Real Luxury

How Luxury Brands Can Create Value for the Long Term

M. Pinkhasov, R. Nair

• Publisher: Palgrave Macmillan
• Year: 2014
• Print ISBN:
  9781137395566
• eBook ISBN:
  9781137395573
• Topic: Business
• Subtopic: Business generale
• Index: Business

Real Luxury  examines what a 'luxury brand' is from economic, sociological and psychological standpoints. It spells out the challenges the industry is facing and puts forward a new, practical model aimed at reviving and protecting luxury brands, based on the authors' hands-on experience in the industry.

chapter 1

A dilemma across time and culture

Luxury is the transition of an object from a product to art. It is an essential element of human civilization, in that it both shapes and reflects our values.

People’s relationship with luxury has always been a volatile one – whether in its pursuit or its rejection – paralleling the struggle to reconcile our competing needs as individuals and members of society.

Luxury must always be at the forefront of creativity and innovation in pursuing the highest standards for knowledge and behavior as much as for product quality and refinement.

Luxury has always posed something of a conundrum to mankind. On the one hand, we are drawn to it, entranced by the very idea of something beautiful, rare, and superfluous, and on the other, it worries us, makes us question our values and priorities. Throughout history, mankind has developed philosophies and mechanisms to harness the power of luxury: ethical and political frameworks that reconcile its superficial excess with the underlying emotions that constantly drive us in pursuit of luxury. This is because we associate luxury with more than material trappings. Luxury, in the abstract, represents wealth, sophistication, desirability, and influence. Luxury wields a soft power, one that leads by attraction rather than by intimidation. It makes people want to imitate it and those who possess it. For this reason, luxury is a powerful social force.

Luxury sets a high standard, and becomes a reference to which future generations look for inspiration and knowledge. Today’s art museums are pageants of the luxury goods of previous eras. When an object is good, the result of skillful production, it serves its purpose and creates a practical value captured in the sales transaction. When an object is very good, when its manufacture is the result of education and innovation accumulated over generations, it transmits emotion and human connection, and becomes an heirloom. Its practical value is matched, even surpassed, by its sociological value. When an object is truly exceptional, it enters the realm of art. It remains priceless long after its practical use is gone, as a testament to the abilities and vision of an epoch. It is at this point that the object transcends its original purpose and enters museums, too important to be used. It serves as a marker of time and a source of inspiration. There is an endless litany of examples: portraits of kings, period clothes and furnished rooms, silver table services, holy vestments, funerary items, carriages, the list goes on and on. But we do not only have to pick on examples from the classics for something to live up to. We can look to our own times for that as well. In 2013, the Metropolitan Museum of Art in New York held a retrospective exhibition of punk. The Museum of Modern Art in New York constantly adds objects from the very recent past to its ongoing archive of civilization. Its collection includes the classic Gucci loafer, the Eames armchair, the Apple (Macintosh) computer, and Dieter Rams’ toaster designed for Braun. These are design objects foremost, but they are also luxury objects in the quality of conception, design, materials, and execution that make them inherently rare. The combination makes them iconic, a status that cannot be pursued, but is conferred by time and posterity (Figure 1.1).

FIGURE 1.1 How luxury shapes culture

Right now, luxury, real luxury, is under threat. The industrialization of big luxury brands makes them act more and more like high-priced commodity goods with only a veneer of what makes luxury luxury. When you eradicate luxury, you lose knowledge and skills. Every revolution that has done away with the trappings of the overthrown elite has destroyed the knowledge of how to do certain things. “Russia” leather was an intricate technique of treating leather with the tar oil of white birches. But with the Russian Revolution, the technique was lost and nobody has been able to replicate it. Remember, though, that revolutions are not just political affairs. The whole theme of the last century and half was the Industrial Revolution. It was a persistent and calculated overthrow of old ways of doing things, of faster and cheaper methods of production. It brought huge benefits but has erased forever traditional and exquisite techniques. We lament the resulting loss of skills daily, from the scarcity of workers to restore historic monuments, to the more pedestrian lament of “they don’t make things like they used to.” We are suffering the loss of deep, intellectual reflection and insight.

The roots of today’s attitudes to luxury

The ancient Greeks grappled with similar ideological dilemmas as we do today, that of political equality but economic inequality becoming increasingly pronounced. For ancient Athenians, luxury signified not just material possessions, but a leisurely pace of life, the time to reflect and relax.¹ This led to “sumptuous” inventions, such as chamber pots and bathtubs, which were then adapted by other cultures and found their way to modern times. But it also allowed the development of the arts, literature, architecture, not to mention philosophy and the first democracy. We can perhaps thank the luxury-loving classical Greeks for what we today consider civilization. Their cousins, the Sybarites, gradually became so obsessed with luxurious living that their name became, and has remained, a synonym for debauchery.² They banned cockerels from their city so as not to disturb their rest, they awarded prizes for cookery, and taught cavalry horses to dance to the flute. They also despised any form of labor, took along their lapdogs to the gymnasium, and their chamber pots to dinner parties.³ This decadence ultimately led to their downfall.

In contrast to Athens and Sybaris, Sparta renounced luxury for a warlike state, with a lifestyle that can best be described as, well, spartan. In this context, luxury was seen as an emasculating and degenerative influence. However, even in this austere way of life, the goal of dying a hero’s death on the battlefield was seen as a luxury that allowed the leisure class to devote their life to developing the body in the gymnasium and the mind in the political arena. Children were tested for physical fitness from infancy. Boys were trained in warfare from the age of 7, living in dormitories until they were 30, and were expected to be ready to go into battle until the age of 60.⁴ Women, too, were encouraged to participate in sports alongside men. Compared to Athenian women, the Spartans had more freedom and were encouraged to run their estates in the absence of men engaged in war. War was considered a holiday by the Spartans, a relief from the rigors of daily military discipline.⁵ This reverence of warriors meant that laboring on the land or engagement in crafts or arts was severely discouraged, and was relegated to Helots, or state-owned slaves. The large population of Helots was a constant menace to the smaller “elite” Spartan population; the threat of uprisings was ever present and reinforced their support of the military way of life.⁶

Especially after the Peloponnesian Wars and the ascendance of the Athenians, but even before then, the Spartan way of life gradually turned to activities of pleasure and entertainment. Military training was focused largely on athletics, javelin throwing, wrestling, and boxing. Very little effort was expended on weapons training, tactics or formations, as would be the case in modern militaries. For the Greeks, physical exercise was seen as a leisure pursuit and included hunting, dancing, and music. We can see here the seeds of what came to be considered fitting pastimes for the upper classes in later societies, and are indeed considered leisure activities, even luxuries, today. We can certainly trace our regard for fitness, health, youth, and wellbeing back to these origins.

The Roman Republic, inheritor of the Hellenistic way of living, had its own ambiguity regarding luxury. Between 182 BC and 18 BC, Roman lawmakers enacted a series of “sumptuary laws,” restricting the number of guests at banquets, the number and nature of dishes served, as well as the silverware used.⁷ Needless to say, these attempts were rarely successful; often they served to increase the perceived value of the forbidden goods. Some of the restrictions were specific to foreign wines and foods, which strikes a chord today when we think of protectionist measures taken by several governments, including taxation targeted at luxury goods.

While the traditional European approach to luxury was based on the need to create and maintain a social hierarchy, Confucianism had a different view. Scholars as far back as the Ming Dynasty in China have proposed that luxury consumption is not only beneficial to society, but also acts as a wealth transfer mechanism.⁸ Ancient Chinese literature contains many examples of dynasties encouraging the rich to spend lavishly on tombs, coffins, and funerary shrouds in order to create work for craftspeople. The book Kuan Tzu (476–221 BC) advocates the carving of wood and making of exotic food in order to generate work for the poor. The writers believed that unequal wealth is the cause of unenforceable laws, since the rich are beyond the reach of the law and the poor are too poor to be afraid. Only when the people have full granaries and clothes to cover themselves will they be mindful of laws and courtesy, and distinguish between honor and shame. The Confucians believed that the amount of wealth in the world is fixed and needs to circulate, which is why they condemned “wasteful” luxury, or the dumping of wealth (goods or grains) into ditches. Confucianism criticized extreme frugality and extreme wealth, urging each man to spend according to his means in order to keep the economic balance. Thus, Confucians encouraged the consumption of luxury for pure pleasure, in sharp contrast to European attitudes, where luxury was equated with power and hierarchy. While aristocrats in Europe expected commoners to submit to their rank and position, in China, monarchs were instructed by Confucian teachings that the populace would submit for the expectation of the benefits brought to them. Even today, Confucianism is an underlying principle of economic policy in China and most of Southeast Asia, and still shapes attitudes to luxury spending and consumption.

In addition, the Asian self-view is more interdependent than independent, meaning that one’s identity relies more on one’s familial, cultural, social, and professional relationships than a sense of autonomous individualism.⁹ Thus, the emphasis on harmonious relationships, group goals, and group representation. This, in turn, makes it legitimate to consume luxury without the guilt or embarrassment associated with it in Western societies, since it is a way of signaling not just one’s personal position but that of one’s entire group. The luxuries enjoyed by one member of a group are a source of pride to the other members, and not necessarily a cause for envy.

Indian tradition takes yet another approach. It provides a clear structure for balancing people’s desire for the opulent with the fulfillment of a greater purpose in life. The four aims of life for a Hindu, known as “purusharthas,” serve as points on a compass: they give meaning and help each individual to seek material and spiritual fulfillment. They are based on the philosophy that man is a microcosmic aspect of God, an objective personification of God’s purpose. Similar to the way man makes an object or product as a reflection of his purpose, man as God’s product reflects the purpose of God. Each individual is expected to pursue these objectives as part of the ritual of human life. The four aims, dharma (duty), artha (wealth), kama (desire), and moksha (liberation), encourage – indeed they oblige – the individual to pursue pleasure, but not at the expense of righteousness, and to always keep in mind that the ultimate goal of life is spiritual and physical liberation. The attitude one brings to the pursuit of these aims, including one’s relationship with luxury, will determine if they set us free or entangle us deeper in their allure.

Industrialization and new dimensions of wealth

Until the Industrial Revolution, through the Dark Ages, the Renaissance, and the Enlightenment, socioeconomic systems, and thus the role of luxury, remained fairly constant. Before industrialization, economic growth was limited by the speed at which either nature or people could work. Machines allowed us to produce at a level well above that capacity. This new abundance opened the door to higher levels of economic growth and the creation of new wealth. Developments in manufacturing and transportation had the effect of turning erstwhile luxuries, such as cotton, indigo, and exotic spices, into commodities that raised the bar on what was considered to be luxurious. The advent of innovations, such as the steam engine, electricity, and the telegraph, helped connect the world of the privileged with travel and communications. Railroads and cables were laid. The Orient Express was introduced, making for easier, faster, and more luxurious travel between the imperial capitals of London, Paris, Vienna, Budapest, and Constantinople. Russian and British nobility began to spend their winters in the sunshine of the French Riviera. A network of luxury hotels, such as César Ritz’s establishments in Paris, London, and Madrid, developed to receive these travelers with the latest comforts: electric lights, elevators, and individual bathrooms with hot and cold running water. Transatlantic travel – pioneered and epitomized by the luxurious ships of the Cunard Line, the French Line, and others – became much more advanced, with ever bigger, safer, faster vessels and more regular service.

This helped marry the new industrial fortunes of the US with the established aristocratic houses of Europe, creating the first truly global elite. Beyond Europe and the Americas, a global consensus emerged around the vocabulary of luxury, which was decidedly Western. Indian maharajas and Egyptian khedives began attending elite schools in England and France, adopting the tastes and habits of their peers in those countries. This opened up new opportunities for European luxury brands. From Jacques Cartier’s trip to India in 1911, a long tradition grew of the house making jewelry for India’s royal families. The client list of Savile Row tailors Henry Poole & Co. eventually encircled the globe from William Randolph Hearst in California, to Crown Prince Hirohito of Japan, via the Vanderbilts, Rothschilds, Isma’il Pasha, the shahs of Persia, and the Maharaj...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• List of figures and tables
• Introduction
• 1 A dilemma across time and culture
• 2 The strengths and weaknesses of luxury
• 3 The environment for luxury
• 4 Luxury and the search for meaning
• 5 Toward a socially valuable business
• 6 Creating a culture of shared value
• 7 Adapting the business model
• 8 The outlook for luxury
• Background reading
• Index