Two major luxury fashion brands are experimenting with discounting themselves. Alexander McQueen, and Tiffany have all been embracing their more price conscious shopper. The net effect is that the brands are enjoying more profits and customers get a brand they think is cool, but that they never thought they could afford.
Here’s what we can learn about the power of consumer psychology and the emotional aspect of the customer experience from these two luxury brands.
Luxury Brand #1: Alexander McQueen Opens an Outlet Store in California
In April, late designer and fellow Brit Alexander McQueen opened his first outlet store in the US at the Desert Hills Premium Outlet Mall near Palm Springs, Ca. Chances are that McQueen, renown bad boy of the fashion world, would have had some choice words for the prospect of selling his haute couture at a discount outlet store, but experts say that the recent state of the economy has definitely taken some of the stigma out of the prospect for major luxury fashion brands. One thing is clear. How people brought things before the ‘Great Recession’ and how people by things now is different. Many people have become much more price conscious and lowering the prices can even help these brands. Considering the mall takes in $1,300 per square foot, chances are very good that the brand will not suffer much in way of profits. The only challenge will be if their usual clientele now see a diminishing of the brand because of this. Time will tell.
The Lesson? Matching consumer needs with a company need creates a winning strategy for increased customer loyalty.
Nielsen’s Global Survey of Consumer confidence revealed that in 2014 consumer confidence is building. But it also revealed that saving and reducing debt are hangovers from the last few years’ economic crisis. It is as if consumers are making it a priority to have a financial umbrella for the next financial rainy days.
Creating a customer experience that appeals to their subconscious needs as well as their conscious want is a great way to increase customer loyalty. What brilliant organizations do is link the customer’s needs with an activity that drives the bottom line for their company. In this case, McQueen’s brand of Haute Couture is more accessible to consumers, and McQueen’s older, unsold inventory finds it’s way out of the retail stores, which can drag down the atmosphere of the store, and into the closets of shoppers.
Luxury Brand #2: Tiffany sells tons of fashion jewelry instead of fine jewelry
The quality of the fine jewelry is how Tiffany’s built its brand. The finest quality diamonds and the high-grade platinum gold are impeccable. They also built an experience to match the quality of their jewelry. Their reputation is known all over the world and they created a longing for their brand, best depicted in the movie, Breakfast at Tiffany’s.
A brand that is famous for selling diamonds is making the most profit selling sterling silver. Tiffany reported a profit surge of 50% to $126 Million in the most recent quarter. How? By keeping the experience the same while selling items with a lot more margin.
The Lesson? Selling the luxury of your experience is as important as selling the product.
By selling the same experience with a piece of jewelry that costs the company far less to produce, they have found a winning formula for growth that includes a whole new class of consumer. Not everyone can afford the fine diamonds and platinum metals they display under their gleaming cases. But they can afford the less expensive silver trinkets, called their fashion jewelry line delivered in the iconic turquoise box or bag. In this case, the jewelry is not “fine” but the experience still is.
The Attention Cluster of Emotions
Both luxury brands are making more profits by discounting their product. But the reason this works, is because both brands are appealing to their consumers’ emotions. In this case, they are appealing to what we call, The Attention Cluster.
The attention cluster of emotions is part of the concept of, “How Emotions Generate $$$.” This cluster includes the emotions Energetic, Exploratory, Indulgent, Interested and Stimulated. These emotions drive customers to buy in the short-term more than any of the other clusters in our Hierarchy of Emotional Value. This is particularly true for the fashion industry.
The fashion industry benefits from the attention cluster of emotions at its core. The whole business category is built on the concept of redefining itself, creating momentum that generates energy in the industry. People are interested what’s new and explore the new looks they can create based on what’s coming down the runways each season. It stimulates them to buy new things that based on the brand can be indulgent.
The emotional part of an experience is critical to the overall customer experience. It drives over half of the reasons why customers do what they do. In the case of buying jewelry I would suggest the percentage is much higher. In the case of the Alexander McQueen and Tiffany brands, it is what drives consumers, old and new, into the stores to purchase the actual brands instead of the thousands of knock offs they could find for a lower price. By discounting luxury prices, these brands just made themselves a little more accessible to a lot more people.
Bear in mind, however, that the 20% discount on an Alexander McQueen jacket that retails at $2,000 still costs $1,800, so the term “discount” is relative. Also, a pin sold by Tiffany’s fashion line is still $300, even though it is made up of less than $20 worth of silver. But while the discounts are relative, the idea that the luxury brand is more accessible because it is discounted is universal.
