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Global 100 Luxury

Luxury is back. Consumers purchased enthusiastically and without apology. The category brand value rose 16 percent, following a 6 percent rise a year ago.

The strong performance illustrates both how luxury consumers have put the financial crisis behind them and also how the crisis influenced changing attitudes and tastes.

During the recession, luxury became a stealth indulgence after years of conspicuous consumption. Informed by that experience, consumers today are more comfortable with luxury, treating it as a medium of self-expression.

Even in China, consumers became more discerning, appreciating luxury for design and craftsmanship rather than as ostentatious display to demonstrate status. At the same time, luxury brands felt the impact of China’s slower economy and the government’s discouragement of extravagant spending.

Adjusting to these market dynamics, some brands rebalanced in favor of exclusivity over the accessibility to mass audiences that drove revenue during lean financial times. Logo key rings are out, but fragrance remains an entry point to the category.

Driven in part by newly wealthy young people in fast growing markets, the luxury consumer is becoming younger, with different tastes and interest in niche brands. Major luxury brands marketed to this group both for the immediate payoff and to cultivate the next generation of customers.

In a trend also influenced by consumption in fast growing markets, men’s luxury has expanded from a narrow focus on watches and cars to include accessories and clothing. And brands, including Gucci, Prada and Burberry, opened stores devoted exclusively to men. These other trends emerged:

More consolidation

Industry consolidation continued as LVHM added Italian clothing designer Loro Piana to a portfolio that includes brands such as Givenchy and Fendi as well as Louis Vuitton and Moët & Chandon.

Vertical integration

Several brands purchased vendors in order to vertically integrate, control the production process, ensure quality and improve profitability.

Brand experience

New ways to express brand experience included brand-themed theatrical events staged in airport duty free shopping areas. Brand experience in luxury drives new business, trialing and brand equity.

Consumer confidence influences aesthetics

Interest in luxury jewelry increased, perhaps an indicator that post-recession, people are ready to purchase items that are purely decorative rather than utilitarian.

Consumer interest in jewelry is broader than traditional precious gems and includes colorful and unique stones that express individuality. The interest in self-expression also shaped attitudes about the prominence of designer logos. Louis Vuitton, known for integrating its iconic logo into the design of its bags and other merchandise, introduced products without the LV logo.

The shift away from prominent logos to more discrete, subtle and less accessible luxury captures a change in consumer attitude termed, “in the know” rather than “in the show.” Louis Vuitton, Gucci and Fendi took steps to reinforce the exclusivity of their high-end brands by cutting back on less expensive merchandise. Burberry eliminated some opening price points on rainwear and leather goods.

Chanel appealed to younger consumers by offering cosmetics and makeup tutorials. In its messages, the brand attempted to project youth and frivolity within the context of its heritage. To protect brand exclusivity, Chanel limited the products available for online purchasing. In contrast, Coach made the brand more accessible, opening more stores, both flagships and factory outlets. Slower US store traffic during the holidays impacted sales.

Social media intensified the ongoing tension between brand exclusivity and popular appeal. To maintain a productive balance, brands often used the web to express the essence of their brand in a virtual world. But they limited the products available through ecommerce.

At home on social media

To control the brand experience, brands typically created content for larger screens, like tablets, rather than apps for smartphones. Fendi and Louis Vuitton presented content about backstage at fashion shows, for example, providing a behind-the-scenes glimpse of the brand world.

Brands also engaged in sophisticated online games, which might involve a consumer posting a photograph with the brand, connecting younger people with the brand experience.

Cartier presented its brand in an elaborate movie fantasy of a leopard on a worldwide journey that evokes historical heritage and positions the brand as exotic and inimitable but contemporary. Hermès was playful and accessible online, where it’s possible to purchase from the site. The brand’s relaxed feeling online contrasted with the reserved elegance of its stores.

Burberry, which pioneered the presence of digital luxury and luxury online, featured a campaign called “Kisses with Google,” in which a person could seal an email message with a kiss. The recipient received the message in an envelope with the imprint of the sender’s lips.

Burberry also collaborated with Apple, taking the images for its catwalk with the latest iPhone. The brand, which attempts to present a seamless physical and virtual experience, also opened concessions, outlets and 14 stores, including flagships in London, Chicago, Hong Kong and Milan.

Rolex launched its multimedia “Icon and Rolex” campaign, featuring the faces and stories of famous people who wore Rolex watches, including Dwight Eisenhower, Winston Churchill, Martin Luther King, and Elvis Presley, with the strapline, “Rolex doesn’t just tell time. It tells history.”

Fast growing markets

The slowdown in the economic growth rates of the BRICs impacted luxury sales both in those countries and in North America and Europe where sales to tourists from fast growing markets represent a large portion of luxury revenue.

Still, the China Outbound Tourism Research Institute predicts that more than 100 million tourists from China will travel overseas this year. Among brand initiatives to reach these shoppers, Burberry hired 150 Mandarin speakers as sales associates in key tourist destinations.

Burberry also created special product offerings for important Chinese occasions and holidays. And the brand entered into a partnership with Tencent, the Chinese Internet giant, to present the brand in social media and on Tencent’s other online platforms.

As luxury sales in China slowed, brands balanced the immediate desire to drive sales with the long-term need to protect brand equity. Gucci reduced its store openings while rolling out a refurbishment plan to align the image of its retail network. With less presence in China, however, Prada opened locations in the major inland cities of Chengdu and Chongqing, bringing its China store total to 33.


Some of the luxury brands are pulling back their low-end entry merchandise. While these brands may feel a short-term financial impact, they have a long-term view. They want the branded product to be consistent with the brand’s purpose, what the brand is about. They believe that makeup and fragrance work better than key chains and other trinkets as an entry point to luxury.

Elaine Quirke
Worldwide Director
Mindshare Luxury


While affordable luxury is still about status and display, attitudes to ultra luxury are changing. People who can afford ultra luxury are moving away from physical goods consumption, often to unique experiences and sometimes even to austerity. They’re increasingly concerned with living responsibly and the impact of excess on their children. The model for this behavior seems to be created by the tech entrepreneurs, with their relatively modest displays of wealth and the values they espouse.

Anastasia Kourovskaia
Vice President EMEA
Millward Brown Optimor