Innovative ways to sell luxury & fashion brands during the economic crisis
There are basically 2 ways of approaching the current economic downturn for a Luxury brand:
The Bad way is to compare the current situation vs the development of the category for the past 8 years. The feeling is close to be in front of big cliff with no arm and no leg to climb…Uncomfortable! 
As everything is relative, 2009 may be a bad year if compared to 2007, but still outstanding whether 2005 would be the reference.
The Good way is most probably to take a Blue Ocean Strategy approach and consider this situation as a great opportunity to innovate. As the market is shrinking, it is critical to find new (or different) sources of growth.
The marketing of Luxury goods is driven mainly by a Pull strategy based on recipes which are considered as “Must Be” but without necessarily a pragmatic performance monitoring. The Ultra-luxury brands will keep their clientele but many others do not have anymore references in a situation where attitudes and behaviors of clients are changing. Innovating in selling high-end goods means challenging the status-quo in some areas such as: making the brand more accessible and enhancing the experience at retail.
Once the quality of products, integrity of brand DNA and rationalization of the portfolio are secured. It remains…the Client. The most important is to keep the contact with the consumer as the desire to own a Jaeger-Lecoultre watch or a Bulgari accessory has not disappeared!
What could be new ways of interacting with consumers with a positive and friendly attitude?
- Targeted and smart Limited Editions
Beyond the marketing trick to issue 888 units of a specific accessory to appeal Chinese consumers, there are ways of using limited editions as a strategic pillar of a brand. The core proposition of a brand A brand could decide to reverse the paradigm and to use restricted offers as the standard for its portfolio. The brand 20 Limited (designers from different categories commercializing a defined quantity of a product) is a good illustration.
Staying in touch with consumers
The fashion designer Marc Jacobs has launched in Paris in October 2008 his boutique Marc by Marc where limited editions of various accessories can be found in an exclusive environment at very accessible price (starting at 1.- Euro). It can be a clever way to generate proximity if the originality of the offer is still consistent with the brand DNA and the affordable price is not the unique benefit perceived by consumers. It helps to generate traffic in the retail stores and positive buzz for the brand.
- Second hand products
A brand could initiate the commercialization of its second hand products in order to facilitate the access to its world and generate additional sources of revenues: It represents a risk in terms of brand image dilution but it is a business already well established for many brands which are not benefiting from it…whilst being a criteria of success for the category. As an example, the Swedish fashion brand Filippa K has opened a second hand shop in Stockholm in summer 2008.
- Renting is not a shame…anymore
It is becoming trendy to rent as it gives the opportunity to transform the absence of ownership into a positive feeling to renew stuff regularly. It is not perceived anymore as a lack of purchasing power.
Fashion victims addicted to hanbags from Prada, Gucci & Co can now make their life a heaven by renting these precious and prestigious items with Sac de Luxe (French company).
Afficionados of Ferrari and Aston Martin have as well their passion fulfilled with Ecurie 25 which is based on a similar principle.
- A new retail experience
It plays a major role in the perception of the brand and the decision making process to acquire a luxury product. However, the current depressing economic climate is not encouraging consumers to push doors of Place Vendôme’s boutiques. Thus, it is even more critical to transform the contact with the consumer into a unique moment (on and off line).
The service level needs to exceed by far expectations through oustanding “Moments of Thruth” and/or the role given to the experience is to be encompassed into the overall brand proposition.
A fashion retail store in Los Angeles, Fashionlogy LA (already mentioned in a recent post), is transforming the purchase at the boutique into a master piece of the product itself.
The Watch Avenue website provides the potential client of some luxury watchmaking brands with the unique opportunity to experience brands and products on-line.
In a different environment, a wine retailer in Denmark, Gerbola Vin, is using Story Telling in an unconventional location as part of its core offer. This approach could support naturally luxury brands having a rich heritage.
Pop-up stores are a good platform to create a unique retail experience while being able to support other initiatives mentionned above. Vogue Magazine opened a Teen Vogue Holliday Haute Spot at the end of 2008 in a mall in the US. It illustrates unconventional routes of using temporary presence in order to built proximity with a specific target and generate buzz.
If the client is not coming naturally to the brand, it is up to the brand to find sensitive strings to pull in order to feed the desire while staying accessible. It is difficult today to pre-empt what would be the sucessfull recipe for tomorrow. However, one critical factor will be the capability of brands to keep the consumer in the centre of the radar screen while innovating in interacting with him or her.
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