Luxury Uncovered in Brandz Report

Released in May by analytics firm Kantar Millward Brown, the 12th annual Brandz 100 Most Valuable Global Brands report is a comprehensive guide to the critical trends and disruptive influences that are redefining today’s retail, technology and luxury sectors.

It should come as no surprise that, according to the report, the global value of luxury has risen 28 percent to $133.1 billion in the last year. The sector has undergone unprecedented growth, thanks in part to rising luxury spend in China, as well as increasingly sophisticated technologies in the retail sector, offering customer service and personalisation like never before.

The three luxury brands which made the top 100 were Louis Vuitton — ranked number 26 globally — Hermes (39) and Gucci (54). Alessandro Michele’s reinvention of the latter, the jewel in Kering’s crown, saw growth of 66 percent year-on-year — the largest growth of any brand.

ORDRE breaks down the top takeaways from the report, including what the luxury sector can learn from some of the world’s most valuable companies.

China continues to drive growth in the luxury sector

Not only did Chinese brands make up a third of the companies in Brandz’ Top 20 Risers — companies that appreciated the most in value — but the overall growth of the luxury sector is largely attributed to the spending power of young Chinese consumers. As Elspeth Cheung, global Brandz valuation director at Kantar Millward Brown explains, shifting generational values in China is fuelling the spend.

“Historically, there’s been a very strong culture of savings and wealth management in China,” she says. “But what we are now seeing is a new group of people, especially millennials, who by the end of the month have spent everything they’ve earned.”

The mobile platforms WeChat — now seamlessly integrated into everyday life for all Chinese — are a key access point for luxury brands, Gucci in particular. “After buying something, people want to be able to show it off right away on social media,” says Cheung. “The brands that are gaining popularity [in China] are the ones that stand out in the crowd.”

“Trust is built when brands can deliver a promise consistently on all touch points”

Brand-retailer partnerships are also driving luxury growth

Luxury brands are increasingly taking on cross-category partnerships with retailers to provide first-class customer service. “A lot of luxury brands know that in order to provide a good brand experience to their consumers, they must cover delivery and everything that happens until it arrives at the customer’s doorstep,” says Cheung.

This year, Gucci, Prada and Burberry have partnered with Farfetch to streamline and increase delivery capabilities. Put simply, strong customer service creates trust, and as trust towards a brand grows, so too does its value. “Trust is built when brands can deliver a promise consistently on all touch points,” explains Cheung. “Trust has been built among consumers, and that affects how much a luxury brand has risen in the rankings.”

Technological innovation is necessary in both product and communication

In the 12 year history of the Brandz 100 report, technology related brands have increased in value proportion from 37 to 56 percent. For luxury brands, the implementation of technology should, by now, be second nature. “It’s about having innovation in their DNA,” says Cheung. “Those luxury brands which leverage technology, not just in the product but how they communicate with consumers, how they innovate in terms of communication, those will definitely be successful.”

Luxury must appeal to sustainably minded consumers

“People are becoming increasingly aware of how the fashion industry is negatively impacting the natural environment,” says Cheung. Adidas, a new entry to the list, is appealing to sustainably-minded consumers with their popular Adidas x Parley trainers. Over 1 million pairs of the trainers, made from recycled ocean plastics, were sold in 2017.

“What is driving the brand value is that they’re integrating something relevant to consumers with their product,” explains Cheung. “This is something luxury brands can learn — they’ll still be producing handbags, shoes, fragrances and cosmetics, but what else can they do to make sure they’ll be appealing to what consumers are concerned about?”

While the findings of report may be unsurprising, it serves as a reminder to luxury brands wishing to grow their companies in the hopes of becoming one of the top 100 most valuable global brands, that the future lies in a intuitive understanding of technology, collaboration across sectors to enhance product offering, and a sophisticated knowledge of burgeoning global markets.