Stretching and Twisting

The luxury brands of the world have learnt a new exercise of diversifying by stretching and twisting themselves. But the question is, how far should they stretch?

By: Salman Z Bukhari

Posted on: February 10, 2012

The luxury brands of the world have learnt a new exercise of diversifying by stretching and twisting themselves. But the question is, how far should they stretch?

If you were to read any of marketing Guru Al Ries’ books, you would conclude one core message, “Don’t mess around with your brand, and be known for just one thing, that you are good at!” Ries is a great believer of focused marketing, and quotes time and again marketing clichés from cola companies to airlines going berserk, taking their brand all over the place just to capture the maximum market share.

Now if only Mr Ries would mind stepping out of his office, and walk into high streets, high fashion boutiques or the store of just about any luxury brand today, we are certain he would eat his own words with a generous helping of salt and pepper. As for the walloping failures of marketing giants which are these cola companies and mammoth airlines, LuxuryFacts recommends you to read this article and then learn a lesson or two from the once ‘niche’, ‘for the select few’ brands, who have done the unthinkable (and that might not necessarily mean in a good way always). They Diversified.

No other brand diversifies as effortlessly as our dear friend Hermes, really! Despite its equestrian heritage, the company swiftly moved into silk scarves, ties, handbags, home décor, fragrances, paper, clothing and everything you can imagine for a luxe life. But what makes it so admirable is that it never for once forgets its core values of fine craftsmanship, attention to detail and high quality. And once in a while, the splendid horses come out to play on various objects, as a constant reminder of the rich story which made up its past.

The House of Vuitton, on the other hand, carried its baggage of luxury travels for long until the entry of Marc Jacobs who went ‘monogram crazy’, and pushed the iconic label into shoes, ready to wear, books, fine jewellery, eyewear and so on. The logo flashers can only have more reasons to be happy as they tug their speedy along as a badge of honour.

This intensive diversification is not new to the luxury industry. Madame Chanel was one of the first to experiment much before anyone else did. The object of her affection was a bottle of fragrance she christened No.5, which went on to become one of the fastest and largest selling perfumes in our modern history, thus paving way for brands, luxury or not, to introduce their version of concoctions in every imaginable bottle shape and size.

Fragrances are the most accessible entry point into the world of luxury. The overwhelming volume of the business and sheer magnitude of margins make it a win-win situation for both the consumer and the brand,” quoted a manager of a known Italian luxury brand making forays into the Indian market. Chanel has since then taken a fast car into the diversification town wearing high heels, cosmetics, skin-care, men’s wear, sports equipment… luxury never looked so good.

The reason for this shift in business is now core to the existence of many luxury brands in this day and age. As the number of consumers increase, especially because of the rising economies of Asia and South America, these newly awakened luxury connoisseurs are looking for multiple expressions of their new found financial independence and a loud proclamation that they have finally arrived. For them, a luxury brand is a route into the world that evaded their kind for generations, and now these very unthinkable labels are available in great abundance and within easy access. Luxury brands, on the other hand, are playing on the same sentiment. Their small world has grown, number of consumers has multiplied and there is a demand for their core offerings. These once small, family owned specialized manufacturing and retailing businesses realized that to survive, they will need to enter new markets to grow, and to grow they will need to enter new markets, leading them to sell out to the big bad boys called investment banks or to luxury conglomerates, who were willing to take these labels global. Gucci, Yves Saint Laurent, Fendi, the list just goes on. Each of these small brands turned global in no time and their new owners realized that the high perceived values of these brands make for a perfect diversification angle. Some call it growth, others mere survival, while purist call it greed. We do not judge, nor do the consumers, who are only too happy to indulge.

However, there are many who would stop in their tracks before immersing themselves in this ‘Disney-fication’ of luxury. They are of firm Al-Reis school of thought, which, in luxury language, translates into Rolex can only make great watches, not shoes, and Dior is known for couture not jewellery. Luxury labels, which are encompassing a wide spectrum of categories under their name, might not find much love emitting from these staunch believers.

For leather makers, getting into small accessories like belts, wallets and even shoes, may mean an organic business transition. Same can be said for a clothing brand pushing its envelope and striving to complete the look by getting into hand bags and footwear. But the business of diversification often takes strange roads which we wish we weren’t witness to.
“Brands are made over years with much care and must be safeguarded as heirlooms,” says an Indian designer who has made quite a name for himself by designing racy clothing for Indian movies and TV shows. Although he is light years from luxury and veers more towards commercial, he speaks words of wisdom, which we wish Pierre Cardin had heard before he went rabid with his merchandizing bonanza in the late 1970s and 80s. Once celebrated for his fine aesthetics and for revolutionizing fashion, no sooner did Cardin learn the value his brand held, he gave away his name to every conceivable manufacturer through licensing rights. His name appeared on rubber flip-flops and bathroom tiles made in slave factories in far off places, making Mr Cardin a rather rich man, but his label the most unwanted luxury brand of its time.

Christian Dior’s business too went on this self-destructive path, the last blow being Dior cigarettes. The same luxury conglomerates, which insist on diversification, turned into an angel in disguise for the pre-maturely dying Dior brand. LVMH, run by Bernard Arnault, cancelled almost all licenses by Dior the year it was purchased, and consolidated the damage by making the label focus on what it did best – make dresses.

How much experience does Prada have in making mobile phones? So what if Korean brand LG creates one swanky piece for Muccia, Prada should have at least looked at a much better partner like Apple or even Vertu, before entering into a partnership to create handsets. Cavalli’s loud and kitschy fashion loving fashionistas might find some solace in his namesake club in Dubai, just as a home seeker might find his moment of luxury in Armani’s designed home in the heart of Mumbai.

Indian brands are not far as well. Hidesign, a leather goods brand, crafts eyewear too now. Designer duo Abu-Sandeep design homes, while the ubiquitous Tarun Tahiliani has collaborated with flower shop Ferns N Petals to make flower arrangements!

One may argue that designers are creative people, who are in the business of weaving aesthetics into the simplest objects and ideas they which catch their attention, making them highly desirable and, needless to say, beautiful. But on a flipside, it is also a dangerous thing to move into territories you have no idea about, especially, when a brand is not your own namesake label. A little caution and care needs to be heeded because they are someone else’s vision, but often are also vulnerable to whimsical deviation from the real dream, which made the brand what we know it for today.