Ged Carroll

Category: luxury | 奢華 | 사치 | 贅沢

Over the space of 20 years, luxury changed enormously. The Japanese had been a set of new consumers for luxury, but in terms of numbers they hadn’t eclipsed the US as the biggest market for luxury.

China’s ascent into the WTO (World Trade Organisation) made a lot of business people and politicians a lot richer. China challenged the US in terms of luxury market size. On their rise, Chinese consumers changed a lot in their sophistication as they educated themselves on luxury consumption.

These new consumers picked up new traits such as wine drinking. This also meant that luxury goods became new asset classes as Chinese money looked to acquire only the best. Chinese culture in turn impacted luxury design. Chinese new year became more important than Christmas.

Then there was the second generation money. Young rather than old consumers. Consumers who were looking for something less formal, either because they didn’t wear anything but streetwear or they worked in the creative classes rather than the traditional professions and high finance.

The industry had traditionally avoided rap artists and R&B singers, now Jay Z and Beyonce are the face of Tiffanys and Fendi had collaborated with Rihanna.

They no longer wanted to have to wear a jacket and tie to have afternoon tea at the Mandarin. They took an eclectic look more attuned to the Buffalo Collective than Vogue Italia.

You had hybridisation with the street to create a new category of luxe streetwear in a way that also owes a debt to football casual terrace wear and the pain.

Now you have Zegna badge engineering approach shoes from alpine brand La Sportiva and Prada has done a similar thing with adidas’ iconic Stan Smith tennis shoes. Balenciaga with their Speed Sock looks like a mix between Nike’s flyknit football boots and the Nike Footscape sole.

As I have written elsewhere on this blog:

Luxury has traditionally reflected status. Goods of a superior nature that the ‘wrong sort’ of people would never be able to afford. Luxury then became a symbol that you’d made it. In Asian markets, particularly China, luxury became a tool. People gifted luxury products to make relationships work better. It also signified that you are the kind of successful business person that partners could trust. You started to see factory managers with Gucci man bags and premium golfwear to signal their success. Then when the scions of these business people and figures in authority were adults, luxury has become about premium self expression.

  • Hasan Minhaj and other things that caught my attention this week

    Supreme by Hasan Minhaj. I hadn’t watched much of Patriot Act mainly because there is more content that grabs my attention on Netflix. This clip is a great dive into hype culture by Hasan Minhaj – often the best humour is that with uncomfortable truths in it.

    Amazon playbook on Amazon Vine. Gartner L2 made this useful clip on the effective use of Amazon’s Vine programme.

    Key take-outs (my observations in italics):

    • Amazon don’t allow vendors any editorial controls over reviews and look to keep them honest and authentic
    • Vine seems to be really good in the process of accelerating product launches for vendors
    • Use Vine BEFORE Amazon’s sponsored products and sponsored brands advertising function; by the sounds of it pretty similar to the way you’d have previously used PR in a product launch marketing campaign
    • L2 recommends ensuring the efficacy of the product; but Vine COULD be used as the last gate in the innovation process before you go gangbusters. Lots of negative reviews could still save you on a massive production run and huge advertising spend

    Sophie Cope (Electronic Frontier Foundation) on digital privacy and the surveillance state. Great video on the World Affairs channel – interesting how this has become such a big issue amongst ‘wonkish’ audiences. More privacy related content here.

    Lynx (Axe for non UK audiences) have latched on to the ASMR meme that has been popular for a couple of years. It feels weird to watch, I am not sure what the strategic insight(s) were for this work beyond the fact that beards are sticking around for a good while yet.

    https://youtu.be/x9T7BJ-jf6o

    The last thing is the positive experience I had with American Express this week when I lost my card. I spoke to a real person on a decent phone line who quickly canceled my old card sent me out a new one that arrived in 48 hours.

  • Brick and mortar retail + more

    Forrester: Why Brick-And-Mortar Is Failing Luxury 02/25/2019 – the failure is department stores rather than ‘owned’ brick-and-mortar stores. You could also argue that department stores are primarily aimed at the mid market part of luxury which is being crushed

    The Kraft Heinz experiment in radical cost-cutting has failed. | LinkedIn – imagine if 3G Capital had succeeded in their hostile bid Unilever as well? 3G Capital deployed zero budgeting the wrong way. Focusing on cost cutting rather than budget optimisation. They haven’t supported their brands and now its coming home to roost

    Number of ‘McRefugees’ increasing, study finds | HKEJ Insight – a seven fold increase over 6 years. More on the background on McRefugees

    Luxury Brands Learn How to Speak Streetwear Their Own Way | High Snobriety – High Snobriety on the luxury fashion hybridisation. If you like that article you’ll love Louis Vuitton, Supreme and the tangled relationship between streetwear and luxury brands

    Explaining p-values with puppies – Hacker Noon – best bit of content that I’ve read all week

    LG’s Dual Screen foldable phone breaks apart – BBC News – probably much smarter approach. I still don’t get what the use case is

    Malaysia Airlines pitch called off – agencies get apology from CEO and compensation – Mumbrella Asia – be a client organisation like this

    Chinese Whispers: Tourists Spend Less on Luxury Goods When Traveling in Japan and Hong Kong, and More | Jing Daily – the massive size of China’s e-tailing sector is insane

    Why Meituan Dianping is one of Fast Company’s Most Innovative Companies – recommendation of services a bit like Amazon’s product recommendations

    CYC – Technology overview – one of the best critiques of machine learning that I’ve seen. Cyc have spent decades building rules to move towards artificial intelligence. They now have products that do narrow jobs in certain verticals (PDF)

    ‘Huawei Mate X’ foldable phone leaks ahead of unveiling – 9to5Google – where’s the screen from; I thought this was Samsung exclusive technology. Why would they help Huawei?

    U.K. cites big se­cu­rity is­sues with Huawei (The Washington Post), 21 Feb 2019 – Huawei shockingly slow at fixing Infosec issues

  • Is there a luxury smartphone segment?

    There are luxury smartphones, but is there a meaningful luxury smartphone segment?

    From Apple’s iPhone price inflation to Huawei and Blackberry’s Porsche Design devices, manufacturers have looked to cater to a ‘luxury’ consumer.

    Prior to this is you had the Vertu phone with its concierge service and niche players like Goldvish catering for the the Gulf based clientele and Russian entrepreneurs. TAG Heuer tried launching its own phone.

    Pierre Cardin approach to licensing

    Prada and Bang & Olufsen had collaborations with Korean manufacturers. Even Dolce & Gabbana allowed their names to be used on a gold anodised Motorola RAZR. But these brand licensing deals rather like what Pierre Cardin were famous for in the 1970s and 80s.

    There was little input in the product beyond doing a launch.

    Luxury is an attachment

    Luxury brands have been smart enough to jump on the tech bandwagon in their product accessories. I used to have a Coach-made pouch for my Palm V courtesy of Sun Microsystems that I got given as part of a conference goody bag. (The dot-com era meant that money was thrown around willy-nilly).

    There were a variety slide in pouches from the likes of Louis Vuitton for Blackberry devices and Apple iPhones respectively. This then evolved into cases like Moschino’s famous ‘McDonald’s fries’ box.

    moschino

    Where’s the missing space?

    We know that China has become the workshop of the world. We know that Qualcomm’s reference designs, Google’s Android and Jolla’s Sailfish OS make smartphones easy (relatively speaking) to roll out.

    We also know that luxury firms are not afraid of:

    • Global supply chains and manufacturing in China
    • Attempting to step into complex manufacturing (like Louis Vuitton and Montblanc’s entry into watchmaking) or to do technology

    One only has to look at connected watches from the likes of Breitling or Louis Vuitton. Montblanc’s e-strap was way ahead of Sony’s WENA Wrist Pro Smart Watch Band.

    We know that luxury brands have moved away from the the stereotypical luxury buyer being an older western person of means to a younger Asian person with family money. That’s why we’ve seen the coalescence of streetwear and luxury brands.

    So where is the luxury smartphone? And why aren’t luxury brands embracing the space?

    Price elasticity

    I suspect that the issue is technology isn’t price elastic in the same way that luxury product categories are. Technology products by their nature are ephemeral. The benefits of technology products depends on network effects rather than exclusivity.

    In his blog post, Is the pace of technology adoption really speeding up? Nigel Scott put together evidence to show that price points and technology adoption are intrinsically linked. We are not in a state of constant acceleration of technology adoption, but instead only adopt it when the price is right.

    It would be reasonable to assume from this work that there is an inelasticity in technology pricing that makes luxury smartphones hard to sustain. It also explains why relatively low price accessories make more sense than ‘luxury’ smartphones. This seems to be a conclusion that Apple has some to (at least in China). It has rolled out discounts through third party channel members and made devices cheaper to purchase with zero interest financing.

    This makes the moves by Huawei and Samsung beyond Apple pricing with their latest phone launches a bit odd and a definite move to define a luxury smartphone segment. These must be halo effect handsets with no expectation of real profitable production; rather like Ford’s special cars like the GT-40. More luxury related posts here.

  • Legend of Old McLanden & things from last week

    BMW’s X7 advert about the Legend of Old McLanden has been cited as a piece of feminist advertising. I won’t spoil it for you watch the clip and you’ll see why.

    I think that its part of something different which has been less heralded: a return to craft in advertising. We’re starting to see a refocusing of marketing. Away from the shiny toys of ad tech and influencer networks back to advertising craft.

    The Legend of Old McLanden would fit comfortably with the golden age of TV adverts and I think that’s a good thing for brand building. Especially when we usually only see this kind of thing during the Super Bowl.

    I am a big fan of Visual Politik’s videos, but was unimpressed by this video on crypto currency. I get the attractiveness of a more decentralised internet, BUT I don’t buy into the cryptocurrency hype and believe that blockchain is at best a solution for niche problems.

    The video reminds me a lot about the techno-utopian opinions of the early web, P2P technologies etc. It has value, but it isn’t likely to be transformative in the way its implied.

    SK-II has a new instalment in its #changedestiny themed campaigns called ‘Meet Me Halfway’. This time they focused on the pressure that single Chinese women face during family gatherings for lunar new year.

    It follows on the SK-II marriage market makeover campaign done in 2016. More beauty related content here.

    Whilst many consumer brands have dashed into the influencer marketing space, it interesting that adidas have developed a contra-influencer content. It does

    Diesel’s ‘Be A Follower’ campaign took a similar line to this latest Adidas campaign.

  • Roland file trademarks + more things

    Roland Files Trademarks For 303 & 808 Designs In Germany – Magnetic Magazine – interesting reading, in particular patenting designs so long after they were manufactured. Roland files trademarks and patents aimed at trying to stop Behringer who are due to be releasing a near perfect copy of the 808 drum machine

    Why Jeff Bezos Went to Medium With His Message | NYTimes – evidence that blogging isn’t dead and social media isn’t everything

    Huawei Threatens Lawsuit Against Czech Republic After Security Warning | NYTimes.com – interesting that Huawei is trying to cow the government with legal force. Huawei’s interpretation of Chinese law seems to be different to legal experts

    An Honest Take on the Hits and Misses of SIHH 2019 | SJX Watches – Baume et Mercier’s abandoning of the silicon hairsprings that made their debut in the Baumatic of 2018. The elimination of the silicon hairspring has lowered the retail price of the watch by about €250, but that’s notable for the reason behind the retreat. According to several insiders, Baume & Mercier, and by extension its parent Richemont, was kindly asked to stop using silicon hairsprings because the intellectual property for them belongs to a consortium led by Swiss micro-engineering institute CSEM, which is in turn backed by Rolex, the Swatch Group and Patek Philippe

    Are Influencers Over? | The Daily | Gartner L2 – interesting read and contrasting approaches between Unilever and Diesel.

    5 Asian Trends for 2019 – TrendWatching – After decades of economic growth, rising numbers of Asians are no longer primarily focused on pursuing material wealth. On the contrary, the pressures of progress are catching up: overwork, mental health issues, apathy, and more. In 2019, many Asians comfortable with their economic status

    Meet the ‘godfather’ of China’s smartphone industry | SCMP – the founder of BBK which backs Oppo, Vivo, OnePlus, RealMe etc. More related content here.

    Cheatsheet: Snapchat is no longer adding more users (but it isn’t losing them, either) – Digiday – bots are loyal?

    WSJ City | As US and Germany draw up trade barriers, Germany fights back – makes sense

    WSJ City | Apple retail chief Angela Ahrendts leaving company – makes sense. Apple’s move into true luxury pricing has shown to be a fallacy if one looks at consumer reaction to iPhone sales and laptop pricing. A number of people I know downgraded in the range rather than follow through on MacBook Pro purchases. Also the retail presence has felt like straightening deck chairs rather than moving forwards