23-Nov, 07:01

05:20, November 13 51 0

2017-11-13 05:20:04
Luxury in a Turbulent World: What’s Next?

What’s next?

There are more than 20 books on Amazon with those two words in the title (and subtitles like “Britain’s Future in Europe,” “Creativity in the Age of Entertainment,” “Dispatches on the Future of Science” and “The Smart Nurse’s Guide to Your Dream Job”).

They form the mantra of Silicon Valley, are featured on the Obama Foundation’s home page, and the title of a cultural trends report by the futurist Richard Watson. And they are the question in a Bloomberg headline after the most recent luxury industry results: “Gucci Loafers Are Everywhere. What’s Next?”

They are, in other words, two words that act as shorthand for the bundle of anticipation, expectation and disruption that is our understanding of the future.

But when it comes to luxury, once upon a time they also had a very specific meaning. They encapsulated the driving force of creativity: the constant quest for new ways of seeing, new ways of working, new ways of crafting and expressing identity, new ways of being relevant in the world. They were the causal root of trends, and they paved catwalks; they were the subtext of seasons, and the theory behind thinking six months in the future.

Ask designers what they are thinking about when they begin collections, for example, and the answers come back as variations of “what’s next?”. What fabric, what color, what silhouette, what hem length? What movie or book or television series that captures the popular imagination and changes how consumers want to dress? When we talk about the “zeitgeist” and “directional items,” that’s what we mean. Luxury is an exercise in projection, and a guess about what’s next. There is always risk involved, but to opt out of the game is to relinquish the urgency that hooks consumers.

So what’s new about that? (To change it up a bit.)

The fact that over the last few years “what’s next?” has also begun to mean something more in the fashion world. It has become a stand-in for the constant need for newness driven by technology and 24-hour communication; a nod to the need to speed deliveries and communications, to systematically rethink the interface between customer and company. What and when are the next product drops? The next Instagram story or newsletter?

And coloring it all is the macro meaning: the groan with which people greet every news alert on their phones, the feeling of nauseous anticipation that arises upon every new headline. “What’s next?” meant in reference to the seemingly unpredictable course of global events: What new natural disaster is about to hit; what unexpected political event will unfold; what tweet will send ripples around the globe? What will fall from the sky to unsettle the consumer, disrupt exchange rates and demand new corporate strategy?

Because these many layers of meaning cannot be disaggregated. People do not make purchases in a vacuum.

They buy because they want to feel better, or they don’t buy because they are scared; or they do buy because exchange rates have fallen and suddenly everything is cheaper, or they don’t buy because it is more expensive; or they do buy because, well, time to make hay while the sun shines (or before the bombs fall), or they don’t buy because what they see seems irrelevant to their lives. What happens next in the world changes what needs to come next in luxury. And the tension between those poles is what defines decision-making today.

So we asked a series of decision-makers to tell us “what’s next?” Here are their answers.

The luxury landscape has been changing for quite a while now and the element that has become most apparent is how it has gone from a brand-driven industry to a product-driven one. Brands can no longer rely solely on their image, positioning and status: this means that the offer and the entire productivity chain (from how the products are conceived and produced to the way they are communicated and sold), needs to adapt and be consistent with these changes.

Sustainability, flexibility, responsibility, quality and engagement will be even more important than they are today. They will determine the success of a company in ways beyond what we already can foresee and, most importantly, they will give it the right language and attitude to connect to the new generation of luxury consumers.

It is likely that others have more data and insight than I do about macro factors and industrywide challenges or focus. Although guided by my belief that surviving and thriving in the next few years cannot be by business-as-usual, my expertise is in leadership. And that will be the greatest challenge.

So, which C.E.O.s and senior team direct reports will succeed and which will falter?

1. Successful leaders will bring all their capacities to the playing field.

— Those who falter will fail to challenge their own strongly held belief that is untrue or no longer true.

— Those who falter will suffer a fear that drives avoidance of necessary actions or risk-taking and will let ego and emotion dwarf their own intuition.

2. Successful ones will bring all the resources in their ecosystem to bear.

— Those who falter will be afraid to delegate to capable subordinates, will react negatively to thoughtful pushback.

— Those who falter will avoid engaging outside resources to help, claiming frugality or confidentiality.

— Those who falter will have no external personal board of directors.

3. Successful ones will stay focused on the end game.

— Those who falter will get stuck in the details, overwhelmed, distracted by the “shiny new object.”

— Those who falter will stay tactical and short term, preserving the status quo or past.

— Those who falter will have an undisciplined involvement in nonstrategic activities, starving time from what only the C.E.O. can do

Whether it is a coach, an outside mentor, a trusted H.R. chief, the only way humans become aware of these possibly temporary troubled mind-sets is to look in the mirror through someone else’s lens.

O wad some Power the giftie gie us. / To see oursels as ithers see us! / It wad frae mony a blunder free us, / An’ foolish notion.... Robert Burns, “To a Louse,” 1786.

Building an environment that fosters excellence to its full potential across each company’s department should remain the focus, while making sure we live in our era and stay relevant.

Uncertain circumstances cannot affect a culture of excellence driven by talent, creativity and passion.

These core values will keep fashion relevant as well as the obsession to guarantee an authentic experience.

In a sense, luxury’s greatest challenge is the same as it ever was: to be more and more relevant to customers and the way they lead their lives.

Having said that, distinctions once critical to our engagement with customers seem less and less relevant. Lines between wholesale and direct-to-consumer trade, domestic and international business, physical and digital storefronts are increasingly blurred.

In a crowded and transparent marketplace, we need to be constantly “top of mind” with our customers without seeming ubiquitous. Given all this, our greatest new focus will be increased personalization and customization of everything from product to content.

To engage with a brand in a uniquely personal way is the ultimate luxury.

The world challenges include the climate, growing inequality, the aspiration for diversity, the rejection of a “one size fits all” global model, the re-emergence of identities, individualities, the aspiration for a more responsible consumption, the aspiration for a more feminine world.

A more feminine world is a world which gives birth to new and beautiful ideas for sustainable growth, it is also a world which takes care of all individuals who feel disengaged.

Therefore the luxury industry will continue to protect the welfare of all people participating in the creation, production and promotion of its products, will protect the environment while improving the traceability of its sourcing and will continue to pay attention to animal welfare. Finally, the role of the most accomplished brands will be to support and serve a larger community than just its clientele by encouraging the community towards a certain mission. Most brands carry missions which go beyond its products; e.g., Nike will encourage audacity, “Just do it!” Apple, simplicity and Chloé, “ freedom to be oneself.”

Beyond a global rise in austerity and digital disruption, the key challenge facing luxury brands is how to keep up with the unprecedented pace of the ever-evolving new luxury consumer. Unlike the previous generation who was romanced by the store experience and stories of craftsmanship, today’s consumer is turned off by the very word “luxury.” For them the term has connotations of elitism and exclusivity. Instead, they want a luxury that is inclusive, honest and democratic.

For the new consumer, status is no longer about how much you can afford to spend on a good, but more about what you stand for and have achieved. They know how to acquire “luxury-quality” at a fraction of the price and seek to be entertained beyond the store and within the digital space. Their first point of contact with a brand is usually via the website or social media channel, which makes it imperative for brands to consider these channels as platforms for information and entertainment and not just commerce. They want brands to care about the values that are important to them such as sustainability.

To keep ahead of this demand, luxury brands will have to focus on how best to enhance the digital experience. Will the advent of new technologies such as A.R. (augmented reality) create a new experience in personalization whereby the brand atelier can be brought into people’s homes?

Of great focus in the coming years will be the integration of luxury into everyday life, which will necessitate design inspired by function as well as beauty and craftsmanship. Further, with more understanding of the impact of our purchases — and in the case of luxury goods, the artisans who made them and the provenance of the materials — we’ll need greater transparency and storytelling on how our products came to be. Finally, we’ll see more and more personalization to reflect individual style, and a continued need to serve consumers seamlessly wherever they are.

The history or the moment of luxury has always been turbulent.

It has been turbulent for luxury to become an industry, and a very dynamic one, quite young still — more or less 40 years.

It has been turbulent for luxury to become international.

It has been turbulent for luxury to embrace many different products under the same “umbrella” (brands) and layers of clients (consumers).

It is turbulent for luxury to cope with quantities, and now, as well, with different generations of people from different cultures.

It is challenging to cope with confusion.

Too many adjectives are tied to the word “luxury”: Accessible, ultimate, soft, hard — implying that most of luxury would be average?

The simple word luxury itself is often misused (not to say mess-used) covering brands, products, or processes irrelevant to the necessary evolution of our society and our world.

The challenge, though, is inspiring — and necessary in order to stay, or become, right.

The answer is not to try to protect or come back to a better yesterday (which day?) nor to follow current trends where statements replace thinking and thoughts, where number of followers have more value than what you propose, or where thinking that “digital” will be a new world, when in fact there is only one world.

We must accept and value complexity, and take uncertainty as a teaser to do better.

Luxury has all the means to be a major reference as soon as it really mixes, in a sustainable way, legacy, know how, innovation, creativity, quality, beauty, fun, the unexpected, in concrete products and offers, always with the sense of integrity (towards itself) and the sense of respect (towards others).

The beauty is that it is not about size but about strength.

Besides, there is not one recipe, but several paths.

That is why solid brands exist with their intangible substance and a long-term view.

In an increasingly fast-paced world with more transparency than ever before, the need for continuous innovation and authenticity is paramount. Brands will continually have to balance innovation with authenticity to their D.N.A., especially in a time of macroeconomic and geopolitical volatility. This tension has always been present but is magnified with the power and transparency afforded by technology.

After many years of attempted focus on all things digital, brands are realizing that consumers demand differentiated experiences across channels and we will continue to see innovation in brick-and-mortar store experiences as well as product co-creation with consumers (personalization and customization) taken to new levels.

In a turbulent world with a widening divide between the have and have-nots, sustainability in luxury will move from being a “nice to have” to a “must have.”

The new luxury will create heirlooms of gratifying value while simultaneously sustaining long-term economic, equitable and ecological values.

One of the industry’s main challenges is undoubtedly the emergence of a new generation of consumers, with unique sets of behaviors and expectations. Millennials, who are accustomed to very high standards of end-to-end service in other industries, will soon become its most important cohort of luxury clients and will put pressure on the traditional models. These “digital natives” consumers follow very different and fragmented decision journeys and are amassing more and more power relative to the brands. Yet, many luxury players fall short of offering them an enriched, personalized, seamless and digitally enabled experience able to conquer their hearts and minds.

Through innovation and utmost personalization, brands must shape the 21st century luxury experience. They should leverage their unique assets and brand heritages but also reinvent their in-store experiences, with the help of new technology, and transpose them online. This calls for a complete shift of luxury brands’ approach to emotionally engage with their customers, starting by using data to provide a tailor-made experience across all touchpoints.

While intelligence in business and in the world at large has changed exponentially, let’s never forget that brands are created by people for people. The game-changer will be when we look at what we can achieve collaboratively and collectively as much as we what we do individually. We are in a new Renaissance, and it’s our responsibility to play a role in how business, culture, humanity and science come together as never before.

The concept of luxury has been around for centuries, not only in physical products and experiences but also in people’s dreams. Today, luxury is not just about price. It means different things to different people. For some, it’s about having the best. For some, it’s about having better. It’s not enough for a brand to create a single definition of luxury — it has to be more democratic than that.

Going forward, we won’t be able to define the luxury consumer based simply on demographics and income. We have to understand them much more personally, so that we can engage with consumers that care about what the brand stands for.

And then we need to combine our creativity and state-of-the-art technology to create highly personalized experiences and products that make people feel special. I think that’s what luxury really is. A feeling that something is special.

The luxury Goods industry will need to manage with the fact that more and more disposable spending is now being spent on experiences rather than goods, as the cupboards are full and the garages are full and the affluent would now rather buy unique, memorable experiences.

Traditionally, sustainability and luxury were opposites. Our key purpose at Soneva since we opened our first resort back in 1995 has been to prove that they are not, and that luxury and sustainability go hand in hand. At Soneva, we manage to offer our guests luxuries whilst minimizing our impact on the planet and enhancing their health.

It is very good to see that over the last 10 years, other companies have adopted a similar belief, such as Kering. It is also good to see such revolutionary concepts like Tesla, which is not just as comfortable as a Merc, a Jaguar or a BMW, but also zero carbon in its operation.

As we start to feel the impact of global warming and other environmental issues, low-impact consumption will become more and more important, especially for luxury brands.

Success will come to those that keep a fresh, strong vision in design. This will put more pressure on the most creative designers to constantly reinvent themselves without losing continuity from a past season. Mid-tier luxury brands could disappear. U.S. luxury in particular will struggle unless designers reinvent themselves. Houses with a portfolio of brands in various states of reinvention will have a better chance of surviving than mono-brands.

Luxury brands will create unique experiences in the retail world to entice and engage customers. Authenticity will win over flash or the slick branding of the early 2000s, which is still evident in most retail stores. Values will matter in fashion and integrating those values into the product lines will be really important — think Stella McCartney’s commitment to sustainable fashion or Alessandro Michele and Gucci’s recent commitment to be fur-free. Fashion’s influence on culture will grow stronger, not weaker.