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Millennials are known for surprising us with new ideas and challenging the tried and tested. They are no exception when it comes to luxury brands: they expect them to abandon their eternal reticence and instead come up with imaginative experiences that they can share on the social web - preferably as early as the pre-purchase phase. The next surprise is that the purchase phase is not so important to this future group of buyers.

This is also confirmed by TrendsActive in its TrendReport 2020, which clearly shows that emotional added value outweighs functional added value. People, especially younger people, value experiences more than things.

These are just two of the many findings of our 3rd international luxury study "Digital Luxury: How The Digital Transformation Shapes Luxury Brands", in which we examined the impact of the digital transformation on luxury industries and their brands in the world's three largest luxury markets DACH, USA and China.

"Luxury will become more accessible and more relaxed," is our summary of the study, which Klaus-Dieter Koch and I briefly present in this video:

Another result: the importance of individual touchpoints is changing. Online retail will play a more important role, Amazon is no longer taboo. Luxury brands must therefore learn to manage their brand at contact points that they can only influence indirectly. On the other hand, the monobrand store in an exclusive location - still in first place on the importance scale today - will lose relevance in the next three years and fall to 13th place.

TrendsActive's study proves that things that stimulate an experience - whether offline or online - contribute to a feeling of happiness. People are looking for meaningful experiences, whether in an online store, blog or store. Contact points that stimulate this feeling of happiness gain relevance on the importance scale.

BrandtTrust has been observing the development of luxury brands for eleven years now. In three studies, we have uncovered tips for efficient brand management in increasingly turbulent times. What is important when managing luxury brands? In this article, we have compiled basic knowledge and some inspiration for managing luxury brands. Despite all the changes - these remain valid.

Luxury brands need consistency

The understanding of luxury has hardly changed in recent years. These four elementary principles still apply to the management of luxury brands:

1. Building a luxury brand: think in decades, not years.
Business plans that aim to achieve a lot in too short a time should be treated with the utmost caution. This is because luxury products do not have to be purchased, they are very often not essential.

2. A luxury brand attracts because it excludes.
Luxury brands must exclude. Through their price, their availability, their product language and their codes. Luxury brands that fail to observe this principle out of a greed for growth very quickly run the risk of becoming ordinary.

3. Social media is (not) a taboo for luxury brands.
Luxury brands achieve their desirability by making themselves scarce, among other things. They should use social media, but they need the right balance of proximity and distance.

4. Mature markets segment themselves.
Market segmentation tends to start from the top down. Luxury brands sharpen the sense of quality and connoisseurship in their target group and contribute to differentiated purchasing, which in turn promotes value creation and sustainability. They are economically relevant.

A certain distance must also be maintained in online retail

The principle of exclusion also applies to e-commerce. If a luxury brand were to be available on every online corner, a large part of its appeal would be lost. On the other hand, studies such as TrendsActive's TrendReport show that the fundamental need for social connection is becoming increasingly important.

It is therefore all the more important that luxury brands maintain a balance between exclusivity and belonging. Hurdles, codes and boundaries are also important in online retail, which consumers must overcome in order to access a luxury brand. This is achieved, for example, through rigid recommendation marketing or offers with an exclusive club character. Why not transfer the system of stationary luxury retailers to online stores? What makes MyTheresa special is not on the first level, but in special areas that not everyone can access - like the prêt-à-porter stores in Paris.

As a brand, you have to contribute to high-quality social connections. Give luxury consumers the feeling that they belong and are part of a group. Deepen people's relationships by contributing to their "quality time".

If you want to become a luxury brand, you need discretion and style

Luxury brands must now learn to find the right balance between proximity and distance on the web. This also applies to premium brands that want to develop into luxury brands. They must also pay attention to their communication, tonality and volume on the web and communicate their superiority intelligently. They must concentrate on nobility, discretion and style. They can leave obtrusiveness to prestige brands.

Luxury brands in the fashion industry - recommended for imitation

Chanel is one of those luxury fashion brands that already operates confidently on the web. This has not detracted from its appeal. More than ten years ago, Chanel recognized the advantages of combining analogue and digital communication media. On all platforms (except Facebook), Chanel uses its established supremacy as a leading luxury brand to further captivate its fan base. Chanel does not submit to every customer request, but instead signals authority and dominance.

Karl Lagerfeld runs the Chanel brand according to these five rules:

1. Lagerfeld honors Chanel's legacy: When Karl Lagerfeld joined Chanel in 1982, he remained true to this legacy. Instead of using the brand as a stage for his own creations, Karl enriched the brand by continuing its typically simple French style. Even today, it embodies what made Coco Chanel legendary: Passion, unconventionality and uniqueness.

2. He sets the pace: Karl Lagerfeld does not close his mind to the zeitgeist, but chooses to lead rather than follow. At Paris Fashion Week, he adds a contemporary elegance to his down jackets - with a Chanel flair.

3. He loves continuity: with the strict enforcement of the C on the back and the constant use of the colors black and white, Chanel demonstrates enormous style density. The brand's codes are well known. That is why they can be staged in a new way or even used only partially - the association with the brand is immediately established.

4. He chooses storytelling as the luxury brand strategy: Lagerfeld understood early on that a brand has to painstakingly build up a relationship with its customers over a long period of time. Storytelling increases the speed of this development because the brand can achieve not only a rational, but above all an emotional persuasion. Karl Lagerfeld satisfied the need for transcendence. He enabled people to experience transcendence through storytelling. He used the power of aesthetics and created mysticism, surprise and wonder. On the website, customers are invited to explore the nucleus of the brand in 24 chapters under "Inside Chanel". The strong narrative can be found on digital channels such as Facebook and Instagram.

5. He thinks in "No Line": Chanel allows no contradictions in the interlinking of online and offline contact points. Throughout the entire customer journey, every customer feels the sophisticated authority of the brand, which elevates their experience with cleverly used reminiscences. Karl tightens the customer-brand relationship with "magic moments of truth" and "wow effects".

Louis Vuitton learns from a streetwear label

He sets the pace: Karl Lagerfeld does not close his mind to the zeitgeist, but chooses to lead rather than follow. At Paris Fashion Week, he adds a contemporary elegance to his down jackets - with a Chanel flair.

He loves continuity: with the strict enforcement of the C on the back and the constant use of the colors black and white, Chanel demonstrates enormous style density. The brand's codes are well known. That is why they can be staged in a new way or even used only partially - the association with the brand is immediately established.

He chooses storytelling as the luxury brand strategy: Lagerfeld understood early on that a brand has to painstakingly build up a relationship with its customers over a long period of time. Storytelling increases the speed of this development because the brand can achieve not only a rational, but above all an emotional persuasion. Karl Lagerfeld satisfied the need for transcendence. He enabled people to experience transcendence through storytelling. He used the power of aesthetics and created mysticism, surprise and wonder. On the website, customers are invited to explore the nucleus of the brand in 24 chapters under "Inside Chanel". The strong narrative can be found on digital channels such as Facebook and Instagram.

He thinks in "No Line": Chanel allows no contradictions in the interlinking of online and offline contact points. Throughout the entire customer journey, every customer feels the sophisticated authority of the brand, which elevates their experience with cleverly used reminiscences. Karl tightens the customer-brand relationship with "magic moments of truth" and "wow effects".
Louis Vuitton learns from a streetwear label

Disparate brands can energize each other through cooperation. This is demonstrated by the luxury fashion brand Louis Vuitton, which has collaborated with the streetwear label Supreme.

The brands have more in common than it seems at first glance: like luxury brands, Supreme chooses its distribution channels very selectively. Fans camp out in front of the ten sacrosanct own-brand stores and rare pop-up stores worldwide before collection releases. Only the basics are sold online, which are permanently sold out thanks to an artificial shortage strategy. Restocking does not take place; each collection is a "limited edition", which is even sold at a humane price in the first instance.

The fascination of the two brands for each other is nourished by the fact that both possess exactly what the other lacks. On the one hand: history, centuries of craftsmanship, quality and undeniable luxury. On the other hand, what money can't buy: Street credibility and recognition.

Luxury brands don't have to be well-known - but attractive

It is a misconception held by many brand managers: that brand awareness is important for brand success. The luxury brand Loro Piana proves the opposite: it is very successful - even though hardly anyone knows it. In six generations, the family business has become a globally respected luxury supplier in the fabric sector. The Piedmontese entrepreneurs work exclusively on the desirability of their product. Loro Piana simply doesn't care about public awareness.

New times are dawning for luxury watches

Anyone who has "allocated" their products for over a decade, like the Swiss luxury watch industry, has forgotten how to sell. The sale of products was virtually "automatic". Luxury watch manufacturers must now wake up: What used to be luxury is becoming something else due to developments in the world, digitalization and the brutal polarization in society - regardless of age, income and social background.

Today, it is about connoisseurship, reducing complexity, consistency, distance from one's own importance, but above all about meaning and an honest desire for relationships. Being part of the experience and part of something bigger is a feeling of transcendence. "It's a need that everyone wants to satisfy, consciously or unconsciously," says Pauline Taks, Trend Consultant at TrendsActive. These are the drivers of this new understanding of luxury, which is increasingly interwoven with immaterial attributes.

Luxury brands are lone warriors - two examples from tourism

The Chedi Andermatt: The luxury hotel opened in Andermatt in 2014. However, it is not the Swiss location that drives the hotel's appeal, but the Chedi concept itself. The brand style is designed and lived luxury, tailored to the color and tonality-perfect demands of its guests, who expect a carefree vacation experience from their Chedi. Switzerland and the town of Andermatt play a very subordinate role.

St. Moritz: A two-brand strategy with the Engadin ensures that both brands are clearly perceived. This has enabled Engadin St. Moritz to address individual markets and segments more clearly and to develop suitable offers for guests and partners. The clear separation of the two brands has resulted in a measurable strengthening of the single brand St. Moritz.

Storytelling – a strong partner of luxury brands

What really counts are feelings, emotions and meaning. People are investing more and more time and money in unique brand experiences that, underpinned by good storytelling, make them happier. Luxury consumers are therefore prepared to spend more money if they experience moments of happiness as a result.

The cosmetics brand La Mer shows how such an experience, together with strong storytelling, can contribute to long-term success. There is a strong story behind this brand, which in a way carries the brand: In the 1950s, Dr. Max Huber suffered severe burns to his face in a laboratory accident. Because commercially available creams were of no use, he spent many years developing a remedy made from seaweed.

The key component of La Mer's success is this story. It is impressively told by saleswomen. They also emphasize that the seaweed tips are harvested by hand and in an environmentally friendly way. Luxury consumers are attracted by the values ??of a brand - for example, the authenticity of the ingredients of the "Crème de la Mer" or the fact that they are obtained in an environmentally friendly and sustainable manner.

Our three luxury studies at a glance:

3. Luxury Study (2018): „Digital Luxury: How The Digital Transformation Shapes Luxury Brands"

The study analyzes the impact of digital transformation on luxury industries and their brands in the world's three largest luxury markets: DACH, USA and China. The current results are compared with those from 2012. The expectations and wishes of the new buyer group of millennials are also examined.

Order the 3rd Luxury Study (2018)

2. Luxury Study (2012) – Part 1: „New Luxury and Brands Reloaded"

With this study, we researched the general understanding of luxury in Germany, Austria and Switzerland as well as China and the USA. It was shown that consumption in the DACH countries in particular is shaped by values ??such as sustainability, fairness and individuality. Intangible things such as more space and leisure time are seen as important luxury goods and compete with material luxury products.

Results:

• In the countries examined, brands from family businesses can hold their own against the brands of luxury groups.
• Brands that have built up their trust reserves over many years survive even long periods of crisis. The storage power of such brands is enormous.
• On the one hand, material luxury serves as a reward drug, a fetish for differentiation and a symbol of advancement. But health, good nutrition, self-determination and experience consumption are seen on the same level as classic luxury and consumed in parallel.
• Product-driven luxury is no longer possible without experience and vice versa. There is no longer just one type of luxury - contemporary luxury is defined differently depending on the phase of life and socio-cultural frame of reference. The concept of luxury is multidimensional.
• As far as the individual countries' understanding of luxury is concerned, the diversity could hardly be greater. While Germans, Austrians and Swiss cultivate restrained, understated luxury, Chinese people like symbols that make their wealth obvious. US citizens, on the other hand, do not - yet - have any conspicuous preferences.

Check out the results of the 2nd Luxury Study (2012) – Part 1.

2. Luxury Study (2012) – Part 2: Supplementary Study "New Luxury and Brands Reloaded"

In this supplement to the study "New Luxury and Brands Reloaded" we publish a comparison of 40 luxury brands from five countries. We use a four-field matrix to compare their popularity and attractiveness. The result: The variety could hardly be greater. While Germans, Austrians and Swiss cultivate reserved, discreet luxury, Chinese people like symbols that make their wealth obvious. US citizens, on the other hand, do not - yet - have any conspicuous preferences. From discreet to ostentatious - the world has many luxury ideals.

Check out the results of the 2nd Luxury Study (2012) – Part 2.

1. Luxury study (2007): "New Luxury and Brands"

The representative study paints a meaningful picture of the new luxury values ??in Germany, Switzerland and Austria. It portrays the luxury markets and shows what strategic development potential is opening up for brands there.

Results:

• The most important new luxury markets are not yet occupied by strong brands.
• For consumers, self-fulfillment, extra time and travel are desirable luxury goods. What counts for them is quality of life.
• They are hardly interested in classic prestige efforts.
• The new luxury markets include health, food and crafts.
• Brands with high product quality and ethical credibility are considered luxury brands.
• Marketing phrases intended to suggest a feeling of luxury have no chance.

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