Emirates Woman

Have consumers outgrown branding?

Today’s customers have infinite knowledge at their fingertips. We know more about manufactur­ing processes, materials and labour than ever before. Could this mean the end of paying a premium for brands?

- WORDS: GEORGINA LAVERS

The quality is actually quite good; my briefcase's hardware is made in Italy from a well known supplier. Many brands these days cheap out and don't even use solid brass.” The above is a quote from a commenter at PurseForum, a million-strong online community dedicated to all things bags. Take a meander around, and you’ll start to get a sense of just how much we know nowadays. The forum is like a nerdy Aladdin’s cave for handbag lovers. No question is left unanswered, no hardware left unexamined. The members are encycloped­ic in their knowledge and all-too ready to debate strap length, hardware quality, or the merits of lamb or calfskin leathers. They know where a company dyes its leathers; if its strap is made in Italy, but the rest of the bag in Taiwan. And if a brand is shortcutti­ng on quality, they should expect to be duly named and shamed – alongside photograph­ic evidence.

Their members may be more scrupulous consumers than the average luxury Joe, but do they point to a shifting pattern of consumptio­n? As we collective­ly become more discerning, with a keener sense of intrinsic value and interest in quality above all – do brands still hold power over us all?

The state of play

The new luxury customer is hard to pigeonhole. We buy 60 per cent more items of clothing than we did 15 years ago, but hold onto the clothing for half as long. We are more impulsive and fragmented buyers than our baby boomer parents, there’s no one channel that can capture us, and we’re a fickle bunch when it comes to brand loyalty. At least, that’s what we tell ourselves.

A 2019 McKinsey Report reviewed the profit of 500 fashion companies encompassi­ng both high-end and low-end. One of the most illuminati­ng findings was that the top 20 companies captured a staggering 97 per cent of profits. Put simply, the other 480 brands could bottom out of the market and there would barely be a ripple. Who were these “super winners”, as McKinsey refers to them? Alongside sportswear giants like Nike sat LVMH, Hermes and Richemont (the parent company to brands like Alaïa, Cartier, and Chloé). “Notably, the top 20 group of companies has remained stable over time,” commented the report, showing that when it comes to luxury, the big powerhouse­s are impenetrab­le – even to the frivolous Millennial. “We find there is still an appreciati­on for “heritage” brands when perhaps the quality could be same with a more unknown designer,” says BrandAlley content editor Jenna Jones, who name checks Mulberry as one example. There is a thin line between popular and ubiquitous, though. “On a personal level, I used to be obsessed with Veja trainers until I saw them everywhere,” she says. “Now, I’m on the hunt for something more unique.”

Premium luxury brands remain confident in their ability to sell and for that reason, can justify creeping prices seen over the last few decades. Take the Chanel Jumbo Classic Flap, a bastion of the brand. The quilted shoulder bag was $250 in 1955, so according to average inflation costs, should be around $2,500 today. Its current price in 2019? $6,200. w“That kind of very high level of price inflation can only be achieved by a very small number of companies, where you’re buying the brand,” says Sundeep Khanna, Director of Retail and Luxury for Deloitte.

“I think the general trend is for those at the top end to review their price structurin­g architectu­re and to push them upwards.”

He adds that these brands’ offerings are fairly immune to fashion trends, as well as a savvy handle on supply and distributi­on, making sure that their designs are just scarce enough to encourage demand.

It is this scarcity coupled with heritage that will nearly always trump intrinsic value when it comes to jewellery, says Sophie Stevens, a consultant for Sotheby’s Middle East. She tells the story of Suzanne Belperron, a Parisian jewellery designer in 1930s known for her use of non- or semi-precious stones. “If you see a lady wearing a big chunky rock crystal cuff, you know its Belperron,” she says.

“She made these voluptuous, curved pieces in crystal or wood that were antithesis to the clean art deco lines of the time. They weren’t expensive materials, but because of the heritage surroundin­g Belperron, we see pieces sell for well into the tens of thousands.”

Stevens also name check’s Cartier’s ‘Tutti Frutti’ bracelets as pieces worth far beyond their intrinsic value. In 2014, one of the ruby and emerald pieces sold at auction for more than $2.1 million – fetching double its estimate. It would seem that this layer of super brands are impenetrab­le to failure. But, as unease grows over price inflation and quality, a band of outsiders is looking to capture market share.

The new kids on the block

Italic. Beauty Pie. Sotheby’s. One is apparel, one is beauty, one is jewellery. Two are startups, one is a centuries-old institutio­n. All have one thing in common – they sell items straight from the source.

Sotheby’s decided to cut out the middlemen with its new range of fine jewellery, sourcing diamonds directly from the mines. Its European deputy director, Alessandro Borruso, pores over a pair of earrings at a presentati­on in Dubai, pointing out the lack of a ‘bowtie’ in the diamonds – light leakage through the stone that causes a shadow in its centre. I am fairly befuddled, but this is why Sotheby’s is so equipped for this premium offering, he points out: its centuries-long relationsh­ips allows them to offer flawless cuts of coloured diamonds at reasonable prices (the range starts at $40,000 – but still).

In apparel, Italic is an online marketplac­e that lets its 150,000 members shop for leather bags and sunglasses sourced straight from manufactur­ers that also produce for premium brands.

Coloured leather totes are sold at $150, cashmere scarfs for $95. They are made, Italic say, by manufactur­ers that also produce products for Prada and Celine, where a simple scarf could run to considerab­ly more. The only caveat? The items have no logos, no branding, and no creative director. CEO Jeremy Cai met with over 200 factories in order to convince them of his new pitch, whereby the factories were able to absorb more of the profits. “By removing brands, customers

get unbeatable prices, and factories get a fairer share of profits… this is as direct to consumer as it gets,” he says.

Beauty Pie has adopted a similar strategy, offering its members access to luxury products from what it calls the “world's leading beauty labs” for knockdown prices. The most popular product on the site is the anti-ageing cream, available for £11.35 compared to a “typical” price of £100. “I have been amazed to see how many people have become so conditione­d to accept the status quo, and immediatel­y judge new things as suspect, no matter how much more beneficial they are to them as customers,” founder Marcia Kilgore told Get the Gloss. “We’ve had to do a lot of work there, to prove to people that the Beauty Pie fairytale is actually true.” There is a raft of other competitor­s across markets. Like Deciem, the low-cost beauty company whose owner, the late Brandon Truaxe, revolution­ised the industry by pointing out the actual cost of actives like retinol. Or Yanxuan, the Chinese e-commerce company that plays a lucrative (if ethically dicey) game of offering unbranded versions of UGG boots or Coach bags, taken straight off the factory line. “The majority of what you pay for in a branded product is the marketing – not the design, materials or craftsmans­hip,” concludes Cai. “Consumers today are exceedingl­y savvy, with a keen eye for quality, and value. Brands won't go away. But consumers are in search of value first and foremost.”

In it for the long haul

So what do we ultimately want out of our splurges? Will we get the same enjoyment out of a $2,000 canvas Goyard tote, or a $200 unbranded bag made from the finest Italian leather? How much is a creative director, clever marketing, or a logo worth to us? When the top luxury companies have an average age of roughly a century, it will take time before we see if these new players are a flash-in-the-pan, or can offer any real longevity. For now one thing is clear: there may be no definitive luxury consumer, but brands hold an undeniable allure over even the most jaded. Jones may have skipped out on the Veja trainers, but her most recent purchase? Gucci Marmont loafers. As she puts it: “These? They’re just a good investment.”

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