In an era when Aldi is no longer a foreign land for those used to being serviced at Waitrose and customers are no longer put off by shopping around, luxury brands are being forced to review the sweet spot between accessibility and elitism. And this is precisely where Mulberry went wrong.
It was all going so well for this totem of understated and accessible luxury, known for the Alexa bag and the Del Rey bag, but Mulberry started failing when it tried to move far too upmarket. Cue lacklustre sales, a profit warning in January (its third in 18 months), the sudden departure of its yet-to-be-replace creative director Emma Hill last summer, and now the recent resignation of its CEO of two years, Bruno Guillon.
In the two years since Guillon joined the company from Hermès it has been reported that Mulberry has lost two-thirds of its market share.
The rise of accessible luxury brands like Kors, Coach and The Outnet,is not only the result of the market or the economy, but simply because brands such as Prada, Hermès, Louis Vuitton and, of course, Mulberry, with their inflated prices, became unaffordable and unattainable.
Branding strategies around the luxury market have historically revolved around one thing and one thing alone: trying to become more exclusive. Thereafter they reduce entry level products to ensure the long term desirability of the brand.
By upscaling, traditional luxury brands have allowed the more affordable entrants to capitalise on the space they vacated. .
The key problem, however, is demand. Today’s consumer does want luxury brands, but on his or her own terms. Luxury is not just about status and connoisseurship; today’s luxury consumer takes on many different identities.
Decreasing sales of high-end Gucci and Louis Vuitton suggest that, by upscaling themselves, the traditional luxury brands have allowed the more affordable luxury entrants to capitalise on the space they vacated.
Consumers are not up for saving for the traditional status symbol brands as they used to, but are satisfying their appetite for luxury and style amongst brands that cost less. And as the global rise of the middle class continues, the market is seeing a more confident consumer actively seeking a taste of class without the high price tag. It goes as far as becoming a mark of pride to seek out a more "smart" luxury alternative.
The other challenge is the idea of luxury brands as heirlooms. A diminishing brand strategy for luxury houses that might have heritage and craftsmanship, but they are withering on the vine because they are yet to figure out how to connect to the new connected consumer.
Burberry is the best example of a brand that has excelled in sharing its brand history and heritage with its loyal consumers, while updating its customer experience for a new and younger market.
Other luxury brands are trying to match their aspirational and affordable messaging, like Swiss jeweller Chopard which launched My Happy Sport app, which allows buyers to design custom watches in a variety of price ranges. Customers can then either share their creations across social media or locate a store for actual purchase.
Luxury marketing has always been about creating and maintaining aspiration. But the changing demands of consumers means the lines between luxury, premium and affordable are being constantly redrawn. To occupy the highest tiers requires a robust and innovative brand, commercial and communications strategy.