We are living in a world where more people than ever can now afford to own a “luxury” brand.
I own an Omega diving watch and Oakley sunglasses. I have persuaded myself that I bought the watch because I do in fact dive, but I find the helium release valve, that you find on several of the more expensive diving watches, and which James Bond once used to detonate bombs, so incredibly cool; few people who wear these watches need one, I certainly don’t, and most of them don’t even know what it does. Google it! It is essential for all you saturation divers reading this right now (please tell me if you are a saturation diver!).
I tell myself that I had a perfectly functional reason for buying my watch, but I suspect that there was also a “luxury” element to my purchase; a vague desire to be associated with a great brand. I don’t think I wanted to be like James Bond, but who knows what goes on in the murky depths of our subconscious minds? I bought it when I was unhappy: you know what? it cheered me up some too. I think the same may be true for my Oakley sunglasses; no matter how often I justify my purchase on quality grounds alone, you just can’t get away from the fact that it makes a statement of some sort about how rich, cool, young at heart, and discerning I am. I’m an Omega and Oakley sort of guy. Before my Omega days I was a Swatch guy, but I seem to have grown out of Swatch watches now: as Omega is owned by Swatch these days, I guess I have just migrated from one of its segments to another, perhaps with a little marketing help from them!
Anyway, I started thinking about this when I read about how Luxottica, the world’s biggest premium eyewear manufacturer, has achieved its highest ever earnings in 2012. It owns both the Oakley and Ray Ban brands and manufactures for a wide range of other well known brands too, including; Prada, Giorgio Armani, Burberry, and Tiffany & Co. Consolidated net sales for the year were €7.09Bn, up 13.9% on a like for like basis: growth in emerging markets a whopping 26% counterbalancing more modest figures of 6% for Europe and North America. Since 2012 this Italian company has expanded its global reach and acquired several smaller rivals like Alain Mikli. These guys clearly know what they are doing and their CEO describes it as a “young industry” with plenty of growth potential.
We are all getting older and emerging markets are also getting relatively richer and so Maslow comes into play: no longer held back by mere survival activities more and more of us can now strive for self-actualisation, to be “all we can be”. The basic human need we all have, to fulfil our own potential, has been addressed by the luxury branded goods markets for centuries. Today, “luxury” has been somewhat redefined and segmented and so today we can all reach out and fulfil at least the economically closest of our social aspirations, just by buying something! This need is so strong that it doesn’t seem to be affected by recessions; most luxury goods markets have been fairly resilient to the doom and gloom of recent years and many have, like Luxottica, blossomed.
Although branded watches, sunglasses, handbags and clothing are of course quite different industries, at some level of abstraction they are, to my mind at least, in much the same business, the Personal Identity business, and we now live in an age where almost anyone can buy a brand that at least fulfils some part of their personal aspiration. “Statement accessories” abound. The luxury brand market is so resilient because it is selling something that we find most difficult to economise on, ourselves. Whilst we can moderate our consumption we do not want to moderate our personal growth and development, and so the proliferation of “luxury” brands, aimed at thinner and thinner horizontal markets, continues to be a very successful strategy to adopt.
We are living in a world where more people than ever can now afford a “luxury” brand that has the power to define us more clearly as “winners” with our peers.
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