decided to invest in new ventures like cosmetics, cement and bottled water, as well as a furniture rental business in Hong Kong.

Tai Ping lost $HK200m divesting itself of these loss-making mainland investments from 1996 to 1998.7 The first reorganization led the company to concentrate on its core competency: carpet making. Sales turnover for 2000 was US$56.4m (HK$439.6m). Tai Ping also started to explore the B2C market (the residential market) and was selected as a subcontractor for major designers and luxury brands wishing to develop carpet lines within their offering. In the early 2000s, for example, Tai Ping manufactured the Kenzo Maison carpets.

Nevertheless the Tai Ping’s overall concentration on B2B markets (cited as “floor coverings” in their 2002 results document) led them to face a difficult situation: under the pressure of a market that was increasingly oriented towards lower-priced products, their gross margin declined steadily. Some factories in mainland China – a joint venture established in 1993 with a privatized carpet manufacturer which sold products under the Shanhua brand – proved to be operating exclusively in the more price sensitive hospitality sector.8 In 2003 after having brought in an external firm of management consultants, the board decided on a major strategy shift, not to mention a new Managing Director. As J. S. Dickson Leach, the Chairman wrote: “After careful consideration the Directors and I have decided that in order to grow and create shareholder value

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and long term prospects for all its stakeholders the Company must move from its previous factory oriented direction and become a customer driven business. To achieve this, it is necessary to make some fundamental changes to the way we do our business. In the second half of this year agreement was reached with the previous Managing Director for him to step down from his executive role, but for him to remain a non-executive member of the board. A search is underway for an international CEO with strong branding and sales experience. The management structure is also being changed.”9 James Kaplan, former SVP Sales and Marketing Director of Knoll International, was hired as CEO that same year.

James Kaplan’s three-prong strategy to turn the company around was to invest more in its luxury products; sell off non-core assets (the furniture business in 2006 and, in 2012, the 49 percent stake in the factory in mainland China) and diversify further into the residential carpet market as a launch pad out of Asia. The firm’s specialist residential carpet trade had nearly suffocated under the weight of the commercial machine-made division which had swollen over the years before Kaplan entered the frame.10 In 2003, 90 percent of Tai Ping’s sales had come from corporate clients but in 2011, thanks to a network of showrooms (the United States being the brand’s primary target), residential carpet sales had climbed from 10 percent to almost 40 percent.

This was made possible by management team’s internationalization and a strictly controlled branding strategy. This included the creation of a new logo and branded communication; a reorganization of the brand architecture (a new brand, “1956 by Tai Ping” was created in 2011 for the hospitality industry with a new visual identity to distinguish commercial products from residential11 and two further brands were acquired: Edward Fields in the United States in 2005 and the Manufacture de Cogolin in France, in 2011); the opening of a US flagship in 2005; a new distribution strategy; a new pricing strategy. Today Tai Ping considers itself to be a luxury carpet company that only sells 100 percent custom-made products. This has led the company (and all its

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brands) to distribute only through B2B channels, and never to go the BtoC way.

As James Kaplan says himself: “I’ve stepped back and realized that where we manufacture our product is second to how we develop the brand globally. There is often the question of, ‘will a Chinese luxury brand work in Europe and the US?’ I think the answer is yes as long as you maintain the standards of quality and design and customer service that people expect from a luxury brand.” Sales more than doubled, going from 563 million HK$ in 2004 to 1.221 billion HK$ in 2010. Anthony Yeh and Kent Yeh resigned from the board in 2005.

This fascinating story is a perfect example of the hurdles traditional Chinese family companies face when going international.

We can identify 4 major hurdles:

Hurdle 1: The manufacturing bias Chinese companies have built their development mostly on manufacturing. When it comes to building an international presence, they remain fueled by a manufacturing mindset. They will invest in manufacturing facilities, in processes, and will stay volume and product-driven. Their instinct is to try to lower prices to gain market share.

Note 1: The Western education of its managers (even at the MBA level) does not help change this perspective. It may even lead to hazardous investments, by adding a financial bias to the manufacturing bias.

Hurdle 2: The lack of brand management competencies Building a brand (as we have seen in this book) needs very specific competencies in image building, design management, production control, distribution control, pricing and storytelling that most Chinese companies do not have. The role played by a

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management consulting firm and the hiring of a new CEO with the appropriate experience has radically changed this at Tai Ping and allowed it to build a real luxury brand.

When James Kaplan took over he found different logos, different websites, different so-called ‘brands’ used in different countries. Simone Rothman, who he brought in as Chief Marketing Officer, decided to unify all this and to build a single branding strategy (with a logo, a visual vocabulary, etc.) with the help of European branding experts. Her background in design and architecture was an asset here.

Building a brand includes deciding on how to manage the brand portfolio. The decision to develop Tai Ping, Edward Field and Manufacture de Cogolin as three separate brands and not bring all products under the sole Tai Ping brand was a critical decision. It proves that each brand’s heritage and characteristics are respected and that their positioning is clearly defined.

Hurdle 3: The propensity to “short cut” Simone Rothman is adamant: “luxury is a business where no short cuts are possible.”12 She describes herself as a “control freak” which is in-line with numerous examples we discussed earlier in this book. Building a luxury brand takes time and every step must be controlled: Tai Ping’s management had to enforce this when they decided to rebuild their headquarters in Hong Kong, making sure that their Chinese team consented to having all relevant details monitored by American designers and the New York team.

This leads to a fundamental contradiction to the tendency Chinese managers and executives have of looking for short-term benefits, of accepting second best, working in haste and having little respect for intellectual property. Such opportunistic behaviors conflict with the requirements of building a luxury brand.13

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Hurdle 4: The Chinese family business Business literature is replete with analyses of the cultural impact of traditional Chinese family businesses. Most of these papers underscore the importance of cultural traits that impact the way Chinese managers develop their business. Some of the major conclusions are consistent with the Tai Ping situation: • The importance of trust – given mostly only to close family members and to classmates. This leads to a lack of trust in outsiders (and in professional managers).14 • “Familism”: i.e., the overriding respect for family authority and hierarchy, loyalty, commitment and contribution to the family15 • Confucian dynamism, a traditional Chinese trait, has a direct negative influence on international entry mode decisions.16 In fact managers with strong Confucian values will adopt very conservative attitudes when faced with risk or uncertainty.

Moreover they are more cautious when it comes to the costs incurred by competition when entering international markets.

Decision-making is another domain where the Confucian values have a great impact : information analysis and interpretation is mainly done through relatives or potential business partners and the decision-maker’s own subjective evaluations.

Finally these executives will insist on their own ideas to enhance their authoritative position – although they may at some point show respect to other’s suggestions to maintain a harmonious relationship. This has serious consequences : Chinese leaders with strong Confucian values may have great difficulties accepting to work with Western experts.

• The role of the CEO: “A CEO in the western world is normally looked upon as a consensus builder or as an individual who debates and discusses strategies with their employees and then executes the strategy, whereas in China the leader is looked upon as the sole decider and executor of strategies.”17 This once again shows the limits of possible collaborations between Chinese and Western executives when their cultural values are too far apart.

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5.3 Why hiring Asian executives is essential?

The lack of Asian nationals in senior executive positions across the Asia Pacific region is a global issue for the industry. As a key player and by far the most important growth market in the region, China has become the top priority for luxury brands but the talent there is scarce. Brands will not be able to rely on luxury’s most traditional recruitment technique, i.e., poaching from the competitor.

In the coming battle for talent and experience across Asia, most luxury brands will have to come up with new approaches to satisfy their requirements, something that India – the next growth market – will soon need to consider too.

The challenge in China is threefold: • Identify local potential entrepreneurs capable of building solid and profitable distribution businesses (retail and/or wholesale) while developing the brand’s notoriety and implementing the strategy and procedures of the luxury company they work for.18 • Train and develop a new generation of local talent at middle and junior level on the characteristics of luxury: its unique business model, the competencies and behaviors expected, the challenges of retail and merchandising, etc.

• Acquire a deep understanding of Chinese consumers and of local cultural trends in order to build specific customer relationship and customer loyalty programs.

To attract high quality executives, visible partnerships must be developed: with Universities and Business Schools, political institutions, administrations and Consulting and Communication agencies.

Likewise, in order to enable local people to remain loyal to the organization and prepare the leaders of the future, luxury brands need to provide win-win career deals including visible career paths and reward systems that encourage collaboration.

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Finally, luxury brands should try to build “leadership duos,” associating an Asian executive with a European/American executive. Such a leadership duo could, for instance, bring an executive talent from HQ together with a local high potential talent at middle level, with a view to having the duo learn from each other in order to succeed together in their common mission.

This innovative way of cooperation requires a strong end-to-end process that identifies the right talent, selects the relevant project and audits and reviews the duo.

The following section will develop these points further, illustrated by some real examples and case studies and key recommendations on how luxury brands should tackle these challenges.

5.3.1 The talent market in China “As China’s economy continues to grow at a breakneck pace, thousands of new businesses are starting up, discretionary income is growing rapidly with the emergence of a new middle class, and wealth is being created as never before.”19 Trying to recruit and retain high-caliber talent in the luxury industry can be daunting.

What motivates a Chinese engineer (or graduate with a MBA) to work for an Italian fashion company in Shanghai? If you don’t know, you risk falling behind in the race for talent in this emerging market.

Let’s start with the big picture. This new market is growing so fast, even established global players aren’t recruiting and retaining enough employees. For the China market two important factors are important: 1. The Cultural Revolution created a “missing generation” of those aged 45 to 55. Expatriates therefore fill the most jobs at the top.

2. Young workers are flooding the marketplace but because education quality varies greatly among schools, many of them are grossly unprepared.

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The figure below, adapted from Egon Zehnder,20 shows where deficit and surplus exist in China at four levels: entry, middle management, country leadership and regional leadership. The cross-hatched area represents the talent pool; the white area show deficit or surplus of talent.

The Cultural Revolution effect: expatriates fill top jobs Regional leadership

De

fici

De

fici

t

Country leadership

Entry level

us

Su

rpl

rpl

Su

Young workers are flooding the market but unprepared

us

t

Middle management

China Talent supply

Figure 5.1

Talent demand

The talent market in China

The gap between employee supply and demand is especially wide when it comes to candidates capable of moving into senior leadership roles. As a result, as mentioned earlier, a great number of expatriates fill the most critical top jobs.

Likewise, many recruits fresh out of universities lack the language and other skills to take on even entry-level positions in global companies.

Furthermore, salaries in China have risen out of proportion to the expertise of the talent pool, creating unrealistic expectations among potential employees. Finally, China’s one-child policy has created a unique problem. As one manager, working

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as Director for the Asian market for a French jeweler, told to us: “Consider that millions of young Chinese have no siblings and no cousins. It’s not too difficult to see how the child can become the center of attention for the entire family. It’s not easy giving critical feedback to someone who is not used to it and who has lots of employment options elsewhere.”

In this context, while luxury has become a ubiquitous and massive industry in China with annual growth exceeding 50 percent for many brands, luxury talent is increasingly scarce. The luxury industry is faced with a talent bottleneck, where the talent pipeline has not kept up with growth. The context has radically changed: • Ten years ago Cartier, Chanel, Hermès and Louis Vuitton had just a few boutiques each in China (one to five). They were often small shops inside hotels and stores owned by exclusive agents/ distributors.

• After decades of central planning, which eliminated any sign of luxury as well as the overall concept of it, China has had no luxury base of its own, This meant that luxury brands had to bring in their own managers from overseas while they were in the startup phase.

In the 90s, top management came from the brand’s home country – Europe and the US – and middle management tended to be drawn from Hong Kong, Taiwan and Singapore to meet the demand for the degree of sophistication that was lacking locally. This importing of talent also limited development opportunities for local staff seeking a career path in the luxury business.

Last but not least, another factor limiting the growth of the Senior Executive pipeline has been the operational nature of the business, where strategies were decided and designed at head office and simply executed locally. That is why until recently, the demand for talent focused on execution skills rather than leadership skills.

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5.3.2 Testimonials about China’s talent challenges21 Testimonial 1 – The sector expertise James Zhang, the President of LVMH China says “Indeed, the talent pool in China is still being developed, since the history of the luxury business sector goes back less than ten years, which is rather short. To get the right candidates, who have a strong sense of luxury and customer focus with great potential to be developed further, is far more important than to get the candidate with only a short period of luxury working experience and unproven credibility and capability in the market.”

To find such skills, luxury houses need to search in sectors that teach high–quality customer service, attention to detail and the one-on-one human touch, as well as aesthetics and beauty; sectors such as high-end hospitality and cosmetics are worth considering.

Luxury brands should also look at general retail – specialty or mass retail – since these sectors have already attracted and developed a large number of brilliant mainland Chinese talent.

“In China one needs to think out of the box, take risks and come up with quick and creative solutions,” says the head of a Swiss watchmaking brand who has spent the past 15 years in Hong Kong and Shanghai. So, hiring from external talent pools is a plus not a minus and it is especially true for the luxury market.

Testimonial 2 – Promote Chinese managers According to the previous head of Richemont Group in China.

“One of the key success factors for Cartier in China has been that our market-oriented functions such as sales, marketing and PR are all headed by mainland Chinese, who know and understand the fast changing needs of our Chinese customers. Ideally you can mix the local talent with westerners who have experience in Asia, deep brand knowledge and a strong entrepreneurial spirit.

In general you need leaders in China who will be responsible for

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people and for decision making and who are ambitious about shaping the future of the brand.”

Testimonial 3 – Invest on talent grooming “Given the large number of boutiques open and opening in China in the next five years, we are facing a serious challenge to find both junior staff and senior executives. So we focus very much on training in order to cope with our expansion” notes the EVP Human Resources of Chanel.

Building the necessary mid-to-long term talent pipeline is vital.

This includes training, coaching and succession planning. There needs to be a combined approach that blends knowledge and appreciation of luxury’s unique culture with practical experience in a flagship or operational department in order to engrain sales, and management behaviors.

For this reason luxury brands such as Shangri La, Hermès and Richemont group launched their own training/sales academies (see the Richemont Retail Academy case study, below).

5.3.3 How can luxury brands win this Chinese talent contest?

In their HBR article Ready, Hill, and Conger22 suggest two strategies which we have adapted to the idiosyncracies of the luxury industry described earlier in this book. These strategies are illustrated in Figure 5.2.

First strategy – Attract talent by making compelling promises Center these promises on the company’s brand: • Does the luxury brand have a reputation for excellence that may lead to personal advancement?

• Does the luxury brand have a unique business model that is based on creation and craftsmanship?

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Purpose

Brand

promise made

Chinese Talent for Luxury

promise kept

Culture

Opportunity

Figure 5.2 Attracting and retaining Chinese talent in luxury: a framework

• Does the luxury brand have leaders that can inspire passion and trust for people?

Then focus on the company’s opportunity: • Will the luxury brand provide a visible career path?

• Will the luxury brand offer a continual training program?

• Will the luxury brand ensure competitive pay?

Finally explain the characteristics of the company’s purpose: • Does the luxury brand have a mission and values that are meaningful to potential new hires?

• Does the luxury brand provide its people with the right to act as global ambassadors to promote brand recognition among Chinese people?

• Does the luxury brand offer diverse projects that enable its people to grow within Asia?

Second strategy – Retain talent by keeping your promises Craft a culture characterized by three critical things: • A good command of English and French and/or Italian languages and knowledge of their cultures.

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• Strong communication about the essence of brands, their cultural roots and craftsmanship experience, the historic collections, etc.

• Education about how to behave with luxury customers: the art of execution, the provision of superior service, the attention to detail and the human touch.

Insight – The Retail Academy of Richemont Group In April 2012, The Richemont Group opened a Retail Academy in Shanghai with the objective of training Chinese students as luxury retail assistants for its stores across China and to wherever Chinese people travel. The Cartier, Chloé and Net-a-Porter owner will soon begin to train students in a number of professional skills and sales techniques taught by luxury industry experts and guest lecturers.

The nine week training course will involve students in market research and online activities, as well as practical assessments to gauge sales and management abilities. Nestled between high-end boutiques and flagships on Shanghai’s Huahai Zhong Road, the exclusive academy will run five courses each year, with just 50 students in each class.

“The retail academy will be a long term and consistent talent development model for us. Once proven in China, more countries and cities will participate in the model. Richemont has another advantage: our worldwide networks of boutiques need Mandarin speaking sales associates. So there are opportunities for our trainees in China to learn and live their potential in overseas postings.” notes Mr. Alain Li, Regional CEO at Richemont for Asia Pacific region.

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5.3.4

Luxury talent management Conclusion

In China people are trained to do well in exams and learn by rote.

As the result, local employees often are considered by expatriates to lack creativity and proactivity. In contrast, citizens in western societies are trained to learn key concepts and apply those in different contexts. Western leadership, therefore, focuses more on creating a vision and empowering employees to achieve this through their own decisions and actions.

Cultural differences between the two lead to differing expectations about conduct in leadership roles. From a western viewpoint one may perceive Chinese leaders to be lacking autonomy, creativity and independent thought and to be “rule driven.”

“They need to acquire leadership capabilities in order to interact with the business world: reporting added value for the HQ, communicating key messages to local business analysts and building strong relationship with shareholders” says Charles de Brabant, CEO and Founding Partner of an executive search boutique located in Shanghai. In a similar way, from a Chinese viewpoint one may find it difficult to understand what the expectations and roles of western leaders are and may perceive them to be lacking the rigor and depth needed for strong decision making and performance delivery.

That is why we need to balance different expectations in China and the West as to how leaders should behave.

When it comes to executive talent luxury brands want to attract, develop and retain what has to be done?

They should first realize that although their brands are attractive to the increasingly affluent Chinese customers they are remarkably less attractive to Chinese talent. As disclosed in interviews with local recruiters, luxury companies are seldom an employer of choice.

In a white paper23 Philipp Haermmerle – recruitment expert at Heidrick & Struggles for the luxury and retail sectors in China –

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points out the qualities that most talented Chinese executives value over “brand”: • • • • •

Freedom to innovate Autonomy to make decisions Visible career development High level of responsibility and broad job scope Suitable organization (performance driven yet family-like in culture, with minimal politics) • Bosses who motivate and coach • Team spirit • A track record of success “These factors rank ahead of the brand in the majority of cases.

Western brands tend to overestimate their power of attraction, which has dropped in recent years. In the meanwhile Chinese companies have become a magnet competing for the best mainland Chinese executive talent” he says.

Thus, luxury brands should attract mainland executive talent with a new perspective. Some key ideas to keep in mind are: 1. Simplify reporting structures and provide to the very entrepreneurial Chinese candidates more space and resources.

2. Demonstrate that luxury is “art of execution” throughout creative/designer and sales experts testimonials, and with the experience of craftsmanship (the luxury business is often perceived as too “executional” by Chinese executives).

3. Educate, educate and educate the wider market about the essence and the uniqueness of luxury brands.

4. Coach Chinese executives to engage the brand in corporate social responsibility and arts events.

Winning the talent war for luxury brands in China requires a great deal of effort and patience to reach an understanding of different expectations for leadership, as well as alignment on what success should look like. Innovation and participation of everyone should be critical – and a strong Chief Human Resources Officer a definitive advantage to lead this particular change.

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Listening to a successful duo: The Shang Xia case24 What responsibilities does each of you have? In what way do you think they are complementary?

Jiang Qiong Er (CEO & Creative Director) My background is creative, artistic. I started six years ago. I think it is very important to have real talent to specialize in management and business development. Even if I have a leaning for management I lack the techniques and experience. While it develops, I shall have to stick to my priority, which is creativity and the vision of Shang Xia, the future – what will we be doing in one year, three years, five years? In the course of time, while Shang Xia develops, the boutiques open, when the range expands, there will be more and more effort on management, as compared to today, or six years ago.

I think we need partners. I, personally, do not believe in hiring.

Philippe, for me, it’s not recruitment, it’s a happy encounter because in this kind of story, if one wishes to remain together for a long time, it is not recruitment that is needed, but a fortunate encounter. Humanly, it is fundamental. Without it, it is just the recruitment of someone you can replace with someone else. If it is a happy encounter, there will be ups and downs, challenges, successes, but if it’s a happy personal encounter on the basis of shared ideals, a beautiful vision, in such a case, even if one has, as one certainly will, difficulties, ups and downs, these can be overcome.

That’s my understanding of Philippe’s role – it is not at all a question of hiring. Besides, I’ve never used headhunters to fill this position because I do not believe in it. I think it should be people who like and appreciate each other.

Afterwards, we shall talk about other things, because we come from different backgrounds: each one will have a different point of view, with skills and experiences that are different.

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Philippe Lamy (COO) If you look at it factually, it is true that we have different backgrounds. Mine is really international business, there is therefore a complementarity that is evident: when you put down our paths and our specialities on paper, this becomes very clear. This does not mean that it is complementary, but that it ought to become so. What is important is how we interact with each other, therefore we work together and that goes beyond just work. I completely agree with Qiong Er to say that this is a business, but in the end it is a friendship. Even if it’s a business, there is a great complicity and complicity is essential. For instance, on each subject, we both have points of view that are not the same, we therefore have to find a common point of reference, which is a point of equilibrium that is good for the company: it is not the lowest common denominator but rather the highest common denominator.

Jiang Qiong Er At the same time, culturally, one is not so different, since Philippe, even if he is French, has worked extensively in Asia, Bangkok, China, and Chinese culture is therefore not alien to him. I am Chinese, I have lived, studied in France; I am familiar with European culture so in fact, culturally, we are not strangers. We understand each other thanks to our earlier experiences.

Philippe Lamy Concretely, there are plenty of decisions that both of us take together, so compatibility goes way beyond mutual respect. It is a fundamental. Patrick Thomas tells the same story: when he was COO of Hermès, the idea Mr. Dumas had of the COO’s job was that they should always be together. In the end, it’s quite true.

Today, in the twenty-first century, it may be more complicated than before but it’s still true, for there is a need to share to find a perspective. It requires balance to be able to choose the best decision. For me it goes beyond the magnificent Shang Xia project: it is a story of friendship with Qiong Er and a story of admiration for her talent.

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It is also a real pleasure to no longer be alone when faced with decisions. I spent the last 15 years being boss and finding myself having to face difficult decisions alone. Even if you get used to it, is not pleasant, and suddenly, I find I’m not alone at all and it’s really nice. It’s a real privilege.

Jiang Qiong Er It is important for our harmony for me to have a liking for management, at least to be able to understand it. I am not a loony artist. Loony artists exist. One cannot communicate with loony artists. So for a project to go far, one needs both this freedom of creativity, imagination, one needs passion, etc. At the same time one must be rational. For Philippe, he needs to have a bit of creativity in management, because Shang Xia is still small and new. One has therefore to innovate in management and in development. Philippe’s role is not only to apply what he acquired during his past experiences, but also to use them and be creative. Both of us need to have Shang and Xia (top and bottom / up and down / logic and imagination). You need to have both at the same time to be in harmony; if he has only the Xia and I have only the Shang, we will never find this harmony because we will never understand each other. Shang and Xia are two faces that seem opposed but which are not at all. Each one of us needs both: when we have both, you will get good results.

Philippe Lamy It is a duality: what is really nice is that in every human being there is a duality and this may cause conflict. Here, since we are two, ultimately there is no conflict: duality is not inside you; it is physically represented by two people. It becomes a debate, a discussion between two perspectives and it’s really nice. When I arrived I said to myself: this is going to be new: it is even more enjoyable and fulfilling than I ever imagined.

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What strikes me in China is that you start off by getting to know each other before actually working together. Is there a cultural dimension in your way of putting things?

Jiang Qiong Er Historically, there have been many beautiful encounters between poets, artists, writers, among politicians, in love stories. In our culture, human encounters are important. What are the pleasures of life? It is not business. The pleasure of life is when you are happy. What makes you happy? It is to be with people you appreciate and want to be with. Happiness comes from that. If you do business with people you hate, you can make a fortune with them, but your life is miserable.

All that is basic. Even the creation of Shang Xia is a beautiful human encounter between me, Alexis Dumas and Patrick Thomas. This is not a merger or business acquisition but a happy encounter. I believe that man creates projects and successes; it is only because of them and nothing else.

So when building a project based on a beautiful human encounter it means that one builds it with people. They can adapt to many situations, if you have the same dream and the same passion. If a project is built on a commercial foundation, the environment changes, a crisis comes up and can break it easily.

It is therefore a lot more permanent. Even if some day we do other things, that beautiful human encounter will stay forever.

Philippe Lamy I think it’s Chinese but not only Chinese. It’s surely not AngloSaxon, but in the end, it is also quite French. In France you work all the better with someone you know well. It is the Latin culture: there are great similarities between Chinese culture and Latin culture. One of the strong points of this similarity is the

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pre- eminence of the quality of work relationships. It is probably there that France and China meet.

When you look at the two cultures, there are several important points in common: the sense of family, extended family, the precedence of relationships at work, saving face. This contributes enormously to the primacy of relationships at work because when we are face to face and we say that we will trust each other, it is because there is the historical tradition of saving face. If he betrays you, he loses face.

French and Chinese cultures have a rapport with craftsmanship, culture, food that is common.

Jiang Qiong Er It’s a lifestyle.

Would you consider Shang Xia a Chinese luxury brand?

Jiang Qiong Er In terms of quality, yes. But there still a reserve on our side, we do not use the word luxury to talk about items that are created, as what is most precious in the Shang Xia project is the time and the ardour that one brings to the project, the object and to the people who come to visit us. It is time and emotion.

Today the word luxury is used to a frazzle by everyone. What creates our “uniqueness” is time, the fact that people feel an emotion when they visit and when they set out to discover objects, craftsmen, beauty, service, stories. So we ourselves do not use the word luxury: we say that Shang Xia is a quality enterprise, an upscale enterprise; we steer clear of it, if not we fall into the run-of-themill luxury that is expensive and does not represent us.

Philippe Lamy Luxury is statutory.

The word you chose earlier is very apt: it is a lifestyle brand, Shang Xia is “the contemporary Chinese art of living,” luxury is part of

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it, but in a very profound way. This is not a statutory brand: one does not stroll around with the Shang Xia tea service in the street!

When you have a Shang Xia jewel, is not because it is more expensive or that it makes you into someone who displays his economic strength.

I had the privilege of meeting Jean Louis Dumas one day and talking to him; I asked him whether one could speak of Hermès as a luxury brand, and he answered, we aren’t one. I asked why, he said, because on each of our items we sell, there is my name, so it is not a brand, it is a contract I have with our clients. This is striking because it means we’re not in marketing but in a personal human relationship, between the head of a family business and its customers, it’s at another level.

Jiang Qiong Er We do not market either, but we offer. We offer, and when one offers one is more generous. In the contemporary Chinese art of living people do not know what they need: it is we who create the offer. It touches us, we welcome them, we are very happy to receive them, but if our offer does not touch them, it doesn’t matter; they will come back some other time. It is an offer that we propose, not a marketing survey. That is more generous, more enveloping.

Philippe Lamy I think the arrival of marketing in luxury has thrown luxury out of kilter, because when marketing arrives one switches to “manufacturer” logic. We have a factory and the goal is to sell as many pieces as possible. We then begin to do marketing, and that is how the affinity with the customer is created. For us in lifestyle, we have no factory, no industrial reasoning: we have craftsmen and the store is where we create an affinity with the customer. When a store manager decides to buy a product in the Shang Xia catalogue, he already has an idea of the customers to whom he will sell it. I think the entry of marketing in luxury has perverted it, because it has really led it astray, taking it to areas in which it

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does not belong. That’s why today we are very chary of the word luxury.

Jiang Qiong Er I give you an example of what happens in luxury boutiques: there is never a customer that sheds tears of emotion. Contrariwise, it happens regularly in ours, because people who enter our boutiques are affected and overwhelmed by emotion – by an object, a cultural artifact or an object that is utterly extraordinary.

Philippe Lamy It happened again yesterday: a girl came for a job interview. I asked her if she had visited the boutique; she said she had not had time to do so, so I invited her to go and see it. When she returned, I asked her, “So, what do you think?” and she replied: “I wept.”

Jiang Qiong Er This is one example, but the most precious thing is when you live an intense moment that will stay in your memory. We serve tea to welcome customers. We have customers who return with their own collection of tea and they invite us to take tea together because it is a moment for sharing. Our style, our “uniqueness” is also that. That is where you find the value of Shang Xia. You are going to open a boutique in Paris. If I take the example of tea, how you will make sure that what happens here will also happen in Paris?

Philippe Lamy It’s a real challenge. This is where we enter a phase where management becomes very important because you need the ability to duplicate all the conditions. I am convinced that in Shang Xia’s history, like in all brands that commence, there is an initial phase where what is important is creation, vision. The execution is less important because there is only one store: it obviously stands out.

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The second phase is the ability to duplicate the whole.

Very concretely, in Shang Xia’s service there are 3 things that are imperative. There are things that can be “schematized” and others that you cannot, which can be learned, but cannot be drawn up in a standard “service procedure.”

There is: – The philosophy of the service with its rituals – that can be schematized. Clients enter, one has to smile, serve them tea, etc.

When speaking of the products one relates a story, or several, about them. That corresponds to standards, it can be charted.

We can say that that is the easy part.

– Then there is a second level of service, which is how, in this schematized system, does one create a human connection, an emotion, an encounter between a client and a vendor, a visitor and a Shang Xia ambassador? Here it depends rather on the people that are selected: they should like to render service in the sense that they take pleasure in offering pleasure and making people fantasize. Here one cannot chart it, but one can still manage to recruit people who enjoy it, and who have Shang Xia deep in their soul. Often, at the end of an interview, we ask the question: “Is this person Shang Xia or not?” If the answer is no, we cannot recruit him/her, because the Shang Xia spirit is very important.

– The third level of service cannot be charted and it is not really possible to recruit people who know how it’s done because it takes years of practice to achieve it: in a rapport between a client and a vendor there is a moment that is quite brief, a window, within which you can make a sale. It is very narrow, because it must happen at the time the customer is willing to talk about it: if it’s too soon, you destroy his fantasy, if it’s too late he will already have moved on to other things. Identifying that particular moment requires subtlety and an amazing knowledge of human psychology, also a very good power of observation. So you can only reach this stage with years of experience. It’s not a question of achieving sales targets; it’s

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just that if you really want that person to leave as both a client and ambassador, it must be done at the right time and in the right way.

Jiang Qiong Er To maintain the same style of service in Paris or Beijing, when we ask people to join our team, they usually have experience in “skills.” After that, it is important that they like Shang Xia and they really want to join us, not only for the sake of changing jobs.

In which case Shang Xia is not the best choice. If you work in Shang Xia, you must have and share this generosity, the sensitivity of human contact: sales are secondary. Generosity is not learned: You have it or you don’t. We therefore choose ambassadors who possess this generosity.

For people at the higher level, their cultural background is very important because today our customers are not the nouveau riche, but people who are really cultivated. They have knowledge about skills, craftsmanship and the history of China, even more than people who work in the boutiques. So to have a real dialogue and serve our customers, the people who work in the boutiques have this “cultural background” with regard to tea, the art of living, on materials, on craftsmen, and even poetry.

We have good timing, because in China there are people between 20 and 50 years of age who want to rediscover their cultural roots.

If Shang Xia was born ten years ago it would have been too early – the market was not ready, the Chinese were not ready, nor were our current teams (they would have dreamed of a big French or Italian company). Today, after working in a French or Italian company, working in a Chinese firm, showcasing Chinese culture, is enjoyable. It is not even a job, and there is sincerity in everything. Customers are sensitive to this because they sense the authenticity, for as soon as they arrive in the boutique we share, we welcome, we offer them a nice tea. Everything comes from the heart.

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Philippe Lamy It is for that reason that we ask the question during an interview, is that person Shang Xia or not? If she does not correspond to it, the rapport will be mechanical and real human contact will be impossible.

This is one of the main problems of service in Asia. The one the West faces is that the philosophy and rituals of service are not respected and one fights to reinstate them. But in Asia they are respected to the letter and executed in a very mechanical way. It bores one to tears.

When I entered your boutique for the first time, while chatting with your employees I realized they all had degrees and had worked in Europe, is this the case?

Philippe Lamy Degrees are a more of a consequence: we recruit people who have a deep interest in Chinese culture, so they are educated people.

We do not look especially for qualified people, but it happens that those who have an interest in Chinese culture are educated, and so they have degrees. It is true that the affinity with other cultures is important, because Shang Xia has a universal vocation and Chinese Culture easily crosses borders.

Will the salespeople in the Paris boutique be Chinese?

Jiang Qiong Er One does not say salesperson but ambassador – it’s written on their business cards. It’s not important for them to have a Chinese “physique,” the most important is that they are cultivated and understand Chinese culture, because the boutique is a place for sharing, dialogue and meeting, where we invite French people to discover the Chinese contemporary art of living, to experience, to share our passion. All the ambassadors, even if they are not Chinese, should appreciate Chinese culture. Because it is not limited by language or by nationality, it is universal.

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Philippe Lamy To come back to recruitment regarding things that one cannot schematize. I have even seen an example, at the Ritz Carlton, where every employee has a small card that they always wear, which says, “We are ladies and gentlemen serving ladies and gentlemen.” This does not fall under the ambit of standard procedures, or a routine or the rituals of service, and not even a philosophy. It goes much further – it is a very strong message that is constantly in their minds. I find this phrase very profound. I wondered whether we should do the same at Shang Xia – but we will find our own way of doing it. Nevertheless, it is a subtle and intelligent way of materializing the need to create a connection, emotion. The Ritz Carlton is fascinating: we recently went to their worldwide meeting in Shanghai. We saw how they work, talk to each other. The presentation was amazing. They resemble us quite a lot – they have a very informal way of speaking to each other, even if they speak business, it is not limited to that, they share values, and believe in things that are similar to this contemporary art of living. Sometimes you saw it in the small details. For instance, in the room where the meeting took place we were installed in two-seater sofas – so there were 75 sofas with two people each, with coffee tables. It changes the whole relationship.

While being a part of a large group they still manage to preserve this culture.

At this point in Shang Xia’s development, what conclusions would you draw?

Philippe Lamy The deployment will take a while, after which we will refocus on the creative challenge. It’s Shang and Xia: one day on top, another day at the bottom, the wheel turns, roles are switched. Jiang Qiong Er is creatively excellent and she has understood that one of the measures of creative success is economic success. According to me, there are many creative people who do not understand that. They think, to create one must be as revolutionary as possible, they want to change the world, but those who succeed

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are those who have understood that one of the gauges of the their creative capacity is economic success.

Jiang Qiong Er Creativity should bring commercial success, after that the market will give us a new freedom to continue to innovate. One must always find a balance. We cannot abandon one or the other and we cannot look only at the financial results, otherwise one loses the value and meaning of the project.

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The Resort Revolution: Chinese Weekenders in Search of Style Luxury by the lakes

Located 160 kilometers west of Shanghai, the city of Huzhou is rarely visited by foreign tourists. Indeed, even though its undulating landscape boasts natural hot springs, tea plantations and bamboo groves, several friends in Shanghai questioned why I wanted to visit. Then I showed them a photo of the Sheraton Huzhou Hot Spring Resort. They smiled.

I arrived on a cool winter morning, via a 30-minute train journey from Hangzhou, and a 25-minute taxi ride through dusty industrial outskirts.

After leaving the vast new train station, my cab passed several servicing facilities for global automobile giants. The grimy air was redolent of China’s southern manufacturing heartlands. It seemed absurd that I would shortly arrive at a holiday resort described in a press release as “the most architecturally innovative property in Sheraton Hotels’ global portfolio.”

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Sheraton’s China portfolio is adding a clutch of eye-catching hotels and resorts, notably the lakeside Sheraton Bailuhu Resort, Huizhou, in southern Guangdong province, which is being built into the hills surrounding a lake, and the soaring Sheraton Taizhou Wenling residing beside a river in Zhejiang province, and which is set to be completed in 2019.

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The resort’s French-styled offerings have struck a chord with affluent weekenders.

“Money isn’t an issue for Chinese guests and families that stay with us, especially on weekends,” says Lee Peres. They aren’t looking to stay in one place for five or six days, that is not a concept they understand.

Short getaways are what they want, and for people living in nearby cities like Shanghai, Hangzhou, Ningbo and Nanjing, Moganshan is becoming their own version of The Hamptons.”

Managing the entire project themselves gave the couple time to thoroughly assess their target market and their positional approach.

“We started our marketing in January 2013, and focused squarely on the Chinese media,” says Lee Peres. “Social media is also very important in China. Visitors take more photos than we could ever expect from our own photographer, and they re-post them via Weibo and WeChat. You can’t create publicity like that. It’s a phenomenon.”

Initially, Lee Peres noticed two distinct guest profiles, sophisticated consumers with overseas travel exposure who were possibly educated abroad and take international business trips and are very familiar with five-star hotels. Then there were very wealthy guests, with plentiful money to spend and a desire to enjoy great French cuisine, try a French cooking class, sip fine wines on the terrace and live the experience. “The more affluent the guests, the more likely they are to drive themselves, as they like to enjoy their cars,” says Lee Peres. “One client called us the day before to ask if the road to our hotel was good enough to drive his Bentley.”

Le Passage’s client base has since embraced newer niche segments.

“A lot of Chinese mountain biking groups are enjoying the Moganshan scenery at weekends, and this brings younger guests to dine or stay with us,” says Lee Peres. The opening in 2013 of a high-speed rail station at Deqing, at the base of the Moganshan mountains, has also made access easier for weekend train trippers. “The train reduces the distance,” says Lee Peres. “Nanjing is a three-hour drive, but it takes just one hour by train, and Ningbo is now only half an hour away on the train.”

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and build a country getaway for their young family. Several coincidental twists and turns during construction resulted in a total rethink, and Le Passage Mohkan Shan was born.

Le Passage Mohkan Shan is a distinctive proposition. Lee Peres calls it “a French luxury country house hotel in a verdant Chinese valley.” The heart and soul of this elegant mini-resort is French, and designing and building it was a labor of love. But the owners also worked tirelessly to ensure its authentic look and feel, rather than tailoring the design to the Chinese market. Leisure seekers flock to Le Passage largely because it feels like a small pocket of France in the Chinese countryside.

“Affluent Chinese from the big cities are now looking for unique places where they can drive and stay, eat great food and enjoy themselves.

We have created a place that delivers the kind of experiences they are seeking,” says Lee Peres.

It could have been different. The couple had built a small house on an isolated patch of land they had rented, and were about to renovate an adjacent barn into a larger home when they received a knock on the door in 2008. Government officials from Moganshan stopped by to ask if they would be interested in building a hotel, which could be integrated into a plan to develop the area as a tourism destination and stimulate the local economy. In return, the couple would be able to acquire the land. “We thought about it carefully, because we had never planned to open a hotel,” says Lee Peres. “The idea gradually crystallised in our minds, and for both of us, it became a dream we wanted to pursue.”

The hotel – the name of which, Le Passage Mohkan Shan, refers to the historic English translation of the place known today as Moganshan – soft-opened in 2011 with nine rooms, and has since expanded to 29. “Every aspect of the hotel was designed by Christophe, whose grandparents owned a small hotel in the Pyrenees,” Lee Peres says.

From day one, the aim was to be “a gourmet destination.” The couple hired a Shanghai-born executive chef who worked for Mandarin Oriental in London to elevate the standards of the kitchen and restaurant with the ultimate goal of gaining a Michelin star accreditation, and built an impressive cellar of fine wines. Later, in spring 2014, Le Passage opened a French gourmet cooking school.

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In the second decade of the twenty-first century, urban leisure spenders are demanding challenging experiences. “We hit the market at exactly the right time,” says Horsfield. “The old Chinese model of selling tickets for mass tourism sites has become outdated. People want to try out new things and visit different places. They are buying items like mountain bikes, tents and horses and heading out of the cities.

Eco-themed tourism is becoming very popular, but there are virtually no resorts in China for people to enjoy the natural environment.”

As a result, Naked Retreats, known in China by its local brand name 㻌ᖗᰃ, meaning Naked Heart, has charted an expansion path. In addition to its two Moganshan resorts – Naked Home (which is being expanded and renamed Naked Castle in late 2014) and Naked Stables Private Reserve – the company is designing and building, and will operate, a small portfolio of new luxury rural resorts across China. Naked Hill is slated for Shaoxing, Naked Spring will open in the hills near the city of Yiwu, Naked Wall is pending near the Great Wall of China at Badaling, and Naked Island will be created at Taihu Lake.

The objective is “to build a scaleable Chinese brand with resorts near the main cities of Shanghai, Beijing and Hong Kong that could, in around five years time, go international,” says Horsfield. “Brands are the future in China, and we want to establish a strong presence, not just be a translation of a western brand.”

Managing the pace of expansion in a nation where action today is preferred to waiting until tomorrow is critical, he adds. “People are spotting the appeal of our resorts, and because we design, build and manage each one, we have become the number one option for anyone who wants to build a resort. We get a call at least four times a week from a different developer somewhere in China asking us to plan a resort for them.”

A frisson of French chic in the country Born in Hong Kong and educated in the UK, Pauline Lee Peres and her French husband Christophe were tiring of urban life in Shanghai, so they decided to purchase some land in a Zhejiang province tea valley

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Moganshan, a photogenic mountain region clad with bamboo groves and tea fields that had been used as a weekend retreat for European and Chinese city elites during Shanghai’s decadent 1930s Paris of the Orient era.

Yip-Horsfield restyled the cottages adhering to stringent eco-friendly principles and a rural-chic theme, and Naked Retreats was born.

In addition to vacationing weekenders, Naked Retreats attracted corporate teambuilding clients from Shanghai and Hangzhou for its verdant scenery, connections with local culture, hiking and cycling, and lakeside yoga. It even offered a British Army-style fitness boot camp.

The seeds were sewn for a new China-made eco-resort concept.

At a drinks reception following the groundbreaking ceremony, a beaming Horsfield told me that the couple’s second resort project, Naked Stables Private Reserve, would “adhere to the world’s highest environmental standards, and prove that ‘Made in China’ can provide luxury and sustainability while supporting the local economy.”

The Horsfields’ “sustainable luxury in nature” gambit has proved a winning bet. Not only did Naked Stables Private Reserve become the first resort in China to achieve the LEED (Leadership in Environmental & Energy Design) Platinum Certification, it also became a poster child for China’s leisure revolution. Guests escaping the frenetic city life in Shanghai, Hangzhou, Suzhou, and Hangzhou jump in their cars at weekends and head to Naked Stables, where they can stay in tree-top villas, enjoy horseback riding, tea picking or secluded fishing trips. Less adventurous guests relax in the spa or sip locally grown green tea beside the infinity pool. As darkness falls over the forest, Michelin-starred chef Stefan Stiller prepares degustation dinner menus in Kikaboni restaurant.

The resort’s success, Horsfield says, has hinged on a reappraisal by travelsavvy metropolitan Chinese of how and where they wish to spend their time outside of work. “There has been a radical shift among younger people in the large cities towards enjoying nature, breathing fresh air and trying out new leisure activities,” he says. “In the last couple of years, spending money on luxury experiences instead of spending on luxury products has become a noticeable trend, both in China and overseas.”

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Elsewhere, Anantara Xishuangbanna Resort & Spa offers 80 deluxe rooms and 23 pool villas amid primeval forests of scenic Yunnan province, the first China resort by Six Senses is located at the gateway to the Qingcheng Mountains near the United Nations Educational, Scientific and Cultural Organization (UNESCO) World Heritage & Natural Cultural site of Dujiangyan in Sichuan province.

But it’s not just the deep-pocketed international hotels chains that are creating China’s Resort Revolution. Forward-thinking entrepreneurs are playing their part by designing and building “lifestyle hotels,” which are distinct from branded chain hotels in terms of style, design, products, and service.

The attraction of a lifestyle hotel is neatly summarized as “a place where guests can seamlessly connect, a setting where guests can become part of an experience by interacting with the people that live there as well as staff and a place where design adds to the uniqueness of the adventure,” according to A New Breed of Traveller: How Consumers Are Driving Change in the Hotel Industry, a report published in November 2013 by HVS, a leading hotel and leisure consulting firm.

Sustainable luxury in rural China On a sunny afternoon in October 2009, South African entrepreneur Grant Horsfield and his Hong Kong-born architect wife Delphine Yip-Horsfield stood in a field flanked by forested hills and tea plantations near Moganshan – a three-hour drive from Shanghai – and planted a tree.

They were not alone in that bucolic corner of Zhejiang province, however. As the tree planting was completed, the generous applause of a gathering of local government officials, business owners and the media echoed around the valley. We had all just witnessed the groundbreaking ceremony for an eco-themed resort called Naked Stables Private Reserve, the first of its kind in China.

The Naked story had begun a couple of years earlier, when the couple purchased a handful of farmers’ cottages in a village on the slopes of

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At the heart of the resort is a conference center large enough to host the 2014 Asia-Pacific Economic Cooperation (APEC) Leaders’ Summit, while a spa, 14 restaurants and bars, a yacht marina, 18-hole golf course, and spacious wedding facilities have been designed to cover a range of clientele bases.

“For Kempinski, this is our flagship project in China, which we expect is going to be for China what our Emirates Palace is in Abu Dhabi – a magnificent resort for hosting heads of state delegations, global politicians and celebrities. It will be the modern face of China for important visitors hosted by the government, and we believe this will give the resort huge credibility in the market,” says Michael Henssler, President of Kempinski China and Managing Director of Key International Hotel Management Ltd, a joint venture between Kempinski and Beijing Tourism Group.

The rise of the lifestyle resort Projects like Kempinski Yanqi Lake and Sheraton Huzhou are not just noteworthy for the outreach of international hotel brands into lesser known corners of China that would have been unimaginable a decade ago. They offer world-class resort locations, architecture and amenities to broaden the tourism experience base of Chinese travelers. The “resort concept” is today’s go-to buzz phrase in Chinese hospitality.

The triangular area between Shanghai, Hangzhou and Nanjing features an impressive portfolio of lifestyle-oriented resorts, including Amanfayun, Fuchun Resort and Four Seasons West Lake in Hangzhou, Naked Retreats and Le Passage Mohkan Shan in Moganshan, and Sheraton Hot Spring Resort Huzhou.

Resort developers are also moving into quaint tourist-friendly canal-side locales, such as Shaoxing and Zhouzhuang. Meanwhile Hyatt Regency opened the first resort on the island of Chongming, near Shanghai, which is promoting itself as an eco-friendly weekend destination offering natural wetlands, a migratory bird reserve and organic farms.

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As my taxi plunged on, we turned onto a new highway that forged a path towards green hills and away from grimy industry. As the landscape flattened, the 101-meter high, horseshoe-shaped resort emerged from the cold waters of Lake Tai. It’s a bold architectural statement. Designed

by Zaha Hadid’s protege Ma Yansong, it has been said to resemble both an ancient Chinese arched bridge and the mouth of a fish.

Pulling up by taxi is unusual, because the 282-room resort has been built to cater for China’s new urban demographic: self-drive vacationers.

Affluent families and young couples from Shanghai and the cities of Zhejiang province escape high population densities and polluted urban skies to arrive en masse by car on weekends and Chinese holidays. Once the car keys have been deposited with the bellboy, guests enter a lobby decorated with a curtain of Swarovski crystals, and floor-to-ceiling veined marble and jade quarried from Italy, Pakistan and Afghanistan.

From my lake-view room, I spotted the 39 lake-front villas and yacht marina that were under construction, while the grass turf of the ringshaped “wedding island” was being readied for a high-society marriage.

These images were offset by a picturesque backdrop of traditional wooden fishing junks hired by the local government to cruise close to the shore for added photogenic value.

The photo options are intensified at night. Standing in the icy wind and rain, I watched playful neon patterns arcing around the façade of the hotel and reflecting in the darkened waters of the lake. “Images like these are what Chinese smartphone users crave,” says Stephanie Choi, Director of Sales and Marketing at the resort.

More than 1,200 kilometers north of Huzhou, one of China’s most anticipated resort projects prepared for an Autumn 2014 opening.

Framed by mountains with views of the Great Wall of China, Kempinski Yanqi Lake is a 14-square-kilometer, multi-purpose resort about an hour’s drive from Beijing. Scheduled to open in phases it will ultimately comprise a see-it-to-believe-it circular 306-room hotel, nicknamed “The Sunrise,” on the shore of Yanqi Lake, plus 12 boutique hotels on an offshore island and a State Guest House for visiting government VIPs and political leaders.

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