How the World’s Powerful Luxury Brands Stay Strong

on January 26 2011 | in Retail Trends | by | with 1 Comment

Global luxury brands share many similar traits of prestige and exclusivity, yet each brand has its own identity and a distinct strategy of brand positioning that sets itself apart.

A study by global brand strategy firm Millward Brown released last April ranked the ten most powerful luxury brands based on brand economics. The report gave insights on why some luxury brands are more resilient.

The most resilient luxury brands — increased brand value despite economic downturn — are the classic and traditional luxury staples like Louis Vuitton, Hermès and Gucci that focused on heritage and history instead of high fashion. Moreover, these luxury companies showed deliberate business consideration and did not relent on price or brand control.

“Louis Vuitton and Hermés absolutely control every single component of their business model, from retail distribution to discounting,” said Pierre Dupreelle, vice president of Millward Brown Optimor, New York.

These brands have established a compelling brand distinction over time that is meaningful, connects with customers, and allows them to leverage their value and innovate to keep them successful.

Here are the 10 most powerful global luxury brands:

1. Louis Vuitton
Brand Value
: up 2% to $19.78 billion
The most valuable luxury brand for the past five years, Louis Vuitton continued to position itself as timeless and authentic. Its focus on its heritage as a travel brand helped it to retain its core customer–the jet setter. The brand increased prices, invested in creativity and heightened the focus on quality rather than compromising its brand value during the recession.

2. Hermés
Brand Value: up 8% to $8.46 billion
The brand chose to focus on its heritage by sponsoring a horse competition in Paris. It also launched a new Chinese luxury brand Shang Xia, tailored to the Chinese consumer. The company charges far more for its handmade leather bags than its competitors and keeps tight control on who sells the bags.

3. Gucci
Brand Value: up 2% to $7.59 billion
To some Gucci may embody an era of excess with its monogrammed accessories and flashy runway looks, but Gucci remains desirable. The Italian luxury brand teamed up with Christie’s to appraise vintage Gucci luggage and handbags to give the brand a lead on its competitors. Now, the PPR-owned luxury goods maker has a tighter control of  its secondary market.

4. Chanel
Brand Value: down 11% to $5.55 billion
Chanel’s dip in brand value is a sign of the times when consumers favor more practical items. While Chanel still attracted affluent consumers with its classic quilted bags, cosmetics and fragrances, those who want a few investment pieces stayed away from the ready-to-wear. The fashion house will fare better as consumers start craving for newness, which Karl Lagerfeld will certainly deliver.

5. Hennessy
Brand Value
: down 1% to $5.37 billion
One of the most popular spirits in emerging markets, it remains extremely popular in China.

6. Rolex
Brand Value: down 14% to $4.74 billion
The luxury watchmaker, along with other high-end jewelry makers, was hurt by the recession.

7. Moët and Chandon
Brand Value: down 12% to $4.28 billion
While demand for champagne has decreased overall, Moët & Chandon remains the top champagne brand.

8. Cartier
Brand Value: down 19% to $3.96 billion
Cartier is still the most valued jewelry brand in the world despite a drop in its brand value. Cartier just announced that it will accelerate boutique openings in the Mideast and the U.S. to stay ahead of the game and diversify its risk in case China slows down. “You have to prepare yourself for the worst when everything is going well,” said Bernard Fornas, chief executive officer of Cartier, “Let’s be careful about overdependence.” China accounts for about a quarter of Cartier’s sales according to analysts. “Swiss watch sales in China will probably increase 20- 25 percent this year, slowing from more than 30 percent in 2010,” said Rene Weber, an analyst at Bank Vontobel.

9. Fendi
Brand Value: down 8% to $3.20 billion
Chanel creative director Karl Lagerfeld also designs the Fendi ready-to-wear collection, but the brand is better known for accessories, especially its collection of “It” bags in the U.S. Fendi has a huge luxury presence in Asia. LVMH is looking to reposition the brand as its answer to Gucci.

10. Tiffany & Co.
Brand Value: up 6% to $2.38 billion
Tiffany & Co., which was not on last year’s list, is heralded for its refusal to discount and its Asian and Western European expansion.

“Focusing on substance (e.g., craftsmanship, heritage) and subtlety will continue to drive growth for luxury brands in developed markets, where consumers will continue to “invest” in their luxury purchases,” Dupreelle said. “In Asia, brands that use “badge status” to appeal to consumers will broaden their reach in the mass market.”

[luxury daily]
photo credit: louis vuitton

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One Response to How the World’s Powerful Luxury Brands Stay Strong

  1. Calvin says:

    Great informative post, thanks! I’m wondering if you could do a post on oceanfront lifestyle, living, homes, etc…? What are some prime oceanfront locations in China and if this market has taken off yet (like the U.S.).

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