“I don’t believe luxury is in crisis”

Gilles Lipovetski: A recent French survey came to the conclusion that there is a consumer crisis. A large percentage of those polled said they were wary of brands and weren’t attracted to their products. As though people had become more cautious in their spending, and this had jarred the motor that drives consumption. The downturn in the luxury sector could be held up as the perfect illustration of this, boding for further upheaval in retail in the wider sense. I don’t believe this for one second, any more than I’m expecting this revolution to take place. Remember that psychological factors have a major influence on our purchasing decisions, and the current climate is anything but favourable. People are afraid. They’re afraid of losing their jobs and afraid of what’s going to happen to the economy in the coming weeks or months. If the watch segment is suffering right now, so are other players in the luxury sector. Personally, I haven’t observed any deep-seated cultural changes.

The ingredients that made luxury such a dynamic industry haven’t disappeared. Far from it. This longing, the urge to own your heart’s desire or to collect exceptional products haven’t gone away. The crisis is first and foremost the result of an economic situation and the psychological influence it is having. The fundamental factors that spawned the hyper-consumer society are still at work. Nothing has replaced them. For the majority of us, treating yourself means buying something.

I think we’ll continue to see both. In global terms, the luxury market has certainly become a mass market. Think perfumes, leathergoods, jewellery, even watches. Mauboussin recently launched its first poster campaign in the Paris Métro with clear references to price: a diamond ring at €500 for example. And the strategy has paid off. However, a campaign such as this by no means prevents the brand from also proposing far more exclusive products. Luxury for everyone is one side of the coin; turn it over and you’ll find the desire for exceptional objects. I believe there is a market for both.

The luxury industry has no choice than to stay on top of opposing trends. It must embody tradition and expertise inherited from the past while demonstrating the innovation that is also an essential quality of the branch. Obviously this applies to watchmaking too. The challenge is to combine creativity and design with research and technology. The Swatch watch is a prime example. It immediately became a fashion accessory. Consumers began to realise they could change watches like they changed clothes. This different mindset brought new opportunity and gave watchmaking its second wind. But without innovation, none of that would ever have happened.

Don’t forget that when you buy a luxury product, you’re buying into the dream. Why else would it be so expensive? This is why luxury brands must build an image of quality, longevity, creativity and technical innovation. Granted, we no longer manufacture watches the way they were once made, but brands’ communication suggests their timepieces are produced with the same care as in the days when the watchmaker sat bent over his workbench. This approach is essential vis-à-vis a consumer whose first concern isn’t to purchase a utilitarian object but one that embodies a certain idea of perfection and brings its share of the dream. In this respect, I don’t think consumers are tiring of communication that expresses these values.

It means there are new territories that must be conquered, and a fabulous opportunity for brands, particularly as demand for luxury goods is high in these countries, where they are seen as status symbols. It’s no coincidence that brands have continued to open new stores in these regions, in particular China, despite economic crisis. Europe may have had its fill, these countries haven’t. Potentially, thousands of people could be stepping on to the luxury ladder. The watch segment is in a b position to profit from this as the watch is a distinct sign of wealth in these countries. To do so, however it must invest. Any luxury brand with ambitions needs to invest, particularly in communication which brands see as essential when differentiating themselves from the competition. There was a time when a luxury product spoke for itself and was understood by an audience of loyal consumers. Loyalty is now quite relative. Consumers change in a global economy. They become fickle, hence the growing importance of marketing. The only question we should be asking ourselves at this stage is whether marketing could kill creativity.

Brands are global and they are everywhere. The consequence of this is that there has never been so much diversity. The economy today is one of variety, and while hyper-consumption could give the impression of uniform choices, the truth is totally different: there is too much choice, too many products. The consumer needs something to refer back to, and this is where brands can seize their chances. Hyper-consumption has spawned a low-cost culture. Because today’s consumers no longer want to go without, they look for ways to save on their spending. Not because they lack the finances but because they have too many wants. This pulls them into a spiral of easy, endlessly repetitive consumption. In this context, luxury brings that “something extra” which is to make the dream accessible. I don’t see what could replace this, which is why I don’t believe luxury is in crisis. Generally speaking, people haven’t fallen out of love with consumption because, unlike work or personal relationships, it rarely lets them down. People continue to derive satisfaction from what they buy, provided they buy quality. This is the stimulant that drives and will continue to drive luxury brands.