Luxury brands used to be held in high regard as much for their craftsmanship as their lofty price points. But now we’re awash in comparatively average products with questionable price tags. How did luxury brands get to this point where their extensive history has been reduced to a big logo on a pool slide and will they take a step back?
The Timeline in Decades
Throughout the past 40 years, luxury brands have experienced cycles where they dilute and re-strengthen their brands under different models.
’80s: Luxury brands went crazy on licensing under the notion that every time they licensed their brand to a different company, they’d create a different product category. This meant they could collect royalties on the licenses without having to deal with the manufacturing and distribution processes.
’90s: With that stint of brand dilution (and the loss of luxury brands’ wealthy customer base), licensing was dialed down and brands shifted to diffusion brands such as Versus by Versace, D&G by Dolce & Gabbana, and Moschino Cheap & Chic. The idea here was brands could retain the prestige of and minimize the risk to their main high-end label but differentiate just enough to attract middle-class wealth.
’00s: As expected, brands started to fear brand dilution after more people started to access their products, so they cut down on licenses yet again. Building on their experiences in the past two decades, many luxury brands followed a similar strategy of maintaining just a few very tightly-controlled licenses across different regions (most notably, Japan) and product categories such Burberry and Armani’s partnerships with Fossil for watches. Some newer brands at the time like Tom Ford, were also able to leverage strong licenses to grow quickly, showing they were still a highly relevant part of the strategy.
’10s: By this point, brands are risking it all with their main labels: Dolce & Gabbana re-absorbed D&G in 2011, while Marc Jacobs followed suit with Marc by Marc Jacobs in 2015. Their strategy since has been to tap into new millennial and Gen-Z markets by offering luxury goods at lower, more accessible price points: Gucci pool slides, anyone? Either that or they’ve fully embraced collaborations with sports or streetwear brands they wouldn’t have designed to be in the same room with last generation.
Compared with the previous decades, luxury brands have gone through a fundamental shift in direction: No one seems to care about how watered down brand image is now — especially where there’s profit to be had. There are many possible factors that intersect to produce the current trend in increased “premium mediocrity”:
- Loss of traditional market: luxury brands lost the traditional wealthy customer they used to cater to, both in the literal sense and in terms of support as brands shift direction.
- Real wealth goes “stealth”: This generation hasn’t necessarily filled the loss of the previous market. Millennials, even the wealthy ones, are emphasizing other signifiers of affluence and they don’t include logos, experience and travel being the big ones.
- But some are eager to flex: Millennials and Gen Z represent a profitable market that now has the spending power to access the lower limits of the brand — and wants to show that off.
- Money needs to be made: Main luxury players like LVMH and Kering are now publicly listed conglomerates, which means they have to keep driving profits up in order to lift the price of their stock. Diluting some of the brand to achieve this is straightforward.
- Money needs to be protected: Especially to prepare for the sudden loss of other lucrative if fickle markets (such as in China).
- The “drop” model plays nicely: Drops, as in non-seasonal and limited-edition releases that were popularized by streetwear brands like Supreme, help generate attention and shuttle customers into stores. It goes without saying the rarity factor works very well for both streetwear and luxury brands when they collaborate.
Friction and Meaning
From the very beginning of MAEKAN we’ve always maintained that there has to be a need for even a small degree of friction to access a brand (and continue to do so). This is because we saw first-hand what happens culturally to a brand and the meaning behind what we do if it becomes as simple as “paying to play.”
We’re certainly not a luxury brand, but we recognize the reason why such brands gained the respect they did in the past was because of the high level of friction people needed to overcome to access them.
The friction is still there for luxury brands, albeit a bit less of it thanks to lower price points, but what has changed fundamentally is the meaning behind the labels. For one, priorities have done a 180 from exclusivity to inclusivity, but the verbiage needs to be nuanced. The introduction of new modern luxury brands that operate first has opened up the field to new options that are giving luxury a run for its money. Quality (in its nuanced definition) need not be expensive anymore.
Eugene Rabkin, in his op-ed for Highsnob, summarizes it best: “The conundrum that luxury brands face today is that democratization is automatically considered ‘good,’ and elitism is automatically considered ‘bad.’ For luxury this is a paradox, but for streetwear it’s not, and that’s one of the reasons why streetwear has been so successful. Arguably, Supreme is the most elitist brand out there, because its releases are so limited, but who would ever even consider calling it elitist? Meanwhile, in some circles, luxury is still a dirty word because of its connotations with exclusivity and classism.”
As we saw in the past, luxury brands are very robust and adaptable to keep themselves afloat and are masters of controlling both accessibility and scarcity: their latest moves are just part of those necessary adaptations to changing times. But now that they’ve snagged some new customers (whose long-term loyalty remains to be seen) it remains to be seen what they’ll do this time, if anything, once their brand names become even more widespread.