Living The High Life

Over the past couple of years, the consumer world has witnessed the unprecedented co-mingling of what some view as fashion’s sacred and profane—luxury and deep discount. From Karl Lagerfeld’s signature line at H&M to Stella McCartney’s partnership with Adidas to Liz Lange’s discount maternity wear, this marketing revolution of making luxury items affordable for the masses is the shot heard around the retail world. Americans of all stripes who once dreamed of designer wares can now grasp them at bargain basements without emptying their wallets.

This marriage of high design and everyday products, what I call the “massclusivity of affordable luxury,” reflects a drastic rewriting of the rules of marketing. By democratizing the high life, we are redefining the very idea of luxury and how to sell it.

Years ago, luxury products were designed with only the highbrow, design-savvy consumer in mind. It was a product’s dreamy “If only I could have that” quality that made it so desirable. But by shooting only for the top, retailers were missing the growing middle class, which earns more disposable income each year and turns out to have a keen appetite for luxury goods.

In today’s $2.3 trillion retail sales market, it was only a matter of time before haute couture designers came down off their chinchilla-clad high horses and tapped into the middle class. Luxury brands have needed to be reshelved from Fifth Avenue to Aisle Five.

Middle-income consumers are willing to pay more—the $6 serving of chocolates at Mars’ gourmet Ethel’s Chocolate Lounge, for example—for the experience and quality of luxury goods. As marketers discover that they can reach a new multitude of consumers who crave luxury and who are willing to pay a little extra for it, while still preserving the brand’s cachet, they will hit the marketing sweet spot—capturing high profit margins and volume. Companies that ignore the middle market’s passion for the good life will find themselves high and dry on a silver platter.

It is the average American consumers whose median income has jumped 18 percent since 1983. They are the style makers—not the fewer than 1 percent who are able to unflinchingly buy a $10,000 Gucci gown or $5,000 Hermes Birkin bag or the cherry Louis Vuitton purse.

Still, some in the retail industry are poo-poohing these high-low business partnerships, warning that they will dilute the pristine luxury brand. They argue that the motivation for purchasing luxury items is a feeling of exclusivity, and that feeling will evaporate as quickly as you can say Prada if those products become widely available to all.

I disagree sharply with that view. Last year, thanks to its offerings of designer names like Isaac Mizrahi, Target’s earnings soared almost 77 percent. H&M’s fourth-quarter profits surged last year with Karl Lagerfeld’s limited-edition line. For decades, major brand-name discounters like Marshalls have been selling posh labels like Ralph Lauren and Tommy Hilfiger for less while preserving the exclusivity of the brands.

The truth is, we no longer define “luxury” as simply a product. It has morphed into a mind-set. Physically and emotionally, we all crave a little nugget of the good life—a little indulgence. Luxury products make consumers feel better, and as marketers know, resonating with consumers’ emotions is worth its weight in gold. Owning a Lagerfeld T-shirt from H&M is not about its price point or label value. It is about the emotional attachment and confidence we feel strutting down the sidewalk in a designer tee. To pamper oneself … that, to us, now defines “luxury.”

Robin Koval is president of The Kaplan Thaler Group and co-author of ‘Bang! Getting Your Message Heard in a Noisy World.’ She can be reached at robin.koval@kaplanthaler.com.