Is this the future for luxury brands?
I was recently listening to this episode of Business Wars (Price-Wars-The-Fall-of-Dollar-Stores-Duped-3), where the fashion and homewares brand Quince was mentioned at around the 36-minute mark. I hadn’t heard of Quince before, but it has a really interesting business model.
Quince went back along the supply chain and worked together with the original suppliers to create high quality products. But their aim is to bring such products within reach of the general public. Their website claims that they can do this by cutting out many of the steps in between the manufacturer and the customer, as outlined on their website here: https://www.quince.com/how-it-works
Cutting out the middleman is nothing new – but doing it with luxury goods is. And it strikes me that Quince’s approach is absolutely in line with the zeitgeist. Since the Global Financial Crisis, people in many nations have faced economies with significant cleavages in wealth and the ability to raise their income, and this is often along generational lines. Not surprisingly, this is having major political consequences.
I also suspect that it will have longer-term social consequences. For a long time, luxury brands have enjoyed being able to charge a premium for their products, in large part due to the perceived social cachet involved. But many brands that started off as being hand-made (and thus rare and expensive) have offshored much or all of their production to reduce costs and increase profit margins. Consumers were willing to put up with high prices to wear coveted brands, and luxury brands had a field day, expanding into destination cities across the globe. The perceived value of those brands was sky-high.
What is the value of such brands in light of a disruptor like Quince, however? Where is the value proposition for much of the population if they know that the factory which makes products for Quince is the same one, using the same machines and raw materials, that makes a luxury brand? Is that brand worth the extra $100 or more for what is essentially the same good?
I sincerely doubt it in many cases, especially if such brands are perceived as being part of the same set of corporate citizens who have closed factories in the developed world, and whose executives are the ones benefiting from the wealth divide. Add to this the ongoing conversation around the environmental damage caused by fast fashion, and the exploitation of workers in poorer nations, and I think it’s possible that over time, many younger consumers will see most luxury brands as reflecting an entire set of beliefs whose time has passed.
If luxury goods come within reach of the majority of the population, then by definition, they are no longer luxury goods, at least in social terms. And if this belief holds, what does the business model for luxury look like? I imagine that it actually returns to being hand-made, precisely because the human element of it is what ensures it stays small-scale, and that in turn makes producing it expensive. This way of thinking – that products reflect their environs, and the character of the people making it – is the antithesis of multinational brands.
If a small workshop can only turn out 200 hand-made products per year, then that’s it – they’re not lying, that’s all the supply of it the world has on offer. And because that precise thing is made only there, and is not available in every global city across the world, it can actually hold its price.
Could such a shift cause a major change in attitudes beyond the luxury sector? What if travel became less about being seen to have ticked a major city off the list, and more about individual discovery in the suburbs of that city, or in going out to regional towns to see what surprises they might have on offer?
