Opinion: How The Battle Between Mass and Niche Brands Will Reshape Luxury.

There has been a shift happening in the luxury industry for quite some time now. One where those with deep pockets are in every conceivable area where marketing can exist, and one where those with less funds have to think a little deeper about where to put their resources to capture the hearts and wallets of the luxury consumer.

Both work and exist in parallel to one another. But each path represents something different for the brand that chooses the direction it wants to move towards. Does being everywhere to everyone result in strong financial results? For certain. But equally, does focusing on producing fashionable and distinctive products create a more meaningful relationship with the consumer in the long term?

The answer it seems, depends on what luxury brands want to achieve and who they want to target.

Despite the challenges seen two years after the start of the global COVID-19 pandemic, luxury brands have proven that they can recover from even the hardest of times. But uncertainties remain and with that, luxury must once again steel itself for what is to come.

To survive, blockbuster brands revert to what they know best - appealing to the masses by following the same format: expensive street-style products, bags with similar styles but different logos, the same communication strategy, and similar key markets. But in doing so, these companies put their brands at risk of Unilever-isation. Meaning, the higher the volume of sales or the better priced their products are, the higher their margins and the more profit they make.

Thankfully, they are still seeing growth in their revenues, thanks to the driving force that is the Chinese customer. Mainland China’s share of the global luxury market grew to around 21 percent in 2021, according to a report published by Bain at the start of this year, and sales of personal luxury goods in mainland China also rose by 36 percent to 471 billion yuan ($73.59 billion) in 2021 from the previous year. This represents more than double the 234 billion yuan in luxury goods spending on the mainland in 2019, before the pandemic.

But it comes as no surprise that big corporations, despite the efforts to rebalance their customer target and markets, will be forced to set their objectives on Chinese customers, especially in Mainland China, as well as widening their attention from Millennials to Gen Z.

It is important to acknowledge that luxury companies have made leaps and bounds in embracing new areas of growth like digital commerce and are refocusing their business on hot topics like sustainability, cryptocurrencies, and blockchain, what they are missing is something they left long behind when they decided to appeal to everyone and that ingredient is simple: being distinct.

Which has left room in the market for niche brands to rise up and catch the attention of local customers, who are looking for a deeper connection to engage with brands.

Take, for instance, the independent French brand Jacquemus, which not only offers fashionable and very distinctive products to its fans but is also excellent in brand storytelling and communication. It has not saturated the market, nor is it perceived as mainstream, and last but not least, it sells products at very reasonable prices: Le Sac Rond costs €665 compared to the price of a Gucci Jackie 1961 bag at €1,790, a Valentino Roman Stud bag at €2,400 and Loewe Puzzle Hobo at €1,850.

Or sustainable fashion brands like Pangaia, which says it is fully committed to “designing an Earth-positive future, together,” by aiming to mix innovation, fashion, and sustainability to produce “essential products from innovative tech and bio-engineered materials.”

These brands represent a new frontier of fashion that is much more fun, more engaging, and more simple in its approach, proving that one needn’t scream so loud to make yourself heard in the noisy world occupied by megabrands.

It is not by chance that Gabriela Hearst, founder of her eponymous brand, was hired by Richemont as creative director for its Chloé brand, to help recreate some of the magic seen at hers.

Or that uber-luxurious, hyper niche brands like The Row, which almost launches its products in flawless stealth mode, is successful even without the use of celebrities or omnipresent influencers to draw attention from communities they don’t own.

What is interesting is that these new and upcoming brands are not a threat for big corporations, but, thanks to their laser-focused style, their very distinctive storytelling, and their super smart pricing together with a very agile and responsive organisation, their business can make a significant difference in markets like Europe and the United States, helping to create the next chapter in an industry that has become too self-referred and lacking in the kind of creativity that makes customers dream and feel good about themselves.

Take Velasca, founded in 2013 by Enrico Casati and Jacopo Sebastio. The shoe specialist fashion start-up was created around an innovative direct-to-consumer business model, focusing on Italian craftsmanship and timeless style for men, which since 2021 includes women as well.

A very much beloved brand by Millennials and Gen Z, Velasca is known not only for the warm Italian lifestyle it surrounds its customers with but also for the best balance between the quality of its product and price. Value for money, classic long lasting styles, and once established in the hearts of customers, something that they cannot do without.

This brand not only conquered its customers from Gen Z in a natural way, but it also became a master in customer experience and clients’ engagement through the smart leveraging of its online activities through its website as well as the social media. As a result, the company has been able to open 13 brick-and-mortar stores in Europe and the United States, integrating all its activities into an omnichannel approach that has helped it break even in 2017.

Likewise, with Emilia Wickstead and blazer specialist Blazé Milano, The Attico as well as La Double J, these niche brands are conquering the hearts and wallets of local customers in Europe, the United Kingdom, and the United States, who are looking for and willing to pay to own special pieces from independent brands, who sell smaller volumes at a high quality, with a very focused and distinctive message.

What they represent is a new sort of movement; the Meta-Craft. Brands that are not shy about who they are, or their place in the fashion system and ones that proudly stand out against the virtual, blurred, and indistinct world of megabrands. Craft is back. Let us welcome the distinction.