Current Issues in Luxury

Not so cool: Once the ultimate luxury and sign of true success, the private jet is becoming a taboo of waste. Private jets, also called "general aviation" instead of commercial, contribute 2% of greenhouse gases and are seen as environmentally unsound, especially when they carry only one or two passengers. A recent article describes declining sales since 2008 and asks if small jets may be dying.

Top concerns in the luxury industry:

1. Counterfeits & Copyright Infringement

2. Globalization & BRICK

3. Humanity & worker respect

4. Environment & sustainability

5. Technology, internet & digital capabilities

6. Creative directions, editions & collaborations

7. Economic viability, leadership

1. Counterfeits & Copyright Infringement

We are starting with counterfeits because we covered this last week. We concentrated on the black market sales of counterfeit goods and the government control of the illegal activity.

There is an additional aspect of inspired and copied designs which are not illegal counterfeits but are copyright infringement. Below a legal battle between Burberry and US retailer T.J. Maxx simply concerned the sale of "similar" plaids. Imitations effect the overall uniqueness of a luxury good.

2. Globalization & BRICK

The force of globalization is a coming together of economic, cultural, political and technological systems around the world. Luxury always aims for the global consumer, to be the best among all nations.

There are 3 main aspects:

-globalization of production: parts developed in many locations to produce one product

-globalization of markets: products from many places available in one marketplace

-globalization of the economy: transnational alliances such as the G-20 & IMF control the world economy

Brazil, Russia, India and China have aligned forces as BRIC which in some analyses also includes South Korea as the strongest emerging markets for the 21st century.

Brazilian luxury department store Daslu is a prime example of BRICK strength. The store includes not only the best luxury products from around the world but offers luxury services such as children's day care and psychiatrists.

Globalization means selling to more informed global consumers. McKinsey reports show that consumers now look at following:

-The hunt for value

-The desire for the exceptional

-The search for meaning (added value)

-The online migration

-Openness to emerging markets

3. Humanity & worker respect

Humanity and worker respect declined with the disappearance of artisan guilds and unions. Now most workers must defend their own rights. Globalization has encouraged companies to be more considerate of their outsourced labour but luxury brands are still problematic as the report on Ralph Lauren, below right indicates.

4. Environment & sustainability

The green trend has been especially influential in luxury tourism where environment is especially important. Below left the Taj Exotica Maldives and right the Club Med Almadies Senegal both use sustainable materials and have low impact daily operations.

5. Technology, internet & digital capabilities

Technology is the prime site for strategic luxury growth. Social media is still a grey area for commodification but mobile devices are the top target for expansion. Below Luxury Society's Digital Agenda provides luxury technology stats for 2010.

Below luxury brands' website availability in other nations. Hermes and Jimmy Choo have the greatest global presence while YSL and Marc Jacobs the least.

6. Creative directions, editions & collaborations

Like any era, luxury companies must maintain creative vitality. The creation of limited editions has increased entry level luxury along with lower priced labels and collaborations like H&M. While the variety expands the luxury market, some argue it weakens label exclusivity and strength. In the next decade, luxury directors must think of ways for creative growth without compromising integrity and value.

7. Economic viability, leadership

The economic downturn in 2007 challenged the luxury industry. In order to stay alive, some small companies sold to larger corporations for security and direction. By contrast, Taittinger, returned to family ownership and small scale integrity and authenticity in production. See a profile here.

Addtional examples of small scale production are Lesage embroidery for Chanel above, and Christian Louboutin below, who limits his red bottomed shoe production and the store size.

Finally, part of economic leadership is noblesse oblige. Luxury companies with huge profit margins can benefit by giving back. Below Louis Vuitton hosts the Espace Culturel for global artists and it also economically funds educational art programs.