Luxury Brands and the secondary market; why is it important for luxury brands to be familiar to those that are not their primary customer and how luxury marketing plays a role.

 

  Certain luxury items like designer fashion, cosmetics, perfumes, skin care, etc., although in the luxury sector, have predominantly aspirational consumers because of the lower price point.  People can save up to buy a purse, a suit, sunglasses or shoes, but they cannot save up to buy a $60 million dollar jet, yacht, etc.  Lower price point luxury brands rely on the aspirational consumer for 80% of their sales.  In these lower priced luxury categories quality luxury marketing makes all the difference, much more so than the quality of the product.  This, it seems, is magnified and seen with great clarity in the secondary market.

 

Like everyone else, I have to purge the closets regularly and unlike most years I decided to try using consignment shops.  Usually I am of the mindset that time is money and I wind up just bundling up my unwanted items and donating them.  As getting my donated items to the charities often become problematic, leaving boxes of stuff waiting in closets for months, accompanied by the fact that I often have never worn designer product, I have been repeatedly encouraged to try using a consignment shop.  These shops will often pick up from you on a timelier basis if you have designer brands.   So this year I did. It was a fascinating lesson in luxury marketing. 

 

A consignment shop will sell your items for a piece of the sale.  All differ slightly, but the one I used had the following percentage of sales:   Items under $500 they took 50%, items less than $1000 but over $500 they took 40% of the sale, and designer items they priced over $1000 they took 25%.  On certain brands that they deemed very likely to sell, the shops would offer a direct buyout at a lower price than what it would consign at, but you did not have to follow the sales (in other words faster and easier).  Time is the most valuable commodity for the top end of the luxury sector where dollars are in abundance.  Most of these purchasers really do not care about the retained value in the secondary market.  

 

 

Upon interviewing several owners of the top consignment shops in the area I learned about which items retained greater value and it was based on the mass markets perception of the brand.

 

For example any pair of Giuseppe Zanotti shoes/boots were less valuable than a pair of Christian LouBoutins.  The real luxury sector knows that these brands are on equal footing (excuse the pun), but the aspirational market, those buying from consignment shops, are not familiar with the Zanotti brand.  I think that this is an excellent example of two top quality brands where one has practiced excellent luxury market strategy and the other has not. In fact the consignment shop owners were willing to offer a buyout option on HIGH END DESIGNER items with secondary or mass market recognition only.  You make less money doing an outright sell because the shop takes the risk of the item not selling, but you have the benefit of receiving the money on the spot rather than waiting for the item to sell.  The shop offered to purchase worn LouBoutins and would only consign (so no risk to them) new, never worn Zanottis of greater retail value.  The same was true with men's suits.  The often considered superior brand of Brioni, they would only consign, but the better known by the masses, Armani, the shop purchased out right.  This was fascinating to me as a luxury marketing expert about how the perceived value by the non-primary purchaser changed the value of an item.  Not only was this true among brands of equal real status by educated and experienced luxury consumers, but brands that clearly sell for less at full price actually received more value than their superior brand counter parts that did not have any mass recognition.  The consignment shops preferred Burberry and Coach over far superior brands like Zanotti, Brioni, The reason is simply that some brands have better marketing.  (Brioni had to close its women's line just a few short years after launch, because poor marketing never allowed it to rise to the level it deserved off of quality and talent).  

 

As a consumer, when you walk out of the shop with better marketed brands you retain more the retail value of the product.  This value is not in the quality of the product, but entirely based on the quality of the marketing.  This was also true in housewares consignment shops.  More mass recognized brands like Tiffany crystal had a high buyout offer than brands like Baccarat, known to be of superior quality to the real luxury consumer.  

 

Here is a list of women's clothing and accessories brands that have maintained an elite brand image to consumers of the mass market: 

 

Balenciaga	Burberry	Celine
Chanel	Chloe	Christian Dior
Christian Louboutin	David Yurman	Dolce & Gabbana
Fendi	Givenchy	Gucci
Hermes	Jimmy Choo	Judith Leiber
Louis Vuitton	Missoni	Miu Miu
Prada	Tiffany	Tory Burch
Valentino	Versace	Yves Saint Laurent

 

 Since 80% of all these types of purchases are aspirational, the buyer needs to maintain the value for the secondary market because it allows them to sell their used items in order to afford to repurchase new.  There simply are not enough UHNW and HNW to purchase the amount of product that these brands must sell.  Low price point luxury products need the aspirational consumer. 

 Because these types of luxury products must be marketed as a real luxury

brand, and follow all the luxury marketing rules, these brands must somehow make sure that they are reaching their aspirational purchaser while maintaining an elite luxury status.  This is just another example, that just because someone worked at a luxury brand, does not mean they are experienced luxury marketers.  Luxury marketing and the traditional mass marketing (taught at most universities) are almost the antithesis of each other.  As can be seen here, lesser brands with superior marketing excel over better products and design with poorer marketing.  In luxury, marketing is EVERYTHING!   

 

 

  

  Lorre White, has been a international luxury marketing expert for over two decades and is the founder of White Light Consulting an international luxury marketing consulting firm working with luxury brands to reach the world’s wealthiest 1%. She is the founder of a luxury blog with an exclusive UHNW following www.LuxGuru.Typepad.com and the only internationally recognized luxury media personality “The Luxury Guru”. Lorre frequently contributes to luxury magazines globally, including having had her own monthly column in Portugal’s #1 rate luxury magazine. For more information just Google her name.  Twitter: @Lorre