Helge Fluch is the founder of luxury consulting company Japan Access, and author of the influential blog, HNWI Marketing Japan. The focus of his Luxury Marketing Blog is to showcase his research philosophy around luxury brands, while Japan Access offers very specialized services in the field of HNWI marketing and luxury marketing, with a focus on the Japanese market.
He is working on an emerging philosophy of luxury which draws from Pierre Bourdieu, Baudrillard, Foucault, and other post-modern social theorists, and more contemporary references such as Currid’s ‘The Warhol Economy’ and Kapferer and Bastien’s ‘The Luxury Strategy’. He also cites writers such as Tsuchiya Kochi, with his book “HNWI Marketing”, and Takahashi Chieko’s “The Seven Rules of Selling Despite a High Price. Luxury Marketing” as influences on his luxury world view.
Recently, we spoke to him in Tokyo about his point of view on luxury and his work.
- What do luxury brands mean to you?
Luxury brands embody something for which humans have striven for many ages, since the beginning of humanity. It is the desire to create something that is essentially more, transcendental, out of the ordinary, and not necessary for immediate survival. Yet all human societies develop something that can be called “luxury” even if there is not a value/price mechanism associated with it. Religious artifacts and relics can be considered a form of luxury.
For me, luxury is essentially something social. It creates, as Kapferer and Bastien (2009) say, a social distance. Luxury does not exist without human interaction and it appears where human beings within a social context want to construct themselves a place within that society, in relation to others.
By analyzing luxury brands we can learn a lot about the structure and values of a certain society. Without a profound understanding of the society in which the luxury market is taking place, any conclusion may be vague, ambiguous, or even completely wrong.
My fascination for luxury goes beyond the mere social aspect. I adore excellence in all human endeavors, and luxury products – in my point of view – fulfill the human need, as mentioned above, to strive for something more than ordinary. I disagree with the notion that luxury is something “not necessary”. I think the human mind was made to create luxury items, and history proves me right. I would be very interested to see an exception to this rule.
- What do you think luxury brands globally can learn from Japan?
Japan is in many ways a very special market. Around 40% of all luxury items in the world are consumed by Japanese consumers, inside and outside their own country. In Japan, we can see how a developing country – in which social structures are broken up and recreated within a very short time period – uses material objects that have certain value associations in the West, to substitute for social structures and class differentiations that have disappeared suddenly (Chadha and Husband 2006).
To explain the way in which Japan has developed, though, we need more than that. Without understanding the history, the education system, the employment market, and the economical micro- and macro structures, no profound explanation can be found for the special role that Japanese consumers play when compared internationally.
Louis Vuitton has proven how to define a market and how a brand can become unbelievably successful by basically creating the social rules within a country. Similar things can and are happening in China, Hong Kong, and Singapore, and, as a very young luxury market, India. What is happening now to LV, with sales decreases of over 10%, is part of the dynamic and can be very enlightening for the processes within other developing luxury markets.
The dream equation, the difference between the perception rate and ownership rate, is a very fragile construct. Without a perceived limited availability, and by losing core customer groups, a luxury company can reach a market penetration that will become a problem for the aspirational value and the prestige of a brand.
Basically, what luxury brands could learn from Japan is to thoroughly understand and research the social dynamics underlying luxury consumption in new markets, and not just to be delighted by record sales numbers, blind to the cultural processes underlying this success that might some day cause the brand to lose ground within the same market, or internationally. Success alone is not enough. You should know why you are so successful, and the risks associated with it.
It strikes me what Yves Carcelle said at the opening of the LV flagship store in Omotesando in 2002:“This is not just a store, it is a statement.” Well, marketing experts should be sure to understand what exactly that statement will be on the long run. LV still sells immensely well in Japan, and we hope that the brand understands all the reasons for its own success. Only because you sell, does not mean you got all the variables right. In luxury marketing, brand value comes before shareholder value. So you have to think long-term.
- How do you see the future of luxury?
I think luxury will become more diversified and will enter subcultures that we never thought would be susceptible for the concept. It will adapt a more international language of signs as the media will penetrate more and more of our daily lives, increasing the options for consumption tremendously. At the same time, losing sight of your own ethnicity and feeling lost in the global net of offerings will lead to a new-found importance for sticking to your roots, of preserving heritage. The real luxury companies of the future will be the ones that offer some form of legitimacy that goes beyond conspicuous consumption. Social dynamics that punish luxury companies for ignoring their own heritage take a long time. But they work anyway.
The future for the growth of luxury brands lies in Asia, especially in China and India. As these societies discover not only the possibilities of consumption but also exhibit the highest growth rate for rich people in the world, luxury brands will inevitably look to achieve growth strategies there. The question will be whether they can avoid some mistakes made in Japan. Of course you could argue whether the developments in Japan can be called mistakes. They produced a lot of growth for luxury brands. But times are different now, and developments in the rest of Asia could produce unexpected outcomes globally.
See HNWI Japan’s developing luxury philosophy here
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