Retail Refugees

The luxury market is going to find it more and more difficult to find new and aspirational consumers according the findings of a recent Wharton (University of Pennsylvania) panel about luxury marketing.

They see is a revisiting of luxury brands to their core target group- those with considerable wealth; “what’s now “in” for marketing luxury in this difficult era is pampering the wealthiest and most loyal customers with everything from monogrammed shirts to personal in-home visits.”

The panelists agreed that in a recession in which even upscale consumers may find themselves strapped for disposable cash, it is a bad strategy to chase customers too far down the economic ladder. “We don’t want to see huge price cuts that will create a lower-priced brand,” said Brad Farrell, skincare brand manager for L’Oréal Paris. “That’s because you don’t want to tarnish your brand. When this is all said and done, you still have your brand reputation to uphold.”

Some members of the panel did have some advice for surviving with your brand integrity in tact however, the panelists suggested that consumers are likely to see some moves aimed at selling high-end products at a slightly lower cost. L’Oréal’s Farrell suggested that one obvious step would be to sell fragrances in smaller containers, as long as the actual product is not diluted. “You can still maintain your brand integrity, but you’re selling at a price point that’s more accessible for the consumer in today’s market.” A similar move, Farrell added, is to ensure that some version of your key products are more available in mid-market retailers like Target or even — in the case of skincare products — drugstores like CVS, because during a recession even upscale Americans are likely to do more shopping in such stores.

But to boost the bottom line, fashion firms are likely to focus now on pampering their best and most loyal consumers, using computer technology to increasingly customize upscale products that will be designed or tailored especially to their needs. The success of individualized luxury goods — such as designer clothes or eyewear — is a development that could keep a customer repeatedly coming back for more, according to the panelists.  “Everybody wants to be a lifestyle — and they’re going to want to stay for 10 or 15 years with your product,” said Abouchalache. Among the designer trends in customization are monogrammed handbags, personalized options for a color or a fabric in accessories, or a wider array of fragrances that are “personalized.” According to one panelist, Prada — which started its success with a simple but well-designed nylon backpack — is focusing on a similar approach, one in which “customization makes the purchaser feel special and unique.”

“This is not a time to panic,” added one panelist, referring to the difficult fiscal environment. “This is a time to define and redefine the brand.”