CEO Talk | Greg Furman, Founder and Chairman, Luxury Marketing Council

Greg Furman

Greg Furman, Founder and Chairman, Luxury Marketing Council

NEW YORK, United States As the recession wears on, luxury companies are beginning to realise they will have to do more than cut costs in order to survive this downturn. Indeed, for many brands, a fundamental repositioning and reevaluation of their long-standing strategies may be in order.

In this kind of environment, many luxury executives turn to the New York-based Luxury Marketing Council, where their membership enables them to share in the insights and learnings of more than 800 peers and colleagues from across the sector, representing companies as diverse as Bergdorf Goodman, The Carlyle Hotel, and Steinway & Sons, the legendary piano manufacturer. The Council’s reach has also grown in recent years to include international chapters in London and Sao Paolo.

I caught up with the Council’s CEO Greg Furman via e-mail to get his take on the rapidly changing economic and consumer environment, and the implication for luxury brands everywhere.

BoF: You have spoken out against the notion that luxury is dead. Why do you so vehemently believe in the strong future for luxury?

Because what makes true luxury “luxury” is what Mr. Stanley Marcus called: “The impact of the hand: the best that mind of man can imagine and the hand of man create.”

Bespoke services or products will always be able to command a premium price by those with the education and wallet to know the best when they see it. The great luxury brands have weathered greater threats over time than this recession. They will continue to do so. Look at Hermès and Louis Vuitton, who are still showing profits in these toughest of times. They “stick to their knitting” in every way and are rewarded by the market and the most sophisticated buyers.

BoF: Okay, even if luxury is not dead, its much-debated definition has certainly changed. How do you define luxury now and why?

The definition of luxury is changing. The words that I hear most now are Experience (unique and memorable); Story (the ability to talk about a great product or experience that is truly unique); Value (bespoke craft as in a Brioni or Chanel suit will always last, style-wise and wear-wise); Wellness (it’s no longer about ‘stuff'; it’s about how wonderful products or experience make us and our families and loved ones feel); Service (not the same old same old; see Jack Mitchell’s Hug Your Customers for the definitive point of view on this); Time(all of us, rich or poor, desire more of it and the most affluent require a new sensitivity and respect for their time as a favored client’s time in all transactions, in person and on-line); The simple things (dry fire wood; an hour’s spa treatment; a run in the park; quiet time on the screened porch; time with family and friends, a great meal or bottle of wine).

BoF: Suzy Menkes of the IHT recently convened a conference in New Delhi to discuss the notion of Sustainable Luxury. While it’s clear that this is of emerging importance to consumers, no major brands seem to have fully addressed this yet. What would you advise major luxury brands to do?

We’ve done four events in the last 18 months on this topic. Suffice it to say that for luxury brands (as the disparity between the haves and have-nots increases) behaving wellsociologically, politically, environmentallyis in the spotlight as never before.

Luxury brands are in a fishbowl and some of them don’t even know it, yet. Those that think they can just do well by doing good without, in a sophisticated way, publicising their contributions to the community are in for an unpleasant wake-up call.

BoF: Another emerging market trend is everything related to the luxury of wellness. What are the big opportunities here?

As baby boomers continue to get ‘younger’, wellness-spiritual, material, psychological, physical-will be one of the biggest value-drivers to tap into for luxury brands. American Express, in their research, has defined four stages of luxury:

Acquisitive – The bigger the brand the better; the costlier the better; conspicuous to be desired and relatively clueless about price/value and what constitutes true luxury other than price and bragging rights (Russia, Mainland China)

Inquisitive – Reliant on authorities, almost slavishly; wanting to know; self educating; not showy or ostentatious; governed by middle class values (the United States 15 years ago)

Authoritative - Wanting the unique, the bespoke, the ability to tell a story about a great product or service, wanting to be part of the decision (no longer slavish as pertains to ‘authorities’), wanting above all valuethat which lastsand great style (U.S., Europe, Japan, Hong Kong today)

Meditative – Wanting an experience or product that enhances one’s sense of self worth and provides a personal ‘lift’ in wearing, using or recalling this ‘something great’ – look at many of the cutting edge hotels and some of the luxury shops – they’re looking as much like zen temples – completely spare and elegant – appealing to all senses and minimal minimal – as they are hotels and ‘store’ – that satisfaction that comes from knowing one knows rather than wanting every else to know one knows – no need to tout, no need to display – only to enjoy the ‘buzz’ of great stuff, great experiences and share that satisfaction – “spiritual” doesn’t cut it – but that inner sense of “all’s right with the world because one’s efforts have taken one to this point and, recession, no recession – “ain’t life grand” (U.S., Europe, Japan, Hong Kong today, either mostly “there” or moving “there”)

BoF: Finally, what else is on your mind for the luxury industry as we look ahead to the rest of 2009. Things are still pretty gloomy out there…do you foresee a turnaround anytime soon?

Barons, the contrarians, say daylight will come at end of third quarter of 2009.

On the other hand, Booz & Company say it will be two years and that 2009 and 2010 will show back-to-back periods of 30 to 40 percent drops in gross revenues across all segments of luxury. Noone will be immune and perhaps 50 percent of local luxury brands will disappear. Even those with deep pockets will need to consolidating and divest fallow brands.

What I’m seeing is a sea change in the ways the European brands are thinking about marketing. As the recession continues, luxury brands are experiencing a wake up call from a market which continues to be soft. For the first time in many years, even brands that have been determined to continue to pursue their strategy of ‘great product, major investments in advertising’ are rethinking the viability of this old-world approach and exploring tactics that are more like those employed by consumer packaged-goods companies, and could be described as  ‘American’.

CEO Talk is BoF’s forum for in-depth discussions with the fashion industry’s global decision makers, conducted by founder and editor-in-chief Imran Amed.

This interview has been edited and condensed.

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4 comments

  1. Some really spot-on perspective from Greg Furman and quoted sources.

    NY Times columnist and author Rob Walker writes about the brand idea in terms of it becoming a form of identity in shorthand. So much of luxury brands’ ability to set themselves apart is craftsmanship. In today’s technologically obsessed society, do we still appreciate and have an eye for the detail that only a true artisan can create? Are enough consumers moved by the skilled craftsman’s work that they are loyal to his or her “shorthand?”

    As the online replaces the brick and mortar experience clever adjustments to how we approach consumers and how we bring them into the “workshop” of the brand are vital.

    Seth Godin writes about in his book Purple Cow, brands having a “remarkable” attribute. In a similar vein, Rob Walker talks about brands having emotional attributes which transcend the material. He believes that there’s a “desire code” that marketers must tap into. Greg Furman outlines above a similar new luxury branding code to consider when vying for mind and wallet share.

    The complexity of today’s mobile and networked society infers, too, that those brands (and marketers) which aptly define the authentic, often intangible, essence that connects (really connects, at a visceral level) with consumers– and those consumers who are sophisticated enough to see the difference– will enjoy a higher rate of return. Good luck to us!

  2. In agreeance with Greg’s comment, I feel the luxury brands that will survive this recession are the ones that continue to offer the best products and services. Not compromising any costs and continuing to give an uplifting experience. The examples of Hermes and Louis Vuitton are two great examples mentioned in the interview. They have been through the toughest of times and yet they still continue to attract the most sophisticated market today.

    A great informative piece in regards to our currant economic situation.

    I’ve gone ahead and put this piece under my essential blogs on my blog. For more info visit EgO at: http://www.egoctm.com

  3. I love this article Mr. Furman was head on with statements regarding economic times and the classic sense of security many have held in regards to the quality of high end products. For the very wealthy there has always been a minimal exposure to ‘hard times’ I think the Luxury Council will do well to focus on the ‘social marketing’ aspects of consumerism. This will elevate their support for those less fortunate while still having value and quality maintained as a value placed asset to their current base.