10 years has seen explosive growth in what is being called the “massification of luxury goods.” Luxury has gone mainstream but does this still make them luxury brands?

Coach literally reinvented itself in 2001 as a fashion-forward producer of mass luxury goods to better compete against stronger luxury brands. They have been incredibly successful and other brands are doing the same thing. H&M had haute couture designers, Stella McCartney, Roberto Cavalli and Karl Lagerfeld design pieces for their retail stores that literally sold out in less than an hour. This is actually a good thing for the luxury market, providing an entry point for consumers into the luxury world.

Luxury brand leaders are trying to find ways to distinguish themselves from other premium brands and some are now pushing prices up to an unprecedented level to maintain their luxury positioning. Can being expensive alone maintain this positioning? Louis Vuitton, Chanel and Hermès are all testing the limit of what they can ask for. The question is how high can you go? And how do you justify that cost to consumers?

Louis Vuitton is maintaining prestige while selling to the masses without ever having an end of season sale. Burberry is doing a phenom- enal job transforming itself into a luxury brand. Chanel is making sure style never goes out of fashion and is never affordable. Tiffany & Co. is still making sure everyone understands what the little blue box means. Hermès offers a true luxury experience with only a limited number of bags to sell each season. Just like a high-end restaurant that holds a table or two for those important guests that drop in without a reservation, a few distinguished customers can purchase a bag in-store, but generally, if you want to buy a Hermès bag, you have to order it. Most bags in the store are just for display. You choose the material: cowhide, ostrich or canvas, and the color of the hardware: silver, gold or diamond-encrusted. As you wait the 6-8 months for your bag, you can excitedly tell your friends what you’ve ordered. They are the masters in making their products desirable.

The key success factor for luxury brands is still quality. It takes three years to train a leather goods craftsman and two years to train retail personnel. If we continue with Hermès as an example, for the past 20 years their craftsmen have grown from approximately 300 to over 2,000. A Hermès bag is going to last a customer 30 years – it isn’t a product, it’s an investment.

In 2010 the total consumption in the Chinese mainland luxury market reached USD10.7 billion, excluding private jets, yachts and luxury cars, making China the world’s second largest consumer of luxury goods following Japan. Roughly 73% of China’s luxury shoppers are under 45, compared with just over 50% in the US, according to McKinsey & Co., as many as 45% of China’s high-end buyers are under 35, compared with 28% in Western Europe. It is not difficult to see where the opportunities are.

If you spend an hour in Shanghai or Beijing you will find plenty of pseudo luxury brands that are working hard to position themselves as true luxury brands using Italian or French names to lure the unsophisticated Chinese consumers. But as Chinese consumers travel overseas, these pseudo luxury brands need to invest in overseas retail to maintain their image. The cost of entry is raised.

If the largest luxury market decides they needed change, or if they take the lead in luxury consumption, China may initiate a powerful shift. The1960s marked a Cultural Revolution in China; the 2010s may just be the Luxury Revolution. The Chinese consumer may acquire and develop their appreciation for luxury and 50% of so-called luxury brands may not pass the test. Shanghai and Beijing have a higher concentration of luxury watch outlets than any other major city in the world. In China, the ‘luxurification’ of everyday life is the new normal. They have a very different definition of luxury and are fast evolving.

Conspicuous consumption is prominent in China – consumers are willing to pay more for publicly displayed possessions to signify wealth, meaning price will be an indicator of exclusivity. This is good news for luxury goods. Luxury consumption always operates at a level of aspiration and imagination, but it can have real effects in facilitating the construction of self-identity. While luxury shoppers are being led by the rational desire to purchase items that are of high style and craftsmanship, eight of the ten top purchase motivators are emotionally driven. Luxury marketers must be reminded that it is vital to tap into deep consumers’ desires for social status and indulgence. In the context of Chinese consumers, marketers need to consider the implications of the needs of national identity and how they construct and maintain social meanings among the emerging upper-middle class. As luxury goods attempt satisfy a social need to project success, we enter the realm of the symbolic, and it is symbolic meaning that is used in the search for the meaning of existence.

Idris Mootee is the publisher and editor-in-chief of M/I/S/C/, a published author, speaker and CEO of Idea Couture, a global strategic innovation and experience design firm. He spends his time between, London, New York, Toronto, San Francisco and Shanghai.

This Article has been taken from The Customer Experience Issue (Issue #3, Fall 2011) of M/I/S/C/ Magazine – a magazine dedicated to design thinking and innovation available in over 25 countries. To purchase a digital copy of the full issue and for other issues please click HERE.

However, we are now experiencing another evolution in Industrial Design as it appears to be reaching the end of an evolutionary plateau, with emerging industrial economies such as China and India set to take over  the way things get made (for better or worse).  It is important to note that Industrial manufacturing will continue to exist, yet it must evolve to keep up with emerging needs of society and the new rules of global responsibility.  In a similar way that Industrial processes in Europe became focussed on premium quality rather than mass-quantity, North American manufacturing will need to re-examine and re-evaluate where their strengths are and what long term potential exists based on examining holistic risks and opportunities.

Since the 1950′s manufacturing expertise in North America has been systematically reduced to ever more efficient assembly lines with ever increasing regulations and manufacturing processes with more emphasis devoted to marketing and advertising.  As a result of this, manufacturers have become increasingly more clever at reducing the number, complexity and cost of manufacturing.  However as we look forward to the next phase of evolution in our emerging world economy, the core Industrial Design skills and manufacturing expertise appears to be set for going open and experiential.

It is this technical know-how that is gradually being re-distributed throughout the Internet and it is allowing new micro-assembly methods for independents, proving a way to bypass traditional investment heavy processes and procedures.  This is proving to be most beneficial for the emerging economies and independents start-ups.  Fisker Automotive and Tesla Automotive are both companies who are touting their independent green credentials, and yet they using the same supplier base from larger OEMs to create their more sharply defined and powerful Premium Electric or Plug-in Hybrids vehciles. Most important to note however, is that these are still early days for these type of innovators.

Already there are other new (smaller scale) business models which are begining to pop up.  As with many innovations, it is not always the originator of an idea who benefits from an idea or technology first.  Sometimes the groundwork that has been laid down by previous business experiments and prototype models leads innovators to other business models with separate and an un-intended technologies and they are able to realize a novel new approach for use in a new type of product.  An interesting example at this end of the spectrum is BPG Motors; an small start-up company born from a highschool science project in which the technology of Segway’s personal transporter was reformatted to fit into a motorcycle style package.  After only a few short years, the company is now experimenting with a fold-up scooter prototype, the UNO III, which can transform itself to save space to be taken indoors and up an elevator.  None of this would have been possible if not for the accessibility of open-source know-how and shared technologies (such as the out-sourced rapid prototyping of aluminum parts).

Are brand names, badges or marques of a manufacturer more important than what the physical product is?  These are questions that I often think about.  I think automotive manufacturers also need to address these kinds question before taking their brands into the realm of experience design.  If a manufacturer of a brand cannot impart a more compelling story beyond what the end customer picks up from their  dealership, then perhaps it is time for an investigation  around what kinds of experiences, journeys and alternative narratives can be provided to consumers.

Industrial Design has often been criticized as one of the most destructive professions due to the resulting industrial waste,  shortened mid-cycle enhancements and associated pollutants with the entire socio-economic, industrial and commercial program.  There are several leading minds in  transportation design and automotive design experts who acknowledge that the only way to improve current and emerging issues related to transportation and mobility is in collaboration with non-automotive sectors.  More importantly there is now an industry awareness and emphasis on designing experiential brands, that take consumers beyond the realm of “yes or no type offerings” or other stand alone products, and instead focuses on delivering a participative experience.  This is the next evolution for Industrial Design as it requires a breadth of knowledge of both product, process and positioning.

So what does all this mean to brand-name manufacturers?    Manufactures can do much more for consumers, and  there are real needs that can be addressed right now beyond simply offering more products.  The short answers could be in developing alternatives to car ownership, and alleviating time wasted for commuters stuck in traffic.  There are many forms this could this take, most obviously transit buses and ride/share programs.  But how could an automotive brand use experiential marketing to provide a premium service?  Would there be anything from a brand to add to the experience beyond simply being an “outstanding, compelling or gotta-have-product”?   Imagine an autonomous limo that picks you and and delivers you your destination, that is piloted by Google, co-branded by Apple and offers passengers an engaging experiences designed by Universal Studios.  Or how about stopping off at Starbucks to recharge your electric hybrid while you enjoy your favorite cup of coffee?

The path forward is not yet clear, and there is still much deliberation about what vehicle architectures, electric infrastructure and vehicle servicing that will be needed in the future.  However, industry already knows about the more immediate and frustrating issues of traffic, pollution and insurance premiums.  If foresight indications are correct, then the R&D groups of large OEM’s need to begin re-evaluating what mobility means, and what role their brands will play in a service oriented economy.   Creative technology environments are generally reserved for work in manufacturing R&D silos, however I know from experience that they can be quite flexible in accommodating new types of design and engineering (see my earlier post here).  In order for OEM brands to gain access to the next evolution economy, the Researching-of and Designing-exercises for consumer experience based offerings, must be opened up beyond the silo of transportation designers.  What is needed now, is a new platform to engage policy makers, urban planners and non-automotive businesses with those in the Automotive Corporate world.

There are 365 days in the year and our travel luggage spends most of that time buried away in the closet.  When luggage is not being used, it takes away valuable space, and adds to the frustration of clutter creating awkward surfaces that are difficult integrate with other items.

After 100 years in the travel luggage and all the changes that the industry has been through, it is ultimately the consumers who have changed most. With a decrease in leisure travel, and an expansion of alternative means to carrying luggage from the onset as a result of increased air travel restrictions, luggage manufactures have witnessed a near perfect storm.  Retailers in particular have felt the pinch of the great recession and some brands are facing severe economic uncertainties. Research indicates that changes in air travel behavior are here to stay, and while some luggage manufacturers are forecasting expansion into overseas market development in the hopes of luring customers similar to those found in North America, the luggage manufacturers will need to take a more serious look at where they are heading toward and what they are planning to do about their business in terms of strategy and innovation.

What hope is there for the North American luggage industry to survive into the next decade?  What else can this industry do with their manufacturing expertise and brand equity?  How can they to tap some new value streams for consumers? What are some other ways to reframe the context of luggage and how it gets used?  What are some alternative functions or features that could be used in the home and the urban environment?

The following explorations pertain to ideas and opinions expressed over innovation for travel luggage industry.  The directions, departures and themes illustrated here are meant to serve as a starting point around a discussion of innovation, and do necessarily reflect the actual brand names that have been referenced.

One direction could see the extension of luggage docking familiar to travellers brought into the home environment.  This habit formed “Loading and Unloading Zone” serves as a system that can be installed by the DIY homeowner.  Key features would be stowed away storage bins, vanity mirror/wall organizer and an innovative dust trap/deodorizer for the front hallway.

A step down from the built environment could be realized as a mobile cart with integrated lighting and storage systems.  The carry-on luggage would be stationed as temporary shelving unit capable of offering up usable space in a chaotic environment.  Ambient lighting on both floor and ceiling with combined use of mirror would open up even the narrowest of passageways.

Another extension of mobility, this idea focuses on individual docking of carry-on luggage and the interplay of visibility and usable space.  Additional features would include ambient ceiling light, air-scrubbing plants (such as Bamboo Palms) and aromatic fragrances through co-branded vendors.

In this last example, here is an exploration around a stationary unit, meant to be compatible with other electronics and entertainment style furniture.  Featuring a duality of faces through the use of a swivel base, this unit allows the user to display or conceal the luggage depending on scenario of use.  Other conveniences such as magazine rack, shoe organizer and lower cupboard space invite the user to display this station which is made from the same materials and construction as the luggage itself.

]]> http://www.ideacouture.com/blog/2011/01/03/pack-the-bags-for-a-new-direction/feed/ 0 http://www.ideacouture.com/blog/2010/04/22/meet-these-eco-friendly-innovators-on-earth-day/ http://www.ideacouture.com/blog/2010/04/22/meet-these-eco-friendly-innovators-on-earth-day/#comments Thu, 22 Apr 2010 07:00:15 +0000 ltse http://www.ideacouture.com/blog/?p=3949 Recently there have been a few great and green projects that have caught my eye and feel the need to share these innovations with all of you…

The Clever Little Bag by Puma

Recently Puma announced the Clever Little Bag that will reduce their environmental footprint. As a shoelover, a shoebox is not only an environment problem but a space saving issue that involves all shoelovers who live in small condos. The Clever Little Bag not only solves the bigger problem at hand such as sustainability and carbon emission but it also reduces cluster in everyone’s home.

The R3 Green experiment by Petz Scholtus and Sergio Carratala

I stumbled upon this article on ReadyMade magazine and its about a Spanish couple in Barcelona who turned their own home into a green experiment. The couple used as many recycled materials as they could to create a carbon neutral home that follows the 3R principles: Reduce, Recycle, Respect. One of the coolest things in their apartment is the Wine Crate cabinets in the kitchen. You can follow the instruction and make one yourself with this check list.

Obsessive Consumption by Kate Bingaman-Burt
Obsessive Consumption started out as an art project by Kate Bingaman and it’s a project that I have been following for a few years. Kate, the artist, started out by creating a personal record of what she buys everyday and she draws out credit card statements for every single item she buys. The collection of drawings is getting bigger and bigger and she has finally started a blog to document this project. Why is this project green you ask? The drawings of what we consume serve as a reminder for all of us to think twice about how much we consume on this planet and by looking at the colourful drawings of these consumptions you are able to reflect on your own. When everyone is doing it- that’s a good starting point for reducing waste.

Happy Earth Day!

A retailer’s primary role may be that of curator and tastemaker, but that doesn’t mean that the crowds can’t pitch in to help. Modcloth is a Pittsburgh-based online retailer that sells affordable, independent designer women’s fashion. With a recently launched initiative called Be the Buyer, ModCloth encourages its customers to help choose which items to take into production, effectively turning a customer into a virtual member of their buying team. E-commerce functionality + community participation = We-Commerce, and it’s a very efficient method of building both brand awareness and driving advocacy.

The retailer was founded by Eric and Susan Gregg Koger, a husband-wife team who are recent graduates of Carnegie Mellon University. Susan says, “Our customers know our brand best. They’re trendsetters, and we really want to take this opportunity to listen to them, and produce and sell items that they want to see on our site”. This is keen acknowledgment of brand ownership and the value of really letting the voice of the customer be heard — insights not always recognized by more established marketers. There are some designs that the owners think will be hits, but the designer can only put them into production and at a sell-able price if they’re made in a large quantity. As a small company, it’s difficult for ModCloth to make big inventory commitments without knowing if customer demand is necessarily in alignment with the owners’ tastes in style.

ModCloth’s crowd-sourced voting process is reminiscent of t-shirt retailer, Threadless. While t-shirts are almost a commodity from a manufacturing perspective, ModCloth sells dresses, shirts, jackets and skirts that are more complicated to produce. And this is where the virtual buyers come in.

ModCloth’s fans currently have 65 designs to vote on by selecting an item, then choosing whether to “Pick it” or “Skip It”, along with the option of submitting amplifying commentary each design, and to share their voting decisions on Facebook and Twitter, turning the voting process into a useful marketing tool for ModCloth. If a design is taken into production, customers who voted for it receive email notifications as soon as it’s available, allowing them to be the first to buy and wear it. Winning designs will normally be for sale a few weeks after voting ends.

This isn’t the only way that ModCloth involves their shoppers – periodically they invite customers to become fashion writers through their Name It and Win It contests, and features on their website, like reviews and ratings, equal even more involvement. Susan thought it would be wonderful for customers everywhere to get a chance to become a virtual buyer, which was the inspiration for Be the Buyer.

While the concept won’t work for every retailer or manufacturer, it’s definitely one that many could benefit from: by making customers feel more involved, by taking some of the guesswork out of buying decisions, and by empowering customers via social media channels to drive brand awareness and capture customer sentiment and insights. We-commerce initiatives like Be the Buyer are allowing savvy merchants to drive active engagements with their customers that can efficiently drive loyalty, advocacy, and truly meaningful relationships based on that participation.

Catering trucks and street food don’t have the best reputations–most have been known as “roach coaches”, and with good reason.   In the past, you could count on food trucks to serve up suspect tuna salad on stale white bread with limp lettuce and coffee so strong it could strip the paint off your car.  Today’s trucks, however, take a much different approach.  The new breed of  “food trucks” are not just stale sandwiches and greasy gut bomb burritos,  but are often mobile extensions of established restaurants.  Once the haunt of blue collar workers on a coffee or lunch break, food trucks now are attracting a new generation of technocrats in places like LA, New York, Portland, San Francisco and Austin who track and share the locations of the trucks via Facebook, MySpace, Twitter and text messages.

Dan Delaney is a Brooklyn-based entrepreneur who has combined his abundant passion for fine foods and mobile dining with video production and social media with a web-series/podcast that takes the viewers across a tour of the US and reviews the best in portable cuisine. Check out VendrTV at http://vendr.tv/ or via iTunes, where you can download a podcast at vender.tv/itunes.   So you can watch a review of mobile dining on your mobile device.

Here he reviews Let’s Be Frank, a mobile restaurant not far from my neighborhood in San Francisco that serves local, grass fed beef and pork hot dogs and sausages.

The high volume efficiency of the cubed containers reduces costs as well as carbon emissions by better space utilization during transportation and storage, a substantial improvement beyond traditional shaped plastic bottles. Additional environmental benefits are gained from using readily recyclable plastic materials, like HDPE and PP, and development is ongoing for the use of renewable materials. It can serve as a powerful marketing platform for the introduction of new brands and products.

Marks & Spencer just opened a store on Nanjing Xi Lu, replacing a Muji. Both are established brands in their home country (UK and Japan) and both manufacture and package their own products. Both have a similar product approach in terms of keeping things simple but are different in their design approach. Marks & Spencer is not exactly an exciting retail experience and Muji has far better product design and presentation from functionality to aesthetics. Muji is not doing that well here, as it requires a level of sophistication to appreciate it whereas Marks & Spencer is basically selling British quality and this will win in the short term.

Distribution has always been the greatest hurdle for retailers. The opening of the wholesale sector should lead to major improvements in the distribution environment, but there is a big gap. Strategies that successful foreign enterprises have employed to overcome distribution barriers include developing their infrastructures or partnering with the locals, and both has unique challenges.

In 10 years, its retail sector has been transformed from a simple and inefficient distribution system to a much more complex and highly competitive market-oriented economy. The new retail economy in many ways resembles the contemporary retail economy in the US. It is also exhibiting significant differences with Chinese characteristics but I think eventually it will move towards a different direction. Shanghai and the rest of China is currently suffering from some kind of “Brand Fatigue” as consumers are slowly becoming more sophisticated. The trust and prestige issues carry very different meaning here in China. We are still 5-10 years away from a more predictable consumer behavior and the market evolves.

Coordinating colors can be completely confounding. Do the curtains match the carpet? Will the backsplash compliment the dishes? Is the bedding in-sync with the bedroom walls? To attempt to answer these difficult décor questions, most consumers rely on collecting piles of fabric swatches, paint chips, magazine clippings and even a favorite plate or bowl to mix and match them until the secret of personal style is finally revealed. Then, the challenge truly begins: braving a series of separate stores across the city to actually find those items that, in theory and from that pile, really do work together to conjure color coordination. Failure is frequent, and usually by a hue or two.

Color Concierge By Crate & Barrel solves this challenge by packing the style skills of a professional interior designer into a single, easy to use iPhone application. With reliable, robust and dynamic brainpower, it uses intelligent logic driven by color theory, an archive of best practices and pattern recognition of user activities to take a photo of a room or item, extract the color palette, refine color harmonies and generate the perfect product combinations. Then, to make shopping easier, it acquires instant product details, displays color and fabric options, receives smart recommendations from other brands that align to your project and personality, and accesses special offers available only through Color Concierge.

Design changes are a reaction to pressure. This is true of both evolutionary design and human design.  In a completely stable system (of which there’s no such thing), there is no pressure to make design changes. In today’s chaotic environment, there’s a bigger demand for designer for change.  Expect to see more B-school program on design and innovation.
Design is essentially a rational, logical, sequential process intended to solve problems or initiate change in man-made things and in nature. The process begins with the identification and analysis of a problem or need and proceeds through a structured sequence in which information is researched, ideas explored and evaluated until the optimum solution to the problem or need is devised. The problem is in the traditional process (many still practice it today), the work of the expert in the process was often compartmentalized, each having little, if any input in matters which fell outside the boundaries of their specific domains. Thus, participants explored their ideas unilaterally, with one or another participant, through virtue of their “expertise”, imposing constraints upon all others. As they pass the bucket, the product designer has veto on matters to do functionality; the engineer has veto on technology and the human factor in usability.

Look back at the years of the Bauhaus movement when they attempted to knit the design process into a coherent whole. Students were encouraged to study design in a way that was both total and detailed. That is, designers were expected to balance all the considerations that came to bear upon the design of particular artifacts, systems and overall environments. As a result, design quickly evolved into a closed activity – an activity in which all but the designers themselves had little, if any valid input on questions of base materials etc. That was the birth of the multi-disciplinary designer.

Design is important for any organization but not many organizations get it. This includes Google. Bowman, former visual design lead of Goggle accuses the company’s culture of relying too much on numbers, to the point where creativity suffers. According to Bowman, “Yes, it’s true that a team at Google couldn’t decide between two blues, so they’re testing 41 shades between each blue to see which one performs better,” he writes. “I had a recent debate over whether a border should be 3, 4 or 5 pixels wide, and was asked to prove my case. I can’t operate in an environment like that.”

Created by Richard Shed,  “The Good Design Manifesto” in London is a collection of 100 brief responses from industry experts to the question “What is good design?”  Here are a few of them:
Good design…
…makes ordinary people’s life more meaningful. (Lavrans Lovrie, Livework)
…brings the intelligence of nature together with man’s production capabilities. (Jonathan Prestwich)
…is finding new places where what we can dream meets what we can make happen. (John Miller and Anna Hart, Mark)
…is no longer about 20th century debates around form or function. Good design will ensure we got a future on this planet.
…is sooo boring. We need GREAT design: Vision. Humanity. Sex. Death. Art. Love. (Richard Eisermann)

Image Source: http://4.bp.blogspot.com/_HwdkdfjE8Tk/SLY90CTrO6I/AAAAAAAAAeM/YTTydMbcX5U/s400/Coke_Butler.jpg; http://www.modernclassicsdirect.co.uk/imagesstatic/big/breuer/Wassily%20Chair.gif