Brands that were once considered “luxury” have taken to relying on “low-cost, high-profit items wrapped in logos.” https://t.co/OhJIcndsM1 pic.twitter.com/oWAW24t7QO
— THE FASHION LAW (@TheFashionLaw) April 26, 2018
If you are at all interested in the law and business of luxury brands, or even just brands, you have to read this piece in the Fashion Law by Julie Zerbo (yes, Julie again! disclosures here). I keep highlighting different paragraphs because I want to excerpt the whole thing, but then I would just be doing a very poor Julie Zerbo imitation. So read it. And then here’s my riff, along with some necessary excerpts:
In the mid-1970’s, a group of famed European luxury brands decided to tap into the resurgent globalization of the post-World War I and World War II economy to grow significantly beyond the pool of their existing customers. In order to do so, they implemented a new marketing strategy, one that aimed to allow them to expand their consumer base but also enable them to remain firmly within the luxury sector.
That strategy – or the Luxury Strategy – consists of (among other things), 24 “anti-laws” by which all luxury brands should abide, according to the strategy’s creator (and also the former CEO of Louis Vuitton), Vincent Bastien, to maintain this delicate balance.
The tenets of the Luxury Strategy dictate that “true luxury brands” do not compete with each other, as each luxury brand’s selling proposition is inherently unique. They also do not “pander to customers’ wishes,” respond to rising demand, rely on celebrities to do their advertising for them, let price be the defining feature of luxury, relocate their factories, openly sell online, and so on.
So, what are we all thinking? We know what we’re thinking:
It appears that as consumers have made demands of brands, many stalwart luxury participants have altered their way of doing things in order to be meet those demands and operate in the way that is most profitable. As Marketing Week’s Lucy Tesseras stated in an article in 2015, “As wealth is redistributed and the number of luxury consumers rises brands must adapt to meet changing consumer behavior.” It seems that this is exactly what brands have done, particularly publicly-held ones that have shareholders to answer to when it comes to revenue and growth.
With that in mind, the question is this: Since so few of the brands that have been traditionally characterized as luxury brands still fall within the bounds of the term, are we to adapt our definition of luxury? At least some would argue, yes, with the rationale being this: The world is changing and luxury brands must adapt, and with it, the definition stands to evolve.
It seems that brands are doing just that. We can see this clearly in a shift that is underway, one in which it is not brands that dictate what is “luxury,” but it is, instead, the buyer. This, of course, coincides with the widespread notion of the consumer being boss, which is particularly relevant in the digital age when consumers have seemingly endless purchasing options. (As Matches Fashion co-founder Ruth Chapman told the FT last year, fashion “used to be driven by the designers and the houses … whereas now you’re driven by the customer and what they want.”)
As Louis Vuitton’s newly-appointed menswear artistic director Virgil Abloh stated in a discussion with Vogue last year, “If you covet it, it’s luxurious to you. For a 17-year old kid, that Supreme t-shirt is their Louis Vuitton. It doesn’t matter if its $30.”
This shift is obviously so profoundly subversive regarding the entire concept of luxury that the rot reaches right into the theory and practice of brands and trademark law themselves.
The logos, of course, signal “luxury” — luxury, that is, as hoi polloi understand it. Those of us who have worked in anticounterfeiting enforcement know that special training is necessary to distinguish genuine luxury goods from better fakes. Producers also utilize tokens of authenticity such as holograms, microtags and other occult devices to democratize the authentication process, enabling non-experts to spot good fakes from genuine merchandise.
This all makes perfect sense based on the premise that authentication and authenticity are artifacts of quality, workmanship or other inherent aspects of the goods whose brand association they reinforce. But as I have been saying forever regarding “authorized” merchandise, once trademarks stopped bespeaking only origin and extended to “affiliation, connection, association . . . sponsorship, or approval,” trademarks would inevitably come to mean less and less.
And they do. Trademarks today tell us very little about what a good is; they mainly signal who may profit from the sale of that good — or, alternatively, as Tyler Hall argues compellingly, who is prepared to pay a premium to be associated with a trademark that is, in essence, the good itself. Even a little bit: As Tyler notes, few of us can afford a Ferrari automobile; but we can all afford a genuine Ferrari t-shirt. And it is genuine!
Far be it from me to scoff at the magic money machine of licensing or merchandising, an economic engine that generated, according to the Licensing Industry Merchandisers Association, $262.9 billion in 2016. But luxury was supposed to be different. One of the premises of luxury — as opposed to “fashion” — merchandise (see the Zerbo article) was, as I learned during my cup-of-coffee in that field, that it is not supposed to be licensed. That Rolex or LVMH stamp of approval was only to be placed on goods manufactured by Rolex or Louis Vuitton because all Rolex makes is Rolex watches and all Louis Vuitton makes is a bunch of stuff that its makes but definitely not other stuff.
Obviously this is not true for all luxury brands, if it ever was. Obviously Ferrari does not make Ferrari t-shirts; it only authorizes them. “If you covet it, it’s luxurious to you.” (Are luxury cars are different from other luxury goods concerning “trademarks as brands”? I can intuitively see how they might be, but, as we have seen, this can be a complicated business — even at the very top of the line.)
Whether you call it licensing or not, the so-called luxury sector now is essentially, as the article in The Fashion Law acknowledges, a bunch of “corporate giants that are – as fashion and culture journalist Dana Thomas so aptly put it in an Op-Ed for the New York Times in 2007 – saturating the market on a global scale with ‘low-cost, high-profit items wrapped in logos.’”
In other words, they may not be pimping out their brands to others, but they are all the same rendering the concept of luxury, and their supposedly elite brand equity, increasingly threadbare. Addicted to this model — in part because they are out of creative gas, and in part because the revenue from this “self-licensing” is irresistable — luxury brands are no less likely to find themselves riding a brand-equity death spiral than fashion brands. The only question is how fast they fall.
Democracy has a way of doing this to precious things, so what do you expect? “If you covet it, it’s luxurious to you.” All we do is covet. So it’s all luxurious … to us.
That, however, is not luxury. So be it. Does it matter?
It does, because there is a lot of stuff out there calling itself “luxury” in the halls of justice, and demanding the tribute to which real luxury may be entitled but which should really be treated instead with a careful judicial evaluation owed to the merely virtual “luxury” of consumer desire.
True, the law inevitably plods along far behind such developments. Courts, as I’ve also rued a couple of times, are still reluctant to acknowledge explicitly that brand — i.e., secondary meaning — is built differently in the 21st century from the way it was built 75 years ago. Similarly, you can buy anything on the Internet right next to advertisements for cellulite creams and mortgage refinancing, but judges still defer meekly to those boilerplate affidavits. Yes: trademark owner has a prestigious brand, it spends a lot of money on keeping it prestigious and any disturbance in the delicate calculus of prestigious retail placement will cause irreparable harm. Preliminary injunction against “unauthorized resale” and other crimes against the “high-end” state granted!
Sometimes, of course, this is true. Retail environments do affect brand image, and hence value. And if brand owners don’t proceed in this manner, their inaction will result in brand exhaustion. But the race to the bottom by brands — even the relatively slow race on the part of luxury brands — certainly suggests that the law should make way for a more honest evaluation of brand equity.
Just as the time has come for the law to acknowledge tha bona fide secondary meaning is routinely established via social media, courts should stop viewing even luxury brand equity as a constant. It is not. Anyone involved in litigation involving “unauthorized” distribution and distributorship termination, grey market goods or the constant tug-of-war involving brands, competition and Amazon, knows the truth. Legal claims based on assertions of esoteric brand status are not entitled to the total credulity its advocates expect and invariably get.
Demanding better, or more rigorous, proof of what brand equity is and how it is and is not affected by brand owners’ own conduct may accelerate the process by which brand equity is drawn down. Brand owners who can’t say no will be burned by judicial skepticism if it is satisfied by competent advocacy from parties that question the application of a rubber stamp to claims of luxury or prestige status.
If so, however, the fault will not lie in such a new and honest reckoning with the facts. It will be a result of the choices being made by even the most prestigious brands to hook up with whatever revenue opportunity — whether licensed or home-cooked — comes their way. As Julie explains:
In the mid-1970’s, a group of famed European luxury brands decided to tap into the resurgent globalization of the post-World War I and World War II economy to grow significantly beyond the pool of their existing customers. In order to do so, they implemented a new marketing strategy, one that aimed to allow them to expand their consumer base but also enable them to remain firmly within the luxury sector. That strategy – or the Luxury Strategy – consists of (among other things), 24 “anti-laws” by which all luxury brands should abide, according to the strategy’s creator (and also the former CEO of Louis Vuitton), Vincent Bastien, to maintain this delicate balance.
The tenets of the Luxury Strategy dictate that “true luxury brands” do not compete with each other, as each luxury brand’s selling proposition is inherently unique. They also do not “pander to customers’ wishes,” respond to rising demand, rely on celebrities to do their advertising for them, let price be the defining feature of luxury, relocate their factories, openly sell online, and so on.
It sounded good, but it was a fallacy. You can have luxury, as defined above, and make a lot of loot; or you can have “brand equity” and make mountains of loot. You can’t have both.
Originally posted 2018-05-08 13:52:28. Republished by Blog Post Promoter
