Strategic Luxury Management

Value Creation and Creativity for Competitive Advantage

David Millán Planelles

• Editorial: Routledge
• Año: 2021
• ISBN:
  9781000472486
• Edición: 1
• Categoría: Business
• Categoría: Strategia di business

Strategic Luxury Management is a case-rich and practical overview of how luxury creates value and why some firms are more successful than others. The focus of luxury study has traditionally centered on the clients' drivers of consumption, their perception of the brand and the way to effectively engage with them. Luxury is rarely, however, discussed from a strategic perspective: how luxury managers make complex decisions relative to their competitive environment.

The book provides insight into the luxury industry and how companies face market complexity across three key areas. First, the company itself, determining what defines a luxury firm. Second, the book offers a specific framework to assess creativity across management and not simply as an individual talent. Third, the book considers the competitive landscape and the principles that allow companies to compete consistently and meaningfully. Each chapter includes pedagogical features to ensure comprehension, including chapter objectives and self-study questions.

With examples and case studies from international firms illustrating each chapter, Strategic Luxury Management is essential reading for postgraduate, MBA and executive education students studying luxury management, luxury brand management, luxury creativity and innovation, and strategic management, as well as reflective practitioners within the luxury industry.

Online resources include chapter-by-chapter PowerPoint slides.

PART 1 The concept of luxury

1 The concept of luxury. Past, present and future

DOI: 10.4324/9781003015321-3

Introduction and objectives

Luxury is today a widely used concept. This is mainly due to the growth that the market has experienced over the past decades. The luxury market has increased at an unprecedented rate over the last decades. The luxury we know today is undoubtedly a much bigger industry than just three decades ago. Consequently, the reach of firms, the audience interested, and the published content on luxury have flourished.

But the extensive use of luxury is also a consequence of its general adoption. Today, all kinds of businesses want to be related to the idea of luxury. The rationale is quite simple; luxury can help to manage consumer perceptions and convey a higher price. This has also created a certain reticence for luxury firms to use the word “luxury”.

As a result, today, there is an extensive use of the “word” luxury. All sets of perceptions and meanings have started to be associated with that word, and its real meaning has become blurred. It is quite frequent to observe luxury as a synonym of premium or expensiveness.

This chapter aims to address this situation and explain the concept of luxury. To that end, the chapter’s main objective is to provide a solid knowledge of the concept of luxury and stimulate a proper use of it.

The chapter delves into the study of the origins of luxury, not as a mere description of historical facts, but as a source of crucial knowledge for every luxury manager. A profound understanding of luxury as a sociological factor can unveil essential managerial insights.

Learning what luxury has always been and how it has changed can help students and managers to face the complex challenges luxury firms face on a recurrent basis.

By the time you have completed this chapter, you will be able to:

• Understand the origins of the concept of luxury.
• Contextualize what luxury has meant and how it has impacted different societies.
• Identify the main anthropological aspects that luxury managers need to consider when evaluating their current strategies.
• Assess the complex balance between static identity and constant change that the concept of luxury represents.

Luxury and mankind. An anthropological perspective

Some concepts are linked in their nature to society and culture, so it will not be possible to understand one without the other. This is precisely what happened with luxury. Its meaning and representation are heavily linked to the society where it belongs. So luxury and society cannot be separated if one aims for understanding it. In fact, some of the most significant contributions to the knowledge of luxury have emerged from sociologists and economists, like Thorstein B. Veblen, Christopher J. Berry, or Gilles Lipovetsky.

This is why the study of luxury should start with an anthropological quest to understand what luxury has meant for different societies. Of course, this study does not aim for an in-depth anthropological discussion, but provides the primary evidence to show how luxury has historically evolved.

Luxury has always accompanied the evolution of humankind. In any historical period, there has always been a conception of luxury. However, this notion of luxury has not always been the same. Over the years, the facets through which luxury has been expressed or acquired have significantly changed. In other words, what has changed over the years is the representation of luxury.

As a consequence, we aim to unveil two components of luxury. The first one is the core component, which has remained stable for all societies and helps explain its meaning. And the second component is its evolving shape and how different societies have understood and represented it.

Therefore, this chapter aims to briefly describe the evolution of luxury so that we can dig into the immutable meaning of luxury. Only then will we be better positioned to start understanding its changes in form, content and shape.

A brief history of luxury

The idea behind this section is to provide a short historical overview of luxury. This section unites the principal authors who have studied the evolution, sociology and anthropology of luxury.

This section will be divided into five main different historical eras to highlight the most relevant difference in the relationship between man and luxury. Likewise, this will also serve as a basis to search for its mutable and immutable aspects over its evolution.

Early civilizations. There has always been luxury

Luxury has always had a strong link with power. Gilles Lipovetsky describes in his essay, Le luxe éternel¹ how the individual possession of goods did not drive early civilizations; on the contrary, it was the circulation and share of wealth—for instance, gifts to the other components of the tribe or the goods—that was relevant. It is with civilizations with a notion of State, Lipovetsky argues, and when societies became stratified, that wealth accumulation started to be significant and valuable.

Here, we can observe the relativity of luxury, regardless of whether we consider a technology early adopted by the elites or scarce know-how only available to those elites. As that technology advances, it passes into other (lower) layers of society. The improvement of that technology or the refinement of that know-how becomes a luxury for the elites. For instance, a giant pyramid was only available to the Pharaoh. The constructive technology would improve, and the next Pharaoh would build even more giant pyramids. This also impacts society, as the techniques spread to other layers of societies, and the elites can benefit from improving their constructions.

It is then a misunderstanding to try to learn luxury from an absolute perspective in terms of their representation. The representation of luxury keeps evolving. Hence, we cannot define luxury by its form, but by unveiling what is underneath that representation. That is what would be called the “relativity” of luxury.

We can see this also today. In their origins, back in the beginning of the previous century, owning a car was a luxury. It was a revolutionary product that improved the lives of the very few who could afford it. As with any change, some people were reluctant to adopt its use. It was perceived as a complicated machine. But the technology was not the only change. The first cars that could achieve 20 km/h made drivers and passengers sick and dizzy given the “high speed”.

Today, owning a car is not a sign of luxury. Our society has adapted to this transportation means, and we have the infrastructure and the technology to use a vehicle daily. However, owning a specific type of car, like a Porsche or a Pagani, is what we know as luxury today.

In summary, as we observe, even in early civilizations, luxury is, in principle, a quantitative aspect (ownership), which becomes more refined later on. This balance between quantity and quality is something that characterizes the evolution of luxury.

Greece and Rome. Luxury as the enemy of man

Plato, one of the most renowned philosophers of ancient Greece, can serve as the basis to explore luxury in this age. Christopher Berry’s extraordinary book The Idea of Luxury² performs the best study on the concept of luxury and its historical evolution. This is, without any doubt, a must-read book for any manager willing to enter into the luxury universe.

Berry suggests that one essential aspect is the interplay between “need” and “desire” and how this has influenced the natural order of different societies. This is one more piece of evidence supporting the fact that luxury is a sociological concept that evolves in line with society.

For Plato, the idea of “desire” was divided into the natural or necessary and the unnatural or unnecessary. The natural desire was the desire for food, while food beyond the simple food or plain food was unnatural. Therefore, unnecessary desires were defined as those eradicable and of no good positive use.

This relevancy of this conception of desire relies upon categorizing what is perceived to be of good (rational) use and what goes beyond that. This is one example of the conflict between luxury and rationality. Luxury is a generator of desires and makes man fall into unnecessary desires. This is also seen in Socrates’s association between luxury and going beyond the body’s natural needs.

Berry further elaborates why luxury was perceived as an enemy to society and hence the basis of some of the negative perceptions of the luxury as we know today. According to Plato, this notion of desire was a potential threat to society and government. As a driver of human desires, luxury can enter into a conflict with the government’s expectations of its citizens. In simple terms, a warrior has to defend his home and his city. Falling into luxury (unnecessary/unnatural desires) will blunt his capabilities.

It is then not surprising that as a threat, luxury was defined with harmful and offensive definitions. One clear example is how luxury was perceived to emasculate a man. Plato’s disciple Aristotle placed luxuriousness as an opposite to hardiness and endurance. There was no greater offense to a man than making him lose his core value in protecting society. Therefore, luxury is not just a matter of wealth or ostentation. Luxury was understood as a significant threat to the natural life of man.

This notion of luxury as a threat to society, and hence the need to regulate it, was also very present in the Roman Empire. Luxury was for Rome a political issue since it represented the potential disruptive power of human desires. A key concept for Romans was the simplicity and frugality of natural life. Berry provides multiple pieces of evidence for this point. For instance, the Stoicism school of thought considered the man of virtue as the man who understands the natural life and acts accordingly. Since luxury could soften that natural life, luxury was regarded as a severe threat to society. Controlling human desires was behind many political decisions, such as the sumptuary laws and censors’ role.

As luxury evolved, quantitative aspects became less relevant. Luxury is then related to a qualitative refinement. The critical element here is that this refinement is not present in nature, and thus it is beyond or against the basic natural needs of man. For instance, wealth to serve personal satisfaction was perceived to generate dangerous consequences, such as self-indulgence, greed and ambition. And luxury was the leading cause of that. As a threat, luxury received very negative associations. The thought of going against natural life was perceived to be the reason behind corruption and a soft society.

Middle Ages and the Renaissance. From the darkness to the light of arts

Middle Ages did not provide any significant change to the concept of luxury. On the contrary, the strong negative perceptions of luxury remained and intensified.

As a menace to man and society, the mechanisms to control luxury effectively, like the sumptuary laws, persisted. Luxury was identified as an enemy. Perhaps one of the most evident examples is to see how luxury was placed as a sin by the Christians. The strong connection between lechery and luxury comes from that age. Etymologically still today, the link persists. For instance, in French, we have luxure (lechery) and luxe (luxury), and in Spanish, we have lujuria (lechery) and lujo (luxury).

We shall observe today why the negative perception of luxury we have today is so strong. For centuries, luxury was regarded as an enemy in our collective mindset. So the etymology, the meaning and the values have a mighty harmful component—something which luxury managers need to break down if aiming to manage luxury firms effectively and with real purpose, as Chapter 2 will discuss.

It is during the Renaissance when the concept of luxury started to evolve and to acquire additional meaning. Berry provides more evidence on how philosophers and economists, like Nicholas Barbon, impacted the demoralization of luxury and the change in the perception of desire.

The Renaissance was a shake to the society, and thus to the concept of luxury. Lipovetsky highlights how the most significant contribution of this age to the concept of luxury was the link between luxury and culture. The source of power changed. As said before, luxury and power have always been linked. Luxury was no longer hereditary and started being concentrated in specific social classes, such as the burgesses and aristocrats. Hierarchy and religion were no longer the only sources of wealth. Those new elites found in culture and the refinement of arts a source of distinction.

The first artisans that abandoned their role as mere craftsmen and became artists were the painters. Ancient painter Giorgio Vasari wrote in 1568 The Lives of the Most Excellent Painters, Sculptors, and Architects.³ This is an excellent example of the link between art and luxury. Pow...