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Op-Ed | Global Luxury: How to Win When You're Everywhere

In an era of global luxury, the right balance between exposure and scarcity is critical, argues Robert Burke.
Hermès and Giorgio Armani stores in Dalian, China | Source: Shutterstock
By
  • Robert Burke

LONDON, United Kingdom — As the luxury market continues to grow globally and digitally, brands are facing new challenges in terms of how to capture and maintain customers' interest at a local and international level.

The digital world, whether it be through a brand’s own website, its third-party partners, or social media, has drastically increased the amount of exposure that brands and their products can receive. While seemingly positive, this can be a double edged sword in the luxury world: digital exposure can go a long way towards increasing brand awareness, but it can also lead to consumer fatigue.

In a world where the term ‘omnichannel’ has become omnipresent, there is a fine line that brands must walk, in order to ensure they are providing customers with the products that they want, when and where they want them — and that they are simultaneously creating exclusivity and desire through the right amount of product scarcity.

This isn’t always achieved solely by a high price. Instead, desire is created when a brand strikes the right balance between availability and scarcity through its distribution.

Take the runaway success of Mansur Gavriel’s bucket handbag. It is not an expensive line — the handbags are an attainable price — but it’s very desirable as a result of the label’s distribution strategy. Before Mansur Gavriel releases its bags online at certain points in the year, it builds up a huge demand via Instagram and other online presences. When the products finally do drop, the site is usually overwhelmed with traffic and the products sell out within hours.

While this is an example in which there are surely missed opportunities for higher sales volumes, the sustained brand equity that this strategy creates is of higher value in the long run.

This idea of exclusivity through scarcity is not a new strategy, but it has become even more important, due to the accelerated turnover of information in the digital age. Hermès and Chanel are no strangers to this strategy: both have become infamous for their strategic release of their most iconic products, so much so that their loyal customers will travel the world in search of that one handbag that can only be found in a specific location.

Given that brands are investing heavily in their international flagships, this helps drive traffic to these far-flung locations. On top of that, the discerning luxury customer knows that, when they reach that destination, they will be greeted with a retail experience that matches the exclusivity of the product they seek.

Going forward, success really boils down to two things — brands have to look very closely at their overall communications strategies and also at controlling supply and demand. By possessing a product that few other consumers can have, the luxury consumer feels like an insider, like they’re been told a secret that nobody else knows. The minute that product starts being overexposed, its appeal starts to wane.

This isn't just applicable to luxury brands. It was always thought that supply and demand was only relevant for luxury. But today, it's becoming more evident that it's significant for all brands. Think of Nike and its collaborations with Dover Street Market. Each of the Dover Street Market stores only has 300 or 400 pairs of shoes. During the last release, I passed Dover Street Market in New York and fans were camping out in front of the store overnight to — not because the shoes were $150, but because those loyal fans knew that once they were gone, you wouldn't be able to get them anywhere else. That's the crux of creating desire — availability vs. scarcity.

As told to Helena Pike

Robert Burke is chairman and chief executive of retail consultancy firm Robert Burke Associates.

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