Luxury needs to return to its roots of exclusivity, targeting the fortunate few rather than catering to the masses. This argument is supported by several observations:
The Pareto Principle (80/20 Rule): In luxury, a small percentage of ultra-wealthy customers drive a disproportionate amount of revenue. Focusing on these Very Important Customers (VICs) is more profitable than chasing aspirational buyers who may never return.
Ubiquity Dilutes Desire: Luxury has become too accessible and visible, diminishing its allure. Exclusivity breeds desire, and luxury brands need to re-establish that sense of mystery and unattainability.
Current Economic Climate: With the rising cost of living and economic uncertainty, aspirational buyers are less likely to make luxury purchases. This further emphasizes the need to cater to VICs who remain unaffected by these factors.
Existing Examples: Some brands are already focusing on VICs, such as MyTheresa's personalized shopping experience and Chanel's VIC-only boutiques. However, more can be done in terms of communication and marketing specifically targeted towards this elite group.
A Call for Change: Luxury brands should shift their focus from mass appeal to exclusive experiences for VICs. This involves personalized marketing, dedicated retail spaces, and unique events tailored to their interests and preferences.
In conclusion, the luxury industry needs to re-embrace exclusivity and cater to the select few who drive the majority of sales. By doing so, brands can reignite desire, create memorable experiences, and ultimately achieve greater success.
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