Modern luxury companies don’t win best-in-class face-offs. They offer better bundles.
An Everlane will never beat an Hermes in absolute product quality – and yet it doesn’t need to. Best-in-class quality only takes you so far, and modern luxury brands are offering something far more compelling: a better overall bundle for shoppers. (924 words)
Few things in business are as frequently — and wrongly — lumped together as fashion and luxury. Yes, fashion can be luxurious, and yes, luxury very often involves some element of fashion, but at their core these are two distinct, separate sectors that are better left treated as such. The same could be said of modern luxury and traditional luxury (the post-1980s, bling version). Again, two very different and separate spaces here.
Lean Luxe exists to both cover modern luxury and to define it. That mission is ongoing and continues to take place. In our first effort to set a loose definition of what modern luxury looks like in the wild, we listed seven characteristics that tend to embody modern luxury companies (MLCs). It established a general framework, but we thought it might be best to flesh this idea out a bit further to better help nail the definition home for readers. Consider this part two, a more granular version of our initial definition.
The ‘best-in-class’ fallacy.
One fundamental trap that subscribers run into when assessing the merits of a modern luxury brand is the tendency to judge that brand using the ‘best-in-class’ framework. Quite often, an MLC on the lower end of the modern luxury spectrum (say, Warby Parker, to use one example) will be deemed as something of a fast fashion startup, rather than an actual MLC, due to the fact that its product quality isn’t the absolute cream of the crop. That logic isn’t wrong, but it’s an incomplete way to think about modern luxury and MLCs.
The key strength of a modern luxury brand is its emphasis on the entire package, rather just the product (or logo) itself. It’s a different mode of operation that takes some getting used to, but it disperses with the conventions of the old, blingy version of luxury, and is best optimized for today’s new consumer behaviors and expectations.
The fact is that competing on product quality alone leaves a brand open to exposure. MLCs have smartly understood that a better overall package or bundle could be more compelling than just product. But what exactly is a package? Here’s what we mean:
The power of the package.
- What the modern luxury bundle includes. A good-to-great (but not best-in-class) product. A convenient, consumer-centric retail strategy (often DTC or omnichannel). A modern, fresh aesthetic (minimalist in this case). Stronger, sharper messaging. Deep specialization (rather than shallow generalization). A reason to exist (practical application that solves a particular problem or market failure). These brands also more athletic-driven (in line with today’s wellness culture).
- To emphasize: it offsets the good-to-great (but not best-in-class) quality of the individual product. Altogether these MLC traits make for a more compelling package, meaning the focus is placed on the consumer, rather than relying on high pricing or rarity (necessarily) as the luxury differentiators. Still, the fact that traditional luxury brands do not behave this way actually makes this package a luxury in itself.
- The modern luxury package is consumer-centric, rather than brand-centric. Frankly, the ‘best-in-class’ war is typically a battle between competitors. While there are benefits for the consumer that result from that competition, the focus is typically on the brands’ bonafides, rather than what it offers the consumer. Often, this leads to higher pricing due to increased marketing and branding spend needed to promote that platitude of owning that ‘best-in-class product’ mantle.
- What if shoppers never wanted best-in-class in the first place? That’s a shocking thing to consider. Best-in-class assumes that there’s an objective marker, agreed upon by all — where in reality, that’s a subjective description. It also assumes that that’s what shoppers value most. But what if they simply value good-to-great product quality, with some element of personalization, and a better mode of convenience for acquiring that item? These things can only really be known in an open, consumer-centric market where new brands have a level playing field and access to consumers alongside the legacies. If you know where to look you can see this dynamic playing out today.
Traditional brands continue to bank on the idea that prestige and absolute quality will win out in the long term. But they might be very wrong there given that MLCs are producing products that are relatively comparable, less widespread, and more honest. They might find that customers were never drawn in as much to absolute quality as they are rarity, personalization, purpose, fit with their needs and lifestyle. This dynamic is what MLCs seem to grasp fully (whether explicitly stated or not).
This might be the biggest break with existing luxury firms and modern ones. It’s a feisty argument between ‘absolutely quality wins out’ on one side, and ‘high quality, yes, but for a purpose’ on the other.
These are the types of things can completely erode an existing brand’s mystique, revealing that there’s not much behind the curtain.
MLCs, then, with the package approach, present a much more resilient and robust model that is less likely to be undermined by new categories and entrants.
MLCs understand the package game. They realize that absolute product quality only takes you so far with shoppers. So they’ve offered a better bundle to offset that — more convenience, transparency, connection, better messaging, pricing, etc. — not just absolute product quality. Because let’s face it — in a faceoff against Louis Vuitton or Hermes, they’re not going to win. But that doesn’t matter if the strength of the bundle is where it needs to be.