Luxury & Innovation
Adut Akech wearing Valentino Haute Couture. Photographed by Ethan James Green, Vogue, May 2021
Scarcity and innovation are driving prices up, and for some time that’s how Luxury worked.
Traditional luxury watchmakers such as Vacheron Constantin or Rolex are not embracing the digital age, innovation is coming from Apple and Samsung, two technology brands with very little credibility in luxury or fine watchmaking. According to Statista, revenue for the Luxury Watches segment amounts to US$28 million in 2021, the wider Swiss watch industry suffered a decrease of 21% in sales in 2020. Meanwhile, smartwatch sales represented US$49 billion in 2020 and are set to grow 18.7% more in 2021.
Is traditional luxury now living in the past? Does the tech industry have the monopoly of innovation and will it take over every single industry?
The artisans were using scarce resources to create a limited amount of items using rare skills. The price of these items was a combination of all these factors, and so was the desirability for these goods. King Louis XIV’s court is credited with the invention of French Luxury. To compete with Spain and protect and develop French style and skills, Louis XIV’s finance minister Jean-Baptiste Colbert decided to organize French artisans in guilds, around strict regulations and quality requirements. The King’s court and the emerging bourgeois class were the customers of these guilds, which, to better highlight their uniqueness, began to “brand” their creations under their name.
Innovation and scarcity essentially remained the drivers of the Luxury industry until the 1960s when Haute-Couture house Yves Saint Laurent opened its ready-to-wear Saint Laurent Rive Gauche store and Pierre Cardin expanded its fashion label into more accessible categories such as fragrances and beauty. From then on, Luxury changed its meaning. The scarcity of brands diminished, and the innovation factor gave way to scaling operations and expanding reach. Clients of Haute-Couture brands expected innovation and originality, whereas the wider public whose lifestyle didn’t involve attending galas, demanded less extravagant goods. the beginning of the democratization of Luxury also meant the end of Luxury as a driver of innovation.
Traditional luxury is notoriously very slow to adapt, e-commerce appeared in the 1990s but it took luxury brands 20 years to adopt the channel.
The gigantic size of luxury conglomerates might be at fault since shareholders are looking at minimizing risk and minimally disrupting what “works”. But sustainable profitability is obviously depending on optimizing operating costs and increasing revenue, which both benefit from innovation.
Diversity is also a driver of innovation, but hiring people from the same background stifles diversity of thinking. Whether on the business side or on the creative side, it is obvious that fresh outlooks breed innovation.
Traditional luxury is slowly shifting to owning its distribution channels, through brands’ own e-commerce websites and physical stores. Not doing so earlier means that traditional luxury brands have far less data to drive decisions and innovation than multi-brand e-commerce platforms such as SSENSE or Farfetch.
The attitude of traditional luxury groups might also play a role in their lack of innovation. Rethinking their industry and questioning their approach requires self-awareness and humility, but the success of luxury groups in the past 30 years doesn’t really encourage self-reflection. But glancing at the car industry should be a call to action for luxury groups. Tesla is innovating everywhere from manufacturing to distribution and of course products, this led to better performance than electric vehicles made by traditional luxury makers.
In more technical industries such as watches or automobiles, luxury brands has stopped innovating and tech companies took over to deliver better products, what will happen to fashion and accessories? Will they learn from other industries or simply leave room for Amazon and Apple to expand widely in those categories?
