Literature Review
1: Introducing The Millennial Consumer
In the past few years, media and literature too, have given attention to Millennials and their consumer behaviour. Before understanding millennial interaction with luxury fashion, this chapter will provide an introduction to who Millennials are, how they have grown up and how their consumer behaviour differs from previous generations.
1.1 The Millennials and Their Upbringing
Born between 1980-2000, Millennials are the largest generation since World War II and have a population bigger than Baby Boomers and Generation X. Every generation has specific traits in common and what makes Millennials unique as a generation is the way they have been brought up by their parents and the time in which they have grown up. They are the first generation to have been a part of the digital revolution, they’ve grown alongside advancements in technology and media habits and hence have a different perception of ‘time’, ‘space’ and ‘possibilities’ (Arian; 2017) Also being called “digital natives”, Millennials have grown up surrounded by personal computers, Internet access, and are used to operating mobile devices, i.e. smartphones and tablets, with ease. Furthermore, this generation is often described as being optimistic, social, connected, tech savvy, diverse, open to change, and independent (Ressel, 2016). At a TEDxSF talk with Scott Hess titled ‘Millennials – Who They Are & Why We Hate Them’, he mentions how millennials when compared to Generation X, are said to be far more engaged, tolerant and inclusive despite the generic assumption of them being laid-back and demotivated. Millennials are said to be socially aware and environmentally conscious, they are connected to their roots and are more than often willing to take a stand for what they feel is right. The generation is aggressive and fights for all things right, they are open to new ideas, are non judgmental and are more than often opinionated. Millennials have witnessed the widespread adoption of the Internet, and also the evolution of social media platforms, and are therefore used to having steady access to whichever information and knowledge they desire to seek from an early age (Cristina Ressel; 2016) and are hence said to have the best ideas at workplaces leading to a rising demand for hiring the younger generation in almost every sector. It is the steady access to information and connectedness that majorly shape the lives of this generation, which is further highly social and tends to be surrounded by a large network consisting of their family, friends, colleagues and other like-minded people, whether online or offline (Cristina Ressel; 2016). The members of this generation enjoy socialising and surrounding themselves with people and do not hold back to share and display their lives and experiences on various social media channels, including Facebook, Instagram, YouTube or Pinterest (Ressel, 2016).
The fact that a whole generation is characterised as being particularly open, self-confident and carefree is not entirely a coincidence. The majority of Millennials have been raised by parents belonging to the Baby Boomer Generation, who themselves have often been raised by war affected parents (Ressel, 2016). Coming to India, the Country is said to be the land of millennials and is positioned to be the youngest nation in the world with 200 Million Indians who are in the age group of 18 to 35, where digital access is becoming mobile-driven. 85% of the weekly internet millennial population in India now owns a smart phone. Out of this, 43% use social media daily or watch Videos online and 11% use mobile payment on weekly basis. (The Economic Times, 2017) India is expected to become the youngest country by 2022, with an average age of 29. Being the largest generation in history, millennials have become the juggernaut that can wield immense influence on the way businesses are run. It becomes extremely important to understand their buying preferences (The Economic Times, 2017).
1.2 Millennials as Consumers
Due to these influences, this generation is often seen as very different and unique in comparison to previous generations. The influences of the two major factors that contribute to the uniqueness of this generation that were highlighted above are also reflected in the Millennials’ consumer behaviours. On their YouTube Channel, Goldman Sachs published a video in May 2017 in conversation with their Vice President of Global Investment Research, Lindsay Ducker Mann where she states that Millennials are reaching their prime spending years in important consumer categories including Apparel, Restaurants, Consumer Staples and Household Products. Over the next three years, she argues that their spending will increase by 15% simply by getting older and Baby Boomers’ spending will decline by 10%. She mentions how 80% of millennials own mobile phones and 75% of them are on social media. What’s interesting is that even for the oldest millennials, who are now today’s 35-37 year olds, have had internet access broadly since at least they were in high school. The generation is three times as likely to talk about a brand or a product over social media than Baby Boomers and are ten times as likely to blog about it. Companies therefore understand that they really need to be present and connect with their consumers on social media in ways that they hadn’t before. In her research paper, ‘How Millennial Consumers Have Increased the Demand for Luxury Brands’, Cristina Ressel states a few factors that constitute millennials’ consumer behaviour; Firstly, Millennials engage far more with companies and brands than any other generation before them. Given the development of various social media platforms on which one can find not only the profiles of individuals but also many companies, Millennials are used to the ability of reaching out to brands directly via messaging them on Facebook. Also for example on Instagram, consumers can share images on which they can tag the products and companies that can be seen on these images. At the same time, this leads to a shift in communication between brands and their consumers. Whereas before, the communication was mainly one-sided with companies communicating about their brands and what they stand for, these days consumers also largely contribute to this communication.
Millennials know that they are influential due to the opportunity of sharing anything they want about a brand quickly and knowing that they will reach a large amount of people with it. This lies true for Indian Millennials as well. As stated above, 85% of the weekly internet millennial population in India now owns a smart phone. In their book, ‘The Cult of Luxury Brand: Inside Asia’s Love Affair with Luxury’, Chadha & Husband call this young generation ‘liberalisation’s children’ and state that for India’s youth, ‘money’ is the new religion (Chadha & Husband, 2007). Auditing and Consultancy firm Deloitte pegs India’s millennials at 440 million, which is nearly 34% of the country’s population that nobody in the consumer business can afford to ignore. “India is a fast-growing nation and for any modern retailer who wishes to stay relevant, millennials are an important customer segment,” says Kumar Rajagopalan, CEO, Retailers Association of India (RAI), in an RAI-Deloitte report titled ‘Trend-setting Millennials: Redefining the Consumer Story’. “Globally, India is leading in terms of millennial population. Generation Y (millennials) is accounting for nearly half of the working age population in India. There is Generation Z, born after 2000s, which has a completely different set of tastes and preferences but it is still the Generation Y which is driving and dominating the entire consumer market,” said Anil Talreja, partner at Deloitte India (LiveMint, 2018). However, these 20-somethings and 30-somethings aren’t an easy market to crack because they aren’t loyal to any brand. As a result, marketing experts have to get into their minds to sell to them (Chauhan & Gupta, 2018).
The quintessentially Me, Me, Me generation is hard to figure out: It is highly individualistic, it’s always on the go, looks for convenience, is passionate about health and fitness, is socially conscious and deeply committed to issues like global warming and the environment, and it is a generation of digital natives. (Chauhan & Gupta, 2018). Given the large options of brands available to them, Millennials are picky shoppers that expect their own values to be represented by the brands that they purchase (Ressel, 2016). Millennials is a generation of inquisitive people and hence look for origin stories, purpose, idea and relatability behind every purchase. As the majority of Millennials are now in their twenties and thirties, it can be assumed that a large amount of them are still in stages in their lives where their values will still alter (Ressel, 2016). Hence, if Millennials are buying brands that currently represent their values, one can expect that it is natural for Millennials to grow out of the brands they buy more quickly than probably Generation X would have (Ressel, 2016). Millennials are very thoughtful about buying brands that represent and reflect who they are and what they stand for. However, at the same the opinions of others are also very important to them (Ressel, 2016). In comparison to other generations, Millennials tend to shop in groups and the opinions of others are a large influence on whether they are going to purchase something or not. Millennials are twice as likely to reference peer reviews on products before buying them as compared to Generation X (Mann, 2017).
2: Theoretical Concept of Luxury and its Significance in the Indian Market
This chapter broadly talks about the theoretical concept of luxury, what it means and how its subjective. The chapter also extends into discussing the significance of luxury brands in India as of today.
2.1 Theoretical Concept of Luxury
The term luxury is originated from the Latin word “luxus” (overabundance, indulgence, opulence, debauchery). Even though different researchers have focused on defining the term, most of the definitions seemed superficial, non-objective and developing, which might be due to the changing nature in personality, place and period (Chakraborty, 2016). For instance, to some finding time to read a book can be a luxury, to others spending a vacation in an expensive resort might be a luxury – although the underlying concept in both examples given here is time. Others might think of luxury in terms of very expensive products or a certain lifestyle that is only available to the wealthiest. Some might have a negative attitude towards luxury, perhaps also due to the fact that luxury only used to be available to the wealthiest and wealth stemming from societal inequalities; and thus view it as unnecessary, while others think positively about it and think that luxury is in fact necessary (Ressel, 2016). Hence, if there is an agreement on how the term luxury is understood, perceived, and valued it is by accepting that it varies to a great extent (Ressel, 2016). Due to the absence of an explicit definition, many authors writing about luxury brands look at the characteristics unique to such brands in order to illustrate the concept further. In his research on luxury brands, Chakraborty (2016), has presented a clear and comprehended definition of luxury mentioning luxury brands as connotation of following four aspects- “evoke exclusivity, have a well-known brand identity, enjoy high brand awareness and perceived quality, and retain sales levels, and customer loyalty”. In any case, not all extravagance brands meet every one of these criteria and some of the times these criteria are not adequate to order a brand as sumptuous. Following the double order of the elements of extravagance brands (i.e. expressive and impressive) and considering the highlights of new luxury brands (Hudders, 2013), the physical and psychosocial traits of luxury brands can be gathered into two fundamental classes: first, attributes alluding to exclusivity; and second, attributes alluding to excellent quality and aesthetics. Luxury brands represent the image of high position in the society. Which, when thought of, also serves a reason for more and more people indulging in buying luxury since it gives them a sense of superiority as well as security of being a part of a certain group in the society. Researches showed that in countries like China and India people of different age, gender and socio-economic groups are consuming a bulk amount of luxury products (Chakraborty, 2016). For instance, luxury is now not confined within Indian rich people, middle class people also consume luxury due to an increase in their disposable income.
2.2 Significance of Luxury Brands in India
However linking luxury to simply ‘brands’ would lead one to reason out that luxury in India did not exist prior to the advent of the global luxury brands which is inherently flawed (The Times of India, 2018). The luxury ‘brand’ is a wholly Western concept, the meaning of ‘luxury’ however is entirely Indian (The Times of India, 2018). Luxury was born in India, and India’s royalty, through the sheer volume of their business, were instrumental in building small Parisian Jewellers such as Cartier and Boucheron into the globally recognised icons of luxury they are today (The Times of India, 2018). The global meaning of luxury has for quite some time been caught in the physicality of the product; the craftsmanship, eliteness and credibility related with a Rolls Royce Phantom, an Hermes scarf or a bottle of Cristal champagne. India has dependably been more about the procedure than the product. Until the Emporios, the Palladiums and the Collectives came along, luxury in India couldn’t be purchased off a rack, it was a lifestyle (The Times of India, 2018). It has always been about customisation and service at home, about the family tailor and the family jeweller, about knowing someone but most of all, it is about having access. Access to things, experiences and people that the rest of the world cannot be part of. Luxury isn’t about having the kind of cash flow to be a part of something exclusive, it is about not having purchased at all, but ‘invited’ to be a part of that exclusivity (The Times of India, 2018). Today, however the meaning of luxury has been tamed and its only getting difficult to give luxury a solid definition. In India too, the millennials have taken over the consumer group and are the ones shaping the meaning of luxury. According to Economic Times (2018), India’s luxury market is set to grow to USD 30 billion from USD 23.8 billion by the year end on back of growing exposure of international brands amongst Indian youth and higher purchasing power of the upper class in tier II and tier III cities. The report points out that economic growth, leading to urbanisation and higher disposable income, has helped propel growth of luxury goods. Moreover, increasing retail presence of luxury consumers across the country and higher numbers of brands entering the country has resulted in strong performance of luxury goods. The report also suggests that frequent travelling of consumers and the emergence of a stable economy paired with the millennial population with growing disposable incomes has turned out to be great for luxury brands in India.
3: Interaction of Millennials with Luxury Brands
This chapter examines the relationship between Millennials and luxury brands and how and why they constitute to the increased demand for these brands. As mentioned in the previous chapter, Millennials are the largest generation since World War II and have now come to their prime spending years. The generation contributes largely to the growth of the luxury market as they spend more money on luxury brands than any generation before them. What is also unique about this generation is that Millennials start buying luxury brands at a younger age than previous generations.(Ressel, 2016). Having had access to the internet since a young age and being part of social media, it is very difficult to advertise to these millennials and catch their attention with content. However, luxury brands rooted in heritage are sitting on a goldmine (Goldman Sachs, 2017). Gary Vaynerchuk, Founder & CEO of Vaynermedia explains in an interview with Somi Aran that why is it that the millennials are investing in luxury way more than any other generation. He quotes, “ Why is it that we love Zeus or Spider Man? We love them because we love, as human beings, origin stories. And these luxury brands have the best origin stories.” Even though the majority of Millennials are yet to reach their peak earning years, commonly reached at the ages between 35-54, this generation already spends a significant amount of their disposable incomes on luxury brands and hence also contribute to the on going growth of this market (Schmidt, 2015; Barton et al., 2013).
According to a recent report by the UBS, it is found that Eighteen to 35 year olds contributed 85 percent of luxury growth last year and will represent 45 percent of total high-end spending by 2025 (Business of Fashion, 2018). Millennials feel better about their future earnings than older consumers and hence spend more on luxury goods(Business of Fashion, 2018). Focusing primarily on India and Indian Millennials, the luxury industry in the country is booming. With increasingly more international luxury brands paying close attention to Indian affluent consumers, the country’s luxury sector is set to be worth over $30 billion (USD) by the end of the year, growing at 26 percent year over year (Fortune India, 2018). Experts estimate that the luxury market in India will expand five-fold over the next three years as the number of millionaires in the country continues to grow (The Economic Times, 2018). This growth is driven by an increase in purchasing power among the upper class in tier II and tier III cities, but mainly by a growing exposure to international luxury brands amongst young affluent Indians. India has the largest share of Millennial consumers among major international economies (The Economic Times, 2018). A recent study by consulting firm Deloitte and the Retailers Association of India indicates that ‘Millennials in India are better connected to global trends than previous generations. They enjoy higher levels of disposable income and are driving changes and rapid growth across multiple consumer segments. Their reliance on the Internet to shop and discover new brands is also shifting the economy towards an omni channel experience’ (Parker, 2018). India has one of the world’s youngest consuming population in the world today, a reason why global continue to flock to India (John Sarkar; Millennials to beat Old Buyers in Luxury Space; 2017; IndiaTimes). “Millennials are definitely the next set of ‘aspirational’ shoppers for premium and luxury brands,” says Sanjay Kapoor, MD of Genesis Group, which markets and distributes some of the top luxury brands in India, including Jimmy Choo, Canali and Paul Smith (Sarkar, 2017).
3.1 Social Media And Pop Culture
The popularity of social media platforms and blogs in combination with Millennials’ overall desire for branded products have influenced the generation to be further engaging with luxury brands. This is due to several reasons. First of all, in comparison to previous generations, Millennials place a lot of importance on brands as a means to communicate their identity to their environment, which, among others, is an overall motivator for purchasing luxury brands. As discussed in the previous chapter, millennials are far more socially aware and environmentally conscious as compared to the previous generations. Therefore, given the popularity of social media platforms, a lot of Millennials do not only portray their identities to an offline environment but also online (Ressel, 2016). According to a report on social media usage by Andrew Perrin (2015), 90% of young adults aged 18 to 29 use social media. Hence, a lot of Millennials are avid social media users and do not only consume the content displayed on these platforms but also actively contribute content (Ressel, 2016). Social media platforms, including Facebook, Instagram, YouTube, Pinterest, and Snapchat, are highly visual and a lot of focus is placed on appearance and experiences that are shared with a large number of people that are a part of this community. Moreover, portraying a certain image on social media platforms and getting a lot of “likes” on the content shared can be an important self-validation factor and confidence boost to some (Srinivasan, Srivastava & Bhanot, 2014).
Interpersonal influence or social influence may be referred to as the need to identify or enhance one’s image with significant others through the acquisition and use of products and brands, the willingness to conform to the expectations of others regarding purchase decisions, and/or the tendency to learn about products and services by observing others and/or seeking information from others” (Chakraborty, 2016). This can be explained with an example of how celebrities use these social media platforms to showcase the kinds of lifestyles they lead and the brands they buy and possess, ready for anyone to observe if interested. Therefore, there is a certain amount of pressure on Millennials to conform to the norms of their reference group, while also being perceived as individual, as well as the norms of their aspirational group (Chakraborty, 2016). Furthermore, the popularity of celebrities, in real life and on social media, can lead to the goal of wanting to own the same products and brands as they do, either to feel closer to this celebrity or to imitate their behaviour in order to boost one’s own ego (Ressel, 2016). Another interesting factor to observe is that social media platforms, and also blogs, themselves have enabled some of their users to reach a similar level of popularity or celebrity status (Chakraborty, 2016). The major influencers on social media platforms have the financial resources necessary in order to purchase luxury brands and are hence portraying them online as well as often being brand ambassadors of certain luxury brands who receive items to portray on social media for free. To give an example, Kylie Jenner, a Millennial herself, has 119 million followers on Instagram and not only is she showing herself wearing and using certain luxury brands but she also indicates their names. This has an impact on the spending on luxury brands by millennials who wish to imitate the person they are inspired by. And Kylie Jenner is just one of the many social media influencers. As the standard of what makes inspirational and aspirational content on these platforms is raised to exceptional experiences, extravagant travels or owning luxury brands, naturally this serves as a motivation to many to live by these new standards. What millennials are seen doing to achieve this lifestyle of luxury is a concept called trading up and trading down. This trend, or behaviour, means that consumers prioritise their spending activities differently than before by spending less money on everyday commodities (trading down) in order to save additional financial resources to spend on other products, services or experiences that provide more enjoyment (trading up) (Ressel, 2016). For instance a consumer might shop the basics at, e.g. Zara, but then purchase handbags and shoes from a luxury brand.
3.2 Quality and Experience
As discussed before, Millennials expect brands to represent the values important to them. They value products differently and have hence redefined the concept of luxury. They value authenticity, craftsmanship, originality and heritage to ensure that the money used on products is well spent (Arian; 2017). Some argue that this makes Millennials natural consumers for luxury brands, as these are the brands offering the value these consumers are looking for (Arian; 2017). It is not necessarily only about trying to establish an image of being rich and wealthy, or pretending to be, rather than naturally choosing brands that embrace and incorporate their values and offer them the best quality possible. While previous generations are portrayed as making expensive purchases as a one-time event, Millennials expect more from the products they decide to buy (Arian; 2017). This is because a product in order for them to be worthy of possessing, needs to provide an experience, which also implies how the term luxury is evolving as it is no longer exclusive to certain products but also starts applying to, for example, dining out and travels (Arian; 2017). It must be an experience of its own to own a particular product and there also should be stories revolving around it and the brand involved. After all, Millennials are the generation of sharing every aspect of their lives with the broader community, whether in the form of a photo posted on Instagram or in the form of physically meeting up with friends.
4. The Changing Perception Of Luxury – New Luxury
Millennials have grown up in times where the nature of luxury has and is changing from something that has only been available to an exclusive and wealthy set of consumers to being also accessible to consumers of lower incomes. This so-called “democratisation of luxury” or “new luxury” has the effect that luxury is being viewed as the norm rather than something exclusive these days and luxury brands becoming more accessible (Ressel, 2016). To give an example, traditional luxury brands for instance, Marc Jacobs or Chloé, have introduced cheaper and therefore more accessible product lines, targeted to those whose income might not be high enough to purchase their traditional product lines (Arian; 2017). Also other traditional luxury brands have started selling so-called entry level products by, for instance, offering make-up and accessories. Both Millennials and luxury brands benefit from this strategic move, also called “old luxury brand extensions”, because it enables these brands to establish themselves in the minds of consumers whose income might not be at a point where they could purchase products of their traditional product lines (Ressel, 2016).
Since Millennials are the prime spending force as of now, there is no other way to survive than catering to their needs. So all the rules are being rewritten, because “we are putting youth on a pedestal, and tradition is getting absolutely hurt by that” states Vaynerchuk, Founder & CEO of Veynermedia (How Millennials are Changing the Market, 2017). It is also extremely hard to catch millennials’ attention in this age of social media where every single company or brand is running in the same race. Therefore, luxury brands have to work extra hard on their marketing strategies in order to be present in the areas and shout at places where millennials would listen. “Just giving them the history of your brand and telling them you’re 200 years old so listen to our story is not enough, you have to have more meat than that.” says Jamie Credland, SVP, Strategy and Marketing, The Economist (Arian, 2017). This is precisely the reason why luxury brands, once niche in a way that they didn’t need to advertise and talk about themselves, have now found themselves advertising constantly in a way that they get hold of the millennial buyers and if they don’t, “the biggest, the most historic brands of our time are going to go out of business in the next ten years.” claims Vaynerchuk (Arian, 2017). Brands that millennials wake up to have woken up to this reality. That explains Supreme selling out a collection in minutes. Plus, the very notion of luxury will change and has changed (The Telegraph India, 2018). For example, does really want to wear a Ralph Lauren T-shirt? Not at all, they would rather wear ASKET. Do they want to drink Beluga vodka? Nope. They would rather drink Our/Vodka. Purpose and meaning have crept into luxury. These are two things that one never associated with luxury in the past (The Telegraph India, 2018).
Yesteryear’s luxury is not necessarily today’s or tomorrow’s (Forbes, 2017). Heritage luxury brands, many with a history that goes back a century or more, have their back against the wall when it comes to innovation. They cling to that heritage and fear innovation threatens it. Yet the world is changing, faster than ever, and what made luxury brands great then isn’t necessarily going to make them great in the future. (Forbes, 2017) In the world’s largest luxury markets, the traditional values and ideas that have defined luxury – aspiration, status, exclusivity, wealth – have taken on negative connotations, “The new luxury is not a showoff.” Other values that luxury brands have traditionally filled – quality, style, workmanship, design – are increasingly being satisfied by premium and lower-priced brands. (Forbes, 2017) It has created an identity crisis for brands that compete in the luxury market or in other words, Luxury retailers and brands have lost their way. The call is to find a new more relevant idea of what luxury means, not just use it as a label, but to convey real meaning. “Luxury is now democratic and inclusive is the new exclusive” – Swapan Seth,2018, The Telegraph. This luxury industry insider expressed the challenges for the future of luxury brands, “There seems to be a wider demographic, and growing base of consumers looking for exceptionally made, sophisticated and well-priced merchandise. Why that is called ‘luxury’ is a question we should be asking ourselves” (Forbes, 2017). Luxury brands must adapt and put the consumer in the drivers’ seat. With the consumer leading the way, that over the next two years the idea of the luxury market will evolve forward to reflect where the consumer demand will be, and in the process, redefine the very definition of luxury itself (Forbes, 2017). When asked if Luxury will remain niche, Swapan Seth, in an interview with The Telegraph said, “Luxury, which was all along autocratic, is now democratic. Inclusive is the new exclusive. So, no, luxury will not remain niche. What will remain niche are brands that are smug. Look at Berluti. It knew that the leather business would only get them that far. Which is why they now have apparel as well (Mathures Paul; September 2018; The Telegraph).
5. Comparative Study Between Luxury and Premium Brands
As discussed in previous chapters, luxury is subjective and can hold different meanings for different people. Talking about luxury in terms of fashion brands however, it is safe to say that these brands don’t necessarily meet a need or solve a problem. Their consumers aren’t said to be interested in more features giving better value for money, that is a premium marketing angle. Luxury consumers are primarily inclined towards the brand’s heritage, prestige and uniqueness, it’s identity which counts, rather than a competitive edge. These brands are displays of wealth that revolve around strong social cues such as social elevation, a sense of timelessness, priceless experiences and a strong hedonistic drive. According to Harper’s Bazaar (2018), in terms of fashion, what’s looked at to define luxury is the motivations of the designer and also about the investment, time and application of skills that’s involved in the production or making of an object (Kristen Bateman,2018). In an article by Vogue Italia, they’ve explained how luxury is research, it is the chance to experience new routes, to find new and unpredictable or already seen solutions. In other words, experimentations are luxury. (Sozzani, 2011). Craftsmanship is luxury. A product is said to be luxe when its handcrafted and tailored for just a a few. Exclusivity is hence understood as another term for luxury (Sozzani, 2011).
Premium brands, on the other hand, are the ones that give you the best features at the best value. These brands operate with a close to one ratio of functionality and price. It is difficult to define premium brands in absolute terms, there is usually a relativity idea behind it, which is outlined by the context of the consumer. Two factors that categorise brand into premium would be category appropriate premium pricing and meeting customer expectations in terms of value for money. And since they do provide the best features and quality, consumers are willing to pay them a fairly high price as they feel its worth it.
5.1 Theoretical Points of Difference
Price
Luxury brands are specifically and obviously placed higher in this segment as they have higher prices for the products that they are selling but that may or may not be in sync with the value or quality of the product since for luxury brands, the brand name sells more than the product itself.
Premium brands on the other hand give value for money, they make sure they provide you with products that have the best features at the best value.
Target Audience
Luxury has primarily been for an audience that understands the craftsmanship, the brand value and the exclusivity that the brand comes with. It is for people who are willing to invest in something that sets them apart form the crowd.
For premium brands, the audience has always been one that is ready push themselves to pay higher than what they pay for an average product in order to possess products that are a notch higher than what the mass market is served with.
Advertising
Luxury has never been about advertising and appealing to their audience, it has never been in the race for catering to a large number of people, it has laws been restricts to its niche. This is basically why we never see a Rolls Royce or a Rolex giving out advertisements.
Premium brand are said to have the biggest share in the advertising market, the entire idea behind a premium brand is to reach out to a larger group of audience.
Manufacturing
Luxury is all about customisation and carefully handcrafted products. Brands are hence rarely seen going for mass manufacturing.
Premium brands may not mass manufacture as much as the average brands, but they still manage to do quite a lot. However, they do not compromise on marinating the high standards and cost limiting.
Exclusivity
Luxury brands have to be exclusive in terms of their price, their availability, and their brand communication. If the brands get greedy, in order to serve to a larger audience and fail to adhere to this principle, they quickly run the risk of becoming ordinary – and ordinariness is the greatest enemy of any brand.
Premium brands however do not have to adhere to this principle, their idea is to reach more and more people and hence exclusivity is almost a barrier that lays in their brand communication.
5.2 Luxury Dissolving into Premium, Thereby Leading to the Birth of Parallels Between the Two
A lot of conjecture has been revolving around the ‘new luxury’ coming in play, there has been an economic downturn on luxury brands (Economic Times, 2018). The issue is that in the recent years, luxury has become more ubiquitous, a lot of premium brands have tap into consumer aspirations for luxury. What has also aided this shift in perception of what luxury means is the change in consumer group (Somi Aran; How Millennials are Changing the Market; 2017). Millennials coming into play, and being almost solely accountable for the economy, luxury brands are bound to cater to their new client base and are hence somewhere losing on their exclusivity (Danziger; 2017; Forbes). Keeping in mind the previous chapter (The changing perception of luxury), and the points of differences mentioned above, one can easily draw parallels between luxury and premium in order to understand how the former is metamorphosing into the latter.
Brand Collaborations
Even though luxury brands are still quite high in the price range for their products, these brands have established extensions or baby brands with premium pricing, most of them have even invested in brand collaborations in order to cater to a larger audience. For example, Moschino x HM or Louis Vuitton x Supreme have been few of the most remarkable collections that had a widespread reach across the world. This in a way has taken away from the entire idea of exclusivity from luxury, it ha definitely made the sector more accessible. In India too. for example, Ritu Kumar came up with Label by Ritu Kumar which has been quite a successful venture as it reached out to the masses and got them closer to a luxury brand what they think was unattainable.
Target Audience
There has been a significant shift in the audience consuming luxury. Luxury has always targeted a slightly mature consumer group and has always served a niche, this however has now changed. According to Business of Fashion (2018), millennials have constituted about 75-80% of luxury growth last year and Louis Vuitton & Gucci have turned out to be millennials’ favourite brands (Bloomberg, 2018). It is therefore safe to say that luxury is now targeting a larger group of people in order to sustain in the industry. The brands are changing their modes of communication and catering to millennial needs. Hence, this again contradicts the entire idea of luxury being exclusive.
Advertising
Unlike older times where luxury brands were never seen advertising or appealing to the audience, this generation of social media has enforced brands like Gucci, Louis Vuitton, Anamika Khanna and Sabyasachi to heavily advertise on social media engaging more and more people in their communication. So much so that in India, brands like Ritu Kumar and Anita Dongre now even have TV commercials running. Premium brands have always said to have the biggest share in advertisement and now luxury is no different. It is hence difficult to draw a line between the two.