Is populism death for luxury?

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This year's fall Fashion Week opened with its signature uber-dose of glamour, freneticism and style. Once again, everyone stood at attention. Even The New York Times mainstreamed the event, moving coverage from the Style section right to the front page, with the proclamation that, "Models are back."

By the end of the week, an even more noteworthy event occurred. Super-high-end luxury came back as well ... more ubiquitous than ever. The catwalks were packed with over-the-top furs and outsize diamond brooches. Only for the precious few? Think again. Because now a new Mizrahi outfit is as close as your nearest Target. This fashion dialectic exposes a radical redefinition of luxury. Luxury is being democratized.

And you can be certain that this democratization of luxury is a trend, not a fad, because it is fueled by a better-informed and emboldened populace; people who know that they can have more and better. Let's face it, if confronted with a choice of luxury and value vs. luxury or value, what would you choose? The debate is no longer about whether luxury and value can coexist in today's global marketplace. They can and they do. The new question is whether, over time, the new democratization of luxury represents an opportunity or a death knell for luxury brands.

redefining the category

In order to encourage the debate, to challenge perceptions and instigate new ideas around this enigmatic issue, Publicis USA recently convened a panel of cultural arbiters, financial and trend experts.

From Moscow to Manhattan, more consumers are spending more of their money on luxury goods than ever before. James Hurley, a luxury-goods analyst for Bear Stearns, points to mass retailers such as Target that redefined the category by making luxury more about design than dollars. Accessibility, not exclusivity, is driving this market now. With a credit card and 10 minutes anyone can purchase a Chanel handbag. Nothing seems sacred! So who will be the winners and losers from this movement?

American luxury brands such as Coach, Tiffany's and Ralph Lauren are ahead. America's relative youth and heritage of freedom allow its brands more elasticity, enabling a broader number of people to embrace American brands, feel their relevance and call them their own. In contrast, many European luxury brands find it difficult to be accessible because they're penned in by their class-conscious heritage and history. Culturally, Americans won't allow exclusivity to bar entry. Europeans relish privilege.

There will, however, always be groups of ultra-high-end consumers who demand exclusivity. Any brand that doesn't deliver is irrelevant. So how do you offer exclusivity in an increasingly democratic market? David Wales, prime minister of international trend company Ministry of Culture offers this advice.

He says more and more the true indications of luxury reside in the precious human touches of the artisan behind the product. An exclusive cookie comes wrapped in brown paper, hand-tied with string and with the baker's signature, not a golden wrapper and machine-embossed brand name. And this precious touch extends to the service environment as well, with special recognition conferred on people at places such as the Helmut Lang custom shop. These are examples of what David calls "corporate eye contact"-human proximity to the privileged consumer in every shape and form.

value in pursuit

William Gibbons goes one step further. As marketing director of The Robb Report, his readers are the wealthiest consumers in the world. For them, value resides in the intellectual and physical pursuit of an object. When a watch costs $140,000, competition is required to obtain the watch, and connoisseur-ship is required to understand why it's worth that extravagant amount. For many luxury consumers, this quest for connoisseur-ship has evolved into a competitive sport. Fostering this competition is one way that true luxury brands can stay ahead of their democratic counterparts. One of our panelists envisioned the Internet as the "the ultimate school for these connoisseurs," as they search for rare facts about exclusive products.

Finally, there's the undeniable influence of emotion and psychology and the impact it has on the democratization issue. Didn't our mothers teach us that luxury is a "want" not a "need"? Stephen Fox, a prominent psychologist, psychoanalyst and academic, suggests that in the case of luxury, one of our primary life lessons may need to be completely recast.

According to Dr. Fox, luxury addresses psychological needs like restoring balance and connectedness, reducing tension, alleviating boredom, the desire to feel accomplishment, to be the best and to feel control. He believes that because people need luxury for such important reasons, luxury is, in fact, a need. In his words, "luxury is an imperative" for well-being.

The democratization of luxury offers great promise both for luxury brands that wish to tap in to a broader consumer opportunity and value brands that want to shed some functionality and incorporate some aspects of luxury.

But, for pure luxury brands that want to stay that way, they will have to "up" the offer to deliver even more exclusive, idiosyncratic and even eccentric qualities, such as "corporate eye contact," personal concierges, inspired connoisseur-ship and rare facts. If they fail, then democratization may very well be their death sentence.

About The Author

Susan M. Gianinno is chairman-CEO of Publicis USA. She serves on the board for the American Association of Advertising Agencies, as well as on the board of the Advertising Research Foundation.

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