Pricing in itself does not define luxury anymore
Luxury has dramatically changed in the last few years, becoming far more liquid and diffused than it used to be. COVID-19 accelerated this change even further.
The Boomer Generation used to consider high-priced brands, from automotive to fashion, from watches to yachts, as luxury—as statements to show-off their status.
Today, the luxury label itself doesn’t even have a lot of sense to me anymore. People are dressing up with Cuccinelli sweaters and Zara T-shirts, what is that? Is that luxury? I’m not sure.
Consumer behavior is changing and brands’ strategy evolving alongside it.
It’s a circle.
People look for brands and products to express their identity, yet in a different and more personal fashion than they used to.
Executive bankers are more likely to wear a Swatch or an AppleWatch than a Patek Philippe.
I think this is a cultural phenomenon strongly related to historical and geopolitical changes.
There were moments in which showing off was more relevant than an understatement.
There are still geographies/markets where luxury equals showing off, while in others it’s more about knowledge and understanding.
As the hourglass effect spreads all over the world, with the rich get richer as the poor get poorer, the HNWI segment looks for something new and strive to be different. This is why the traditional status symbols become less and less relevant for them.
On the other side, this is also reinforced by brands and their marketing strategies.
As Gucci partners with North Face, it opens up to a “lower” pricing segment while building equity across new target audiences.
Moreover, the same brand might be positioned really differently across geographies: Shiseido plays the premium card across western countries while staying mass in its domestic market. Brands’ positionings are different also within the same continent. What drives premium in France might not do so in Germany.
Some Made in Italy brands are perceived much more premium abroad than they are in Italy, for instance.
120% Lino is luxury in US as Americans consider linen as a luxury fabric to dress up with, while Italians tend not go out with a linen shirt at night. Again, this caters to differences across cultures and behaviors.
As the Made In Italy Fund we have recently acquired a turbo-growth brand — GCDS.
We are very happy about this investment. We really appreciate founders’ talent, and their ability to build a strong consumer community — and, last but not least, streetwear is growing at a really fast pace.
Two brothers (Giuliano and Giordano Calza) with a strong creative and business vision respectively,
who know young Gen Z customers very well. They built GCDS brand leveraging on their knowledge
of the Asian/Chinese consumers and were able to export this street culture in the western side of the world.
I do not believe in labels.
Is GCDS Luxury? Yes. If we look at some SKU’s (i.e., we sell boots at € 1K+), yet it’s really for everyone if we look across all categories such socks, or trinkets.
Pricing in itself does not define luxury anymore.
It’s much more important to create a strong bond with your audiences through shared meaning and value rather than by clustering through pricing.
Communicating status isn’t a matter of being part of an enclave anymore; it’s much more related to being in-the-know.
I feel it’s quite meaningless to assign labels to brands, segments or markets.
All is changing at the speed of life—too liquid to be defined a priori.