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This is one of the six chapters comprising the Vogue Business Index: Spring/Summer 2023 edition and should be read in conjunction with the others. Please use the table of contents below to navigate between the chapters of the Vogue Business Index: Spring/Summer 2023 edition.
Key takeaways:
- Differentiation is a key opportunity. Consumers are showing an interest in a wider array of brands, with big shifts in the rankings outside of the big three — Louis Vuitton, Dior and Gucci. Brands need to react to this by leaning into what makes them stand out while honing in on gaining exposure through popular cultural vehicles, including sustainability campaigns and collaborations with musicians that emphasise brand DNA.
- Make your name in China and the Middle East. Brand recognition is lowest in China and the Middle East, which means that many fashion houses have plenty of room to improve their reputation in those countries. With both identified as high-growth markets for the future, brands need to think about how they can gain more exposure and become better known there. These markets also present opportunities for smaller brands to get ahead.
- Quality, not quantity. The continued expansion of luxury brands runs the risk of diminishing their prestige in the eyes of consumers. Brands need to think about creative approaches to demonstrate their heritage and quality. Transparency around supply chains is one option, which could help produce a halo effect from strong ESG.
The decentralisation of fashion
Louis Vuitton is the overall leader of the Vogue Business Index for the third edition in a row. As with the previous two editions, Dior and Gucci follow the French maison in second and third place. None of these brands has finished outside of the top three since the first edition of the Index in spring 2020.
Each of the three brands scores relatively well across every pillar, and although Gucci trails slightly on how positively consumers view the brand, it more than makes up for it with high scores in ESG and innovation. Louis Vuitton’s resonance with consumers and financial heft make it incredibly hard to dislodge from first place.
Look beyond the dominance of this leading trio, and there seems to be significant plate-shifting going on beneath, with brands outside of the LVMH and Kering conglomerates ascending. British fashion house Burberry is one of the biggest movers, jumping up four places to rank sixth. Prada is up one position, Miu Miu up five and both Balmain and Brunello Cucinelli — the latter now on track to become a billion-dollar-brand — have risen six places.
With muted approaches to clothing and accessory design currently in vogue, fashion brands are finding new ways to assert their individual identities. Burberry and Ferragamo leaned into their historic colours for the redesign of their new logos, Hugo regularly reinvents its branding, while Rochas developed temporary new takes on their branding through collaborating with creatives.
As independent brands rise, decentralisation is happening elsewhere, too. Luxury consumers are relying on a more diverse range of sources of information on where to shop. Magazine and newspaper articles are still the primary way that consumers find out about new brands or collections, but their influence has declined since last winter’s Index. Meanwhile, every other information channel has increased in importance, with brands’ own websites, word of mouth, celebrities and newsletters all notably more influential than they were a few months ago.
The significant notable leap was among consumers citing brand websites as sources of information. Over a third (35 per cent) say they find out about new products by navigating directly to a brand’s e-commerce portal, up from 29 per cent in winter. What makes this so notable is that it has occurred alongside a decrease in satisfaction with the online shopping experience that most luxury brands offer.
It may be that consumers are less likely to trust an intermediary like a fashion journalist to tell them what is relevant for them, but that puts added pressure on brands to deliver informative online experiences that showcase products that consumers love. Many brands may not yet be doing this to the standard consumers expect, so any that have failed to recently review their homepage layouts, for example, should schedule time for an honest review.
Luxury’s cultural relevance increases
As a greater selection of fashion houses perform well in the Vogue Business Index, consumer awareness of all the different luxury brands the Index features is also improving. Seventy per cent of brands have a higher awareness score now than they did in winter.
The averages for unaided awareness (the likelihood of a consumer naming any given luxury fashion brand when asked to name one) and aided awareness (whether a luxury consumer recognises the name of any given fashion brand) are up year-on-year.
Awareness had dipped slightly between the summer 2022 and winter 2022/23 editions, meaning that a continual downward trend in brand awareness has now been reversed. Brands should congratulate their marketing teams on reversing this previously concerning trend.
The average awareness score (a figure derived from both unaided and aided awareness) across brands is now at its highest level since winter 2021, which was the first time all 60 of the current Index brands were included. American brands Coach and Kate Spade both increased their awareness score by 10 percentage points since winter. Jimmy Choo, Longchamp, Miu Miu and Loewe, meanwhile, all saw rises of more than six percentage points.
Three of these five brands score higher with under-35s than they do with all other consumers, demonstrating the importance of targeting Gen Z and younger millennials in boosting brand recognition. Coach has pivoted towards circular fashion, including upcycling, in a bid to maintain relevance with more conscious younger shoppers. Some of this cultural relevance comes from external forces, with charting musicians in the US rapidly increasing their mentions of luxury brands over the past decade.
Smart brands have also leaned into luxury’s cultural cachet to maximise exposure and bring in new audiences. Clothes took a backseat at Moncler’s Art of Genius event in London in February, which featured interactive installations and live performances from singer-songwriter Alicia Keys and music producer Mike Dean (on behalf of Jay-Z’s agency RocNation). Other brands also made presentations at the event, with one highlight being a Mercedes car shrouded in Moncler puffer material.
A major vehicle for the cultural exposure of luxury has been one of the world’s buzziest TV shows over the past few years — HBO’s Succession. Centring on the activities of ultra-high-net-worth individuals, the “quiet luxury” trend is often referenced in the outfits of the central characters of the Roy family, with Maison Margiela, Loro Piana and Brunello Cucinelli providing some of the outfits picked by the warring siblings featured in the show. Characters in the show mocked a “ludicrously capacious” £2,000 Burberry tote as inappropriate for a party, but internet searches for the product spiked after the episode.
Average aided awareness across brands is currently highest in Japan, where any given luxury brand is typically known by 85 per cent of consumers. Areas with much lower average brand awareness include growth markets China (67 per cent) and the Middle East (65 per cent), where purchase intent of luxury brands overindexes the global average. As such, there are clear opportunities to build brand profiles in these markets, turning awareness into dedicated consumer bases.
They don’t make them like they used to
These increases in awareness come with a significant caveat. As consumers find out about luxury brands, many of them are less impressed than they used to be.
When asked to rate luxury brands out of 10 on the quality of the cuts and fittings they are producing, consumers gave an average score of 6.7, which was down from 7 in summer 2022. A similarly large decline was seen in how highly they rate the digital experience they have with luxury brands, dropping from 6.4 last summer to 6.1 in this edition of the Index. Across all metrics evaluating brand quality, the average score brands received from consumers declined by 3 per cent. This shows that brands cannot afford to be complacent — not only do consumers notice any minute lapses in quality and experience, but their demands are ever-increasing, too.
However, the decline in consumer satisfaction around the digital experience is not because luxury brands are removing any popular online shopping features; since the winter 2022 edition, there has been an increase in customer support services like instant chat and an effort for greater precision around promised delivery times, for instance. This could be read as brands reacting to a more-demanding consumer that is keen to know when exactly to expect the products they are ordering and in need of easy access to customer support to help guide them through the online shopping process.
It can be difficult for luxury brands to always meet shifting consumer expectations around the digital experience, given the offerings from competitors and multi-brand shopping platforms such as Matches and Farfetch, and even Amazon. However, with a consumer base that prizes both excellence and novelty, it may be time to be more daring and introduce new features that will catch attention. Innovation pillar leaders such as Gucci and Ralph Lauren are perhaps exceptions, but luxury brands, on the whole, are not driving radical changes to the digital purchasing experience, which could maintain consumer interest.
The perception of a decline in quality is a particularly troubling development for brands, especially when, as exemplified by the “quiet luxury” trend, consumers are increasingly focused on the quality of the clothing they are producing rather than how eye-catching the looks are. Quiet luxury emphasises high-quality, classic looks rather than bold or logo-driven designs.
Over half (55 per cent) of Index brands received a lower score for quality than they did in winter 2022. The biggest drop (5.6 points) was for Hugo Boss, which arguably shows the risk of pursuing a Gen Z strategy even if there are clearly many benefits, too. (Hugo Boss recently split into two brands, the millennial-targeted Boss and the Gen Z-focused Hugo.) Many Gen Z-focused brands have fared particularly well in the Financials pillar in this edition of the Index, for instance.
Jimmy Choo and Ermenegildo Zegna were among the other brands to have seen a decline in consumer perception of clothing quality, but both fell from a higher base than Hugo Boss. Shoewear specialists Jimmy Choo and other Capri Holdings brands Versace and Michael Kors have struggled in the fiscal fourth quarter as US demand weakened.
There were some brands that bucked the trend and rose in stature among consumers, most notable among these were Salvatore Ferragamo and Dior. The latter focuses a sizable portion of its social media output on the high levels of craftsmanship that go into the brand, with pictures of Maria Grazia Chiuri’s dresses being assembled ahead of shows.
Dior’s links to artisans are not limited to its French and Italian suppliers, as it demonstrated during a pre-fall collection show in Mumbai in March. The collection emphasised the French brand’s connections to traditional Indian embroiderers in its first show in the country since the 1960s.
Brands looking to follow suit should consider taking a more transparent approach to their supply chain. Underlining the craft of their producers through greater disclosure about how products are made would demonstrate the high quality of their output while also making any brand that follows this route a rare example of a fashion house willing to show its workings.
Case study: Saint Laurent gains in its cultural prowess
If any brand could dislodge Louis Vuitton, Gucci or Dior from the top of the Vogue Business Index, it is likely to be Saint Laurent, which is increasingly becoming a cultural powerhouse. The French maison saw revenues climb 23 per cent to €3.3 billion during 2022, which is a faster growth rate than all of its major Kering stablemates. The increasing buzz around the brand has coincided with Saint Laurent overtaking Chanel to claim fourth place in the Vogue Business Index.
When asked to rank out of 10 the degree to which they agree that the brand is the “most iconic” luxury house, Saint Laurent received an average score of 7.6 out of 10. This is a 10 per cent increase on its score from winter 2022 and means the French fashion house has overtaken both Prada and Gucci in terms of how iconic consumers think each brand is.
Saint Laurent still marginally trails behind the leading luxury brands on important metrics such as perceived quality, positive brand associations and purchase intent. Its focus on formalwear and sharp tailoring nevertheless fits the current luxury mood, and its strong brand heritage, linked to mercurial designer Yves Saint Laurent, impresses luxury consumers globally.
Current creative lead Anthony Vaccarello has been a holistic powerhouse at the brand, pushing it in many new directions, but never reflexively. He designed its first fine jewellery collection, which launched earlier this year. Under Vaccarello, Saint Laurent has also recently launched a film production company, co-producing a new Pedro Almodóvar short (with Vaccarello designing costumes) and a documentary about Jean-Luc Godard.
Speaking to Vogue Business in 2021, CEO Francesca Bellettini emphasised that Saint Laurent was keen to chart its own path, refusing to change its identity in a bid to appeal to a wider base of consumers. The lesson that other brands can take from Saint Laurent is that loving and leaning into your DNA is perhaps the first step to becoming iconic.
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