The Financial Times hosted their yearly luxury industry conference which attracted the who is who of the luxury industry: Johann Rupert – CEO of Richemont (superb speaker), Elkann -Chairman of Ferrari (rather pathetic speech but he made one valid point) as well as personalities like the star photographer Mario Testino (great speaker).
From the speakers and panels as well as luxury goods companies-it is clear: that the luxury industry has gotten spoilt by the good times and fast growth rates. Instead of focusing on being desirable to consumers and producing exclusive products, that are unique, the luxury industry is becoming ubiquitous.
Johann Rupert who controls and owns Richemont (that owns Cartier) warned the luxury industry not to become complacent and that it risked losing its individuality and style by trying to be everywhere. Rupert continued to argue that only if brands remain desirable and unique can they strengthen their brand equity and enjoy pricing power.
What was perhaps most interesting – was what keeps Johann Rupert awake at night.
It nothing to do with luxury in itself but rather the inequality developing in society. The inequality gap is widening so fast that soon the super rich will not want to share and show luxury out of security reasons. If this widening gap of the rich and middle class continues there will be ‘social warfare’ as a result. Luxury brands should pay attention to this according to Johann Rupert.
Another key theme of the conference was China.
Not only is China slowing down in terms of economic growth- changes in anti-corruption laws have negatively affected the luxury industry. Gift giving with corporate money has come to a stand still. Gone are the gifts of Cartier watches and expensive Hennessy Cognac, as well as the gambling excursions.
A man who knows China better than most, argued that companies should not only pay attention to their own brand DNA but also to the DNA of China the country. Doing business requires you to understand China – the culture and country. Chinese consumers while relatively new to luxury are learning incredibly fast and are extremely price sensitive. How can the luxury industry protect itself from the price conscious Chinese?
I personally think that brands have to become better at telling their story and heritage and engaging the consumer more.
If brands can engage the consumer with meaning and tell their story well – then brands can dictate prices and the consumers will come. This is the one point that Elkann of Ferrari made that is extremely important: ‘The term Luxury today is over-used. True luxury is about history, heritage, the story – these are things that cannot be copied.’
It was the fashion photographer Mario Testing who in my point of view had the best quote of the entire luxury goods conference. ‘Luxury brands should be like private clubs. You have to desire them and want to gain access to them.’
