We have entered a new era of luxury. The last ten years have undoubtedly been a decade of men’s fashion and it’s quite likely that the next decade will follow suit, driven by a blitzkrieg of burgeoning male consumption and the rise of streetwear.
For fashion inclined men, they want to dress casually and comfortably but also telegraph their status to peers and onlookers. Ironically, in contrast to true fashion aficionados, this new breed desires the safety of the familiar and the excitement of exclusivity; but they really just want to fit in while perpetuating the illusion of standing out. These aren’t fashionistas but have no doubt, they are fashionable and this next generation consumers has led to another development: the men’s market has been expanding faster than the women’s.
That said, the last decade has also been shaped by a nostalgia driven pride of consumer-collectors – the kind of modern-day “patrons” who signal status not through overt ostentation and excessive consumption but rather by serving as guardians of craftsmanship and provenance.
Whether craving the newest and hottest, or driven by storied legacy and artisanship, these young affluents crave more than a transactional relationship; raised in the streetwear era and the bonds that make the Supreme fan community the envy of even historic luxury brands, younger Millennials together with Generations Z and Alpha are true connoisseurs and avid archivists – trading in knowledge, access, community and craft.
Augustman sat with Dr. Sonja Prokopec, Associate Dean of Faculty, ESSEC Asia-Pacific and Program Director (Academic) of the Academy of Luxury, on the latest developments in the luxury market.
First, An Alternative Perspective
Following a good start to 2022, the collectible watch market contracted, with prices falling for the models that had seen the most price gains. Yet, these models continue to sell for much more than their retail price and are nearly impossible to find in retailers. Hence, it is not unbelievable that the evidence points to the primary and secondary markets combining. Early last November, the 1916 Company launched, merging WatchBox, Govberg, Radcliffe, and Hyde Park Jewelers bringing together the primary and secondary markets under a single, unified brand, comprising more than 20 boutiques and Collector’s Lounges in key watch markets worldwide.
WatchBox was founded in 2017 by Danny Govberg, Justin Reis, and Tay Liam Wee to raise the experience for clients as they collected, sold, traded, and learnt about watches. The 1916 Company advances this mission, offering collectors a trusted partner for both new and collectible pre-owned watches, as well as fine jewellery, and a global network of Collector’s Lounges and boutiques. It’s a major development from which the watch brands themselves are conspiciously absent. Only Zenith in recent years, and Rolex more recently, have launched a CPO – Certified Pre-Owned programme), so while a minority are gradually making inroads, secondary market sales are still only a tiny part of their “mainstream” business with the secondary market growing organically from a multitude of sources. Speaking to Europa Star, Patrik Hoffmann at WatchBox makes the analogy using the Used Car industry: “New car sales in Switzerland are in the region of 350,000 units a year. Used car sales are more than double that. The watch market is very similar to the car market and I’m sure the numbers are comparable, too. There is enormous potential. We’re not behind this. There is real demand from the end consumer.”
According to WatchCharts estimates, Rolex, Patek Philippe and Audemars Piguet (the “Big Three”) make up 71% of the total trading value in the secondary watch market, writes Morgan Stanley in its third quarter 2022 report on the secondary watch market.
Vintage timepieces are making a fashionable comeback. For iconic brands, their archives have become a defining moment to create “revival” or “re-issue” editions of their historic models to cater to young, antique-obsessed consumers by striking the right balance between sought-after heritage and know-how. Since these knowledgeable young audiences are obsessed with heritage and savoir-faire, the secondary market including online marketplaces like eBay and Carousell has become a new, if savage, frontier – case in point: the upsurge of pre-owned prices for what used to be a long forgotten Must de Cartier timepiece when the Maison relaunched a new interpretation of its heritage icon. These shifting the codes of luxury and choosing subtle status signifiers over more obvious, overt displays of wealth and the shifting symbols of affluence is pushing the sector towards a deeper focus on the true value of luxury: longevity and provenance. For a growing niche: it’s about owning a collectable piece of history.
Can primary and secondary markets co-exist in luxury marketing?
Luxury watch companies, as well as luxury companies in general are paying closer attention to secondary markets. The brands need to actively manage secondary markets in order to increase their brand desirability on the primary market. Brands cannot afford to operate with a singular focus on the primary market as consumers today think about the brand in a holistic sense – circularity of the luxury (watch) industry should be integrated into how the brand is managed.
Do auction prices or resale prices affect brand perception?
Absolutely, prices on auctions as well as in the secondary market affect the brand desirability, the higher the price that a watch can get on the secondary market, the more desirable the watch becomes on the primary market, some watches can get quite a premium on the secondary market, examples include some types of rolexes, PP nautilus, etc. many consumers these days check the prices on the secondary market before making a decision to buy a certain watch. even though they might not be interested to resell the watch, they want to make sure that they are making smart purchases, some view it as alternative investments. Brands cannot afford to operate with a singular focus on the primary market as consumers today think about the brand in a holistic sense – the lines between primary and secondary markets are blurred, and only the brand or the specific product matters
Given the rise of quiet luxury, to what degree do you think the industry is still status driven?
After every crisis, whether it’s the 2008 financial crisis or the health crisis we just had, there is always a reaction in the form of a new trend or acceleration of a previous trend. Furthermore, there’s usually a group of consumers who will react to the exuberance by going the other way, right. So 2009 was the year of timeless luxury. Logos became discrete codes. Louis Vuitton pivoted when they saw nobody wanted big logos anymore. They went closer to Hermes rather than Versace. Now we’ve got talking about quiet luxury.
I think globally speaking, we have trends that are driven by by younger consumers. I think it will definitely be a trend that’s gonna resonate among with more evolved consumers, consumers, who are, you know, been in this world for a while who have been you know, who have required a certain stage of their journey as a luxury client, but you also have a lot of markets, a lot of consumers are driven by status, and that signaling is very important to them. Now, signaling might not be, you know, a giant logo during logomania right, so it might be a more subtle logo or visual codes or shapes or, you know, animals that signals you know, a certain brand, but signaling will still be important to that customer, right. So, so I think you know, because when we look at the market overall, most of the consumers are on this stream of buying status, but a very small segment are going to be connoisseurs and that is going to be the segment that that is going that’s always been buying quiet luxury.
Have the ratios of each type of customer remained relatively unchanged through time?
Yes, you have the aspirational and the connoisseur and what’s happening is you’re getting more and more connoisseurs, because people are shifting. It’s a journey, you go from aspiration and ostentation through more information, through your own experiences and feelings during consumption, through education from the brands, through your own networks. They might shift to connoisseur but if you look overall numbers you still have a large pocket of consumers, these are the drivers they’re the ones who are high disposable income spending a lot on aspiration. Spending a lot on visible because these are social signals for them. While symbols and signals change, even if slightly this market is still signal building. Even quiet luxury is signalling to that reference group of those who know.
How do you hope to communicate all this nuance in five day course?
This program is really designed to be across sectors but it takes time and it’s not possible to cover the entire industry and everything that it involves in five days. The profiles that we get in this course are very different as well. Some of them are new to luxury. They might come from different industries but might work with luxury clients and not know anything about the life of a high net worth person or understand the specificities of the brand.
So this course gives them tools to expand their narrative and connect in their industry. We really cater to a broad audience in terms of the topics and what is covered, and I try to give as many practical examples, including deep dives into gems, watches, brand stories, retail stories, and so on. Nevertheless, it is an executive course and so it’s hard to do a longer period because people have jobs. Now what we do have is “tracks” – we’ll started our first track in wines and spirits launched in November, and there will be other tracks introduced that will allow us to expand further into areas of interest. I hope to have a watch and jewellery track because this is my favourite sector.
I followed some of your students and I noticed a foreseeable issue: for many sales associates (SA) and client advisors, these are not careers but merely jobs until their “real one” comes along… they talk to your mystery shoppers about price and little else…
Totally agree. It’s true that depending on the background of the SA, they might not be able to deliver that rich narrative and that’s also something that we’ve been discussing with the brands. The SAs or assistant store managers and trainers would be a perfect audience for this course because it gives them richness and a more holistic way of thinking, which right away expands their vocabulary, their understanding, and they can deliver a better way of connecting more soft skills as opposed to as opposed to hard sell. Never talk about the price.
Unless you are asked the price, these little slip-ups drive me crazy. My worst experiences are at a certain departmental store in Singapore because I love historical department stores but I’m like – Why don’t you train them on product? Retail is a really important job in luxury.
The problem is being in Asia, there’s a tendency at least, for the customers they serve to be very price centric.
In luxury, it’s really about educating and making your consumer evolve with you. It was a big missed opportunity, I think there’s a lot of room left to to evolve and this can be applied to anything. it could be applied in hospitality, it could be applied to local brands, whenever I work with young designers, young brands here, it’s also sometimes cultural, you know, because the, maybe the cultural aspect is not appreciated as much, so it’s not highlighted, that’s a missed opportunity as well. Understanding how knowledge and story telling does to the brain can alter perception of a product, or, or even the visual aesthetic of a product can change once you are exposed to a story. It is so powerful.
Luxury management is a course about things that an executive can control. But part of luxury management is also the customer experience post purchase and after sale service for timepieces can be an annoying experience for anyone…
[Laughs] We don’t talk about this part in part due to the length of the course. It’s a combination of academic and experiential because ithey need to be shown and I completely agree with you that that’s something luxury brands still have a lot of work left to do.They are so good at building desire, but then your patience has to be equally good for brand perception to not be unnecessarily impacted. You’re merely left frustrated [laughs]
What do you hope they take away from this course?
The key takeaway is quite ambitious. We hope our participants have a mind shift change when it comes to creating a premium experience for a premium client. This is opening another world altogether, often opposite from the world which conventional marketing teaches. How can you deliver a brand perspective and retail experience why it is so effective and how you can apply that. The final task is a group project where they have to choose a brand that can be potentially made premium and apply what they have learned – what would they change if they were in management of this brand to make it more premium. It’s a mindset shift into premiumisation.
Dr. Sonja Prokopec was ESSEC LVMH Chair Professor of Luxury Brand Management for 12 years, from 2010 – 2022. She was named one of the Top 40 under 40 Business School Professors worldwide in 2015
Hear from a graduate: Ms. Jaslyn Ng, Professional Certificate in Luxury Management, June 2023 Graduate
Can you share a short introduction of yourself? Your age (if comfortable), job (is it in the luxury sector)
I am a Financial Services Director who manages a team of Financial Consultants. At the same time, I am a Top of the Table (TOT) Financial Consultant serving many HNW clients to guide them on holistic wealth management. I am currently in my late thirties and a mother of two.
Why did you sign up for the Professional Certificate of Luxury Management course?
Considering the niche market, I serve; I realize that I need to ‘live and breathe’ HNW lifestyles. This will allow me to integrate my services with their way of life. It was truly during this 5-day course that I gained deeper insights into luxury management, brand DNA codes, their social etiquette, jewelry, and collectibles.
What are some of the things you learned during this course that you never considered about the industry before?
During one of the class exercises, we embarked on a Safari Shopping tour in MBS. We walked into the various designer stores to understand how customer service can truly affect the buying spirits of an HNW customer. In their world, everything becomes a ‘want’, not a ‘need’. Thus, the greatest differentiating factor to get the HNWs to buy is to wow them with such an awesome experience. It may not be something they need but they don’t mind buying it just because they were served well.
How do you intend to apply what you have learned?
The 5 days of course taught me about value proposition. It is not about product selling. It reinforced how the top of the top sales professionals conduct their businesses. We value-add first then business will come naturally as an extension.
As a consumer yourself, do you think Singapore’s more relaxed consumer protection laws get in the way of brands being as customer service-oriented as they could be?
I still believe that it still boils down to supply and demand in the real market world. There must be a demand and limited supply of goods/services to allow HNWs to ‘truly want’ something. For example, there are so many airlines in the world but why does the HNW still insist on flying Singapore Airlines? It’s because of the crew that the service makes the passengers feel at home and reassured that they are in the best hands. At the end of the day, it’s about creating that “WOW” experience to buy their loyalty.
