The question I ask myself most often is: what is luxury? And a term I hear in meetings at least once a week is about new luxury. This shows the ambiguity around the term, its meaning and above all the new codes of luxury. And frankly, that's nothing new.
As I was working on my PhD on decoding luxury more than a decade ago, the world was emerging from the subprime mortgage crisis. At the time, two things seemed clear to many: first, many believed that luxury would be much more "stealth" and less visible. Second, some even predicted that luxury would become irrelevant in reality after the crisis. Looking at the growth spurt since then and the “logomania” that followed, it quickly became clear that those predictions were wrong.
What has changed is that the delta has widened between the few luxury mega-brands (often part of conglomerates like LVMH, Kering and Richemont) and the smaller and often independent players. The intense capital required to create a luxury experience – from hard factors like flagship stores to soft factors like customer service, brand storytelling and digital customer engagement – has given large luxury conglomerates an edge.
Moreover, few brands are guided by the disruptive and creative vision of their founders, but by designers who often focus on reinterpreting brand codes rather than creating new approaches. Cooperation between brands has partly replaced internal creativity. In many cases, the focus on rapid revenue growth has resulted in what I like to call a "sea of uniformity", where many brands essentially do the same thing, communicate in the same way, and have similar wallets.
The result: With the exception of a few luxury giants, many are underperforming and often play 'not to lose' rather than 'play to win'. So what should luxury brands do instead?
In my opinion, the essence of luxury will never change and this creates extreme value for customers. What changes, however, is how extreme value is created and what drives that value. While exceptional craftsmanship and service have traditionally been synonymous with luxury, today they are simply expected - in other words, at a price. No brand will be known for being friendly or delivering high quality in 2023 and beyond. These previously defined luxury factors are now simply what I call "hygiene factors". If your brand doesn't provide it, it's irrelevant. But it is no longer an essential value factor.
Instead, the ability to be a cultural actor, the ability to influence and inspire audiences, becomes the engine of value creation in a digital native world. The new know-how of luxury creates a reality where customers feel very desirable because the brand can create cultural capital for them. It's a completely different skill than before and very few brands have mastered it.
Building cultural capital means being able to access, process and act on information about trends, hot topics and customer sentiment in real time. And that requires cultural sensitivity on a global scale, which our brand audits show is a problem for many, even some market leaders. Mercedes-Benz recently saw a dramatic drop in demand for its new electric S-Class (EQS) in China, and some media are already talking about a flop. Reasons seem to include a design that doesn't resonate with Chinese customers, a user interface and software that won't excite young digital natives accustomed to more advanced and responsive features, and an inadequate back button for the legs of the customers who used to be with driver
Not paying enough attention to cultural preferences is not just a product issue, but also a reflection of brand content and how brands act and react in times of crisis, as the recent controversy shows. Balenciaga. Several people have asked me in recent weeks why I still wear Balenciaga sneakers and I have even been suggested to burn them. When customers are faced with such reactions, it jeopardizes the future of a brand.
Cultural capital is earned every day and its importance becomes essential to success. It should be managed with the same precision as any other aspect of a brand. This includes the tangible delivery of a net positive brand experience where sustainability, diversity and inclusion are more than just buzzwords. If you do what everyone else has done and say nothing is working, Gen Z will demand fundamental change.
There are exciting and disruptive startup projects that have the potential to revolutionize entire markets with a focus on social and environmental impact. Established brands that become complacent could face a rude awakening as the pace of change accelerates, and up to 50% of all luxury brands may not survive by the end of this decade because they are too hesitant.
The new codes of luxury are extremely customer-oriented. From the model of creating value, inspiration, creating extreme desirability and the need to provide net positive experiences. Is your brand ready?
Read Also : What is the most popular designer dog and Is it profitable to make dog clothes?
Ola Hansen 
The question I ask myself most often is: what is luxury? And a term I hear in meetings at least once a week is about new luxury. This shows the ambiguity around the term, its meaning and above all the new codes of luxury. And frankly, that's nothing new.
As I was working on my PhD on decoding luxury more than a decade ago, the world was emerging from the subprime mortgage crisis. At the time, two things seemed clear to many: first, many believed that luxury would be much more "stealth" and less visible. Second, some even predicted that luxury would become irrelevant in reality after the crisis. Looking at the growth spurt since then and the “logomania” that followed, it quickly became clear that those predictions were wrong.
What has changed is that the delta has widened between the few luxury mega-brands (often part of conglomerates like LVMH, Kering and Richemont) and the smaller and often independent players. The intense capital required to create a luxury experience – from hard factors like flagship stores to soft factors like customer service, brand storytelling and digital customer engagement – has given large luxury conglomerates an edge.
Moreover, few brands are guided by the disruptive and creative vision of their founders, but by designers who often focus on reinterpreting brand codes rather than creating new approaches. Cooperation between brands has partly replaced internal creativity. In many cases, the focus on rapid revenue growth has resulted in what I like to call a "sea of uniformity", where many brands essentially do the same thing, communicate in the same way, and have similar wallets.
The result: With the exception of a few luxury giants, many are underperforming and often play 'not to lose' rather than 'play to win'. So what should luxury brands do instead?
In my opinion, the essence of luxury will never change and this creates extreme value for customers. What changes, however, is how extreme value is created and what drives that value. While exceptional craftsmanship and service have traditionally been synonymous with luxury, today they are simply expected - in other words, at a price. No brand will be known for being friendly or delivering high quality in 2023 and beyond. These previously defined luxury factors are now simply what I call "hygiene factors". If your brand doesn't provide it, it's irrelevant. But it is no longer an essential value factor.
Instead, the ability to be a cultural actor, the ability to influence and inspire audiences, becomes the engine of value creation in a digital native world. The new know-how of luxury creates a reality where customers feel very desirable because the brand can create cultural capital for them. It's a completely different skill than before and very few brands have mastered it.
Building cultural capital means being able to access, process and act on information about trends, hot topics and customer sentiment in real time. And that requires cultural sensitivity on a global scale, which our brand audits show is a problem for many, even some market leaders. Mercedes-Benz recently saw a dramatic drop in demand for its new electric S-Class (EQS) in China, and some media are already talking about a flop. Reasons seem to include a design that doesn't resonate with Chinese customers, a user interface and software that won't excite young digital natives accustomed to more advanced and responsive features, and an inadequate back button for the legs of the customers who used to be with driver
Not paying enough attention to cultural preferences is not just a product issue, but also a reflection of brand content and how brands act and react in times of crisis, as the recent controversy shows. Balenciaga. Several people have asked me in recent weeks why I still wear Balenciaga sneakers and I have even been suggested to burn them. When customers are faced with such reactions, it jeopardizes the future of a brand.
Cultural capital is earned every day and its importance becomes essential to success. It should be managed with the same precision as any other aspect of a brand. This includes the tangible delivery of a net positive brand experience where sustainability, diversity and inclusion are more than just buzzwords. If you do what everyone else has done and say nothing is working, Gen Z will demand fundamental change.
Read Also : What is the most popular designer dog and Is it profitable to make dog clothes?There are exciting and disruptive startup projects that have the potential to revolutionize entire markets with a focus on social and environmental impact. Established brands that become complacent could face a rude awakening as the pace of change accelerates, and up to 50% of all luxury brands may not survive by the end of this decade because they are too hesitant.
The new codes of luxury are extremely customer-oriented. From the model of creating value, inspiration, creating extreme desirability and the need to provide net positive experiences. Is your brand ready?