In the quest for higher sales and early customer acquisition, luxury brands are collaborating with each other to create a unique value proposition for everyone. Are they successful? And what’s the future?
By: Jyoti Das
Posted on: September 27, 2023
While discussing on this topic, I am reminded of a quote by evolutionist Charles Darwin, who said, “It is the long history of human kind (and animal kind, too) that those who learned to collaborate and improvise most effectively have prevailed.” Was this, by any chance, the thought behind Nick Hayek Jr – CEO of Swatch Group – and his team’s recent maverick brand and product collaboration launches, which have created history?
On March 26, 2022, a historic collaboration was launched globally: MoonSwatch, with 11 models named after the planets of our solar system. A $260 mash up of Omega’s Moonwatch – with the heritage of the Apollo space program backing its fame, and Swatch’s colorful bioceramic and biosourced plastic – was an instant hit across the globe. Launched only in a few Swatch stores globally, the watch was out of stockin a few hours of the launch, with long queues never seen before in the history of traditional watches retailing.
The frenzy was such that police had to close the Swatch store in Carnaby Street in London within 30 minutes of its opening. The craze was such that a seller posted a MoonSwatch priced at $2000 on Ebay. Over a million MoonSwatches were sold in 2022 (as per a Bloomberg Report). The massive publicity and media hype also benefitted Omega with its own stores reflecting more than 50% growth in the original Moon watch sales. Swatch Group’s half year report, released in July 2023, highlighted an overall 18% increase in net sales, “with strongest growth in the lowest price level”. The report also mentioned that “global demand for Swatch watches and the MoonSwatch not only continued unabated, but even accelerated.”
New launches like the Moonshine Gold, Blue MoonSwatch and upcoming Snoopy edition will all contribute to keep the sales acceleration going and disallowing any fatigue to set in 2023.
Is success a destination? Swatch Group believes it’s a journey with the latest Blancpain X Swatch collaboration – the Bioceramic Scuba Fifty Fathoms collection – which honours the first true diver’s watch: the Fifty Fathoms. The five automatic watches fitted with the Systems 51 movement are a reflection of the finest Swiss watchmaking skill set. They come with a bioceramic case, gradient dial and featuring a beautiful illustration on the back of the case. Fitted with a NATO strap created out of recycled fishing nets, these magnificent timepieces come in attractive, fiery and bright colors. Launched on September 9, 2023, Swatch stores from Geneva to Champs Elysees in Paris to Tokyo and Palladium in Mumbai have already witnessed long queues and a buying frenzy.
Are brand collaborations as a strategy new? No. It goes back to the first quarter of 20th century when brands collaborated with artists, designers and celebrities. Spanish surrealist painter Salvador Dali collaborated with Italian designer Elsa Schiaparelli in mid-1930s for the Lobster dress – a first of its kind – which was worn by Wallis Simpson. Andy Warhol and Roy Halston introduced fashion and style to the masses with their unique silk screening technique and use of sequins, ultra-suede and silk fabrics to offer affordable and desirable fashion clothing to the Americans through the 1960s to 1980s. Yves Saint Laurent introduced wearable garments with motif inspirations from artists like Vincent van Gogh, Picasso and Georges Braque in the second half of 20th century. The 1980s saw a Chanel collaboration with German fashion designer Karl Lagerfeld for a Herve Leger watch.
Wallis Simpson wearing the iconic Lobster dress, a result of a Salvador Dali X Elsa Schiaparelli collaboration. Image ©Vogue.com
Volvo Cars, with its unique positioning of automobile safety, had collaborated with LEGOLAND, California, to communicate driving safety awareness among children in 2004, who would eventually be more responsible future drivers. With such a long-term collaboration, Volvo managed to instill a brand recall value in young minds, who may end up buying a Volvo as an adult.
A global iconic brand which has maximum collaborations to its name is Nike. Louis Vuitton, Dior, Swarovski, Jacquemus, and recently, Tiffany & Co., have all combined forces with the tick. Louis Vuitton launched the Nike Air Force 1, designed by its then creative designer, the Late Virgil Abloh. Sotheby’s auctioned off this collection – consisting of 200 pairs – in 2022, in a multimillion-dollar sale, culminating into a total of $25.3 million.
The latest offering in March this year has been the Air Force 1 X Tiffany & Co. A rare pair is retailing on Sotheby’s for $2,750, and on Snkrs India for INR 33,595. Crafted with premium suede with a sterling silver plate on the heel back, this shoe did create quite a stir for multiple reasons.
The year of 2023 has especially seen much hyped collaborations – Beyonce X Balmain, Louis Vuitton X Yayoi Kusuma, Jimmy Choo X Pretty Guardian Sailor Moon, Chanel X Barbie and many more.
Beyonce X Balmain. Image ©Balmain.com
Why the Popularity?
As per a Visual Objects survey, concluded in 2021, 71% of United States consumers gave a thumb up to co-branding and collaborative marketing. Collabs enjoy increasing popularity among millennials and Gen Z, two important population groups that are projected to contribute 80% to the total luxury goods sales by 2030. Data by Shopmium – a cashback app and data company – reveals that 60% of these young cohorts have already bought special edition launches in comparison to 40% of Gen X customers.
For luxury and fashion brands, collaboration marketing acts as an energizer. It gives a quick boost to brand awareness. In a high-low collaboration, it introduces an otherwise unaffordable luxury brand to a much younger audience. This can be a powerful tool to build desirability among younger cohorts who then aspire the high luxury brand later in life once they have the ability to purchase. The willingness to buy is already built in with their exposure to such collaborations. Louis Vuitton’s collaboration with Supreme was aimed at making the brand relevant to a much younger audience. The same can be said about the latest Blancpain X Swatch collaboration and the Nike X Tiffany & Co. collaboration. Tiffany & Co. has an ageing audience, and this tie up with Nike will provide the brand with enormous youthful energy.
Also important is to have the correct pricing for the final product, particularly in case of a high-low partnership.
For brands, collaboration marketing acts as a cost-effective communication tool with free publicity that otherwise would have made a serious dent in their balance sheet. The reach, penetration and brand recall value is much higher in such a campaign. It also results in positively impacting sales revenue of both participating brands. The Forrester study ‘Invest In Partnerships To Drive Growth And Competitive Advantage’ concluded that 76% of companies feel that such partnerships help in achieving their turnover objectives and 52% of them benefit by more than 20% increase in revenue.
Actress Margot Robbie wearing Chanel in 'Barbie' .
Every collaboration demands some serious brainstorming with an expectation to achieve not just short term sales, but also long term brand awareness. Being myopic can be dangerous in the longer horizon. Selection of the collaborating partner is extremely vital with values in absolute sync with each other. Is it a win-win for both partners in the longer horizon? Is it stepping into an “overkill zone”? The gains and losses must be weighed well in advance.
The desirability quotient of the collaboration is also critical. Is it desirable enough? Is it worth collaborating? Also important is to have the correct pricing for the final product, particularly in case of a high-low partnership. Moonswatch is a vivid example of a very high desirable quotient factor and a perfect price point for an aspiring younger generation. Lack of common goals, shared values, inter-communication, trust, drive to succeed, and being only profit and revenue centric could be the perfect recipe for failure of the collaboration.
Target and Neiman Marcus collaboration in 2013 is a classic example of marketing failure.Both brands are poles apart with differentiated goals and values. McLaren and Honda had an unsuccessful collaboration in 2015. Honda replaced the Mercedes Benz engines that McLaren used for years. The performance was a disaster and so was the partnership. Apple X Paypal partnership failed at the negotiation stage when Apple discovered that Paypal had already collaborated with Samsung.
How the future may look like?
Collaboration marketing is for the long haul. It’s here to stay. Luxury players have tied up with artists, fashion designers with movies, and gourmet chefs with iconic brands. A futuristic trend has already arrived with the Sotheby’s X Bucherer collaboration. A Sotheby’s Salon has opened in the Bucherer retail store in Zurich, Switzerland. It’s a first of its kind wherein an auction house meets retail excellence. The salon offers a unique experience to collectors and connoisseurs across categories, spanning pre-loved watches, handbags, wines and spirits. It would also host bespoke events, which would be a win-win scenario for both Sotheby’s and Bucherer.
The future lies in brands collaborating in the Metaverse to partner for unique NFTs and generate brand appeal, brand love, and even brand addiction, apart from generating revenues.
Future collaborations in luxury could also hover around sustainability which is now emerging as a new luxury buying value motivation. More collaborations to give a cultural meaning could emerge and more so for Asian markets. Lacoste collaborated with Chinese contemporary fashion brand Randomevent to increase its footprint among the Gen Z and Millennials in China. Both brands benefitted with Randomevent gaining global attention while Lacoste reached out to a wider audience in China. With the onset of Web 3.0 and Metaverse, luxury and fashion brands have jumped into the digital ocean with NFTs that have been well received by Gen Z – Adidas and Louis Vuitton being early entrants. The future lies in brands collaborating in the Metaverse to partner for unique NFTs and generate brand appeal, brand love, and even brand addiction, apart from generating revenues.
Jimmy Choo X Pretty Guardian Sailor Moon
We are living in interesting times, wherein the survival codes for luxury brands is a function of their ability to communicate through unique storytelling and creating extreme value for the customer with HIM or HER being the focal point. Collaboration marketing can be an integral part of such a storytelling approach. Luxury brands can collaborate, not just to energize the brand, but also to communicate a compelling brand story to their young and aspirational consumers.
With an excellent career record spanning two and a half decades in the lifestyle, fashion, luxury & consumer goods industries, Jyoti Das has worked with reputed companies like Whirlpool, Electrolux, Godrej Appliances & Swatch Group in leadership roles with P&L responsibility. He was the former Business Head - India for Swatch and Calvin Klein Watches and Jewellery. He is currently pursuing a PhD in Luxury Management from Birla Institute of Technology, Mesra and engaged in teaching assignments,Visiting faculty, industry academia interactions, CAT selection panel for B Schools and a Jury member in B School case study competitions.