15
Apr

Imagine going to a party. All the sudden a lady shows up with a Loewe purse. Some years ago there would be no doubt that the purse had to be original. However, nowadays people would doubt if that purse would be original, fake,…… or rented! Yes, you are reading it properly. A new service for renting luxury bags in Spain has just arrived. It has been available in the USA for some years and has just been introduced in Spain.

What are the consequences for the luxury brands? What is it going to be the effect in the loyal customers of the brand? Is there something that the brand could do about it?

Chanelpurse.jpg

I would not like to be working in Chanel, Loewe. Carolina Herrera or any other luxury brand. From my point of view they are facing a tough problem, which is affecting directly the perceived value of their brands.

Why would you pay a premium price of more than 600% for a complement, dress, shoes or purse? Value? I don’t think so. Quality? I don’t think so either. Exclusiveness? You are getting close. Recognition and admiration? I think you are there.


Sure there are many reasons for purchasing a luxury item, but I guess that one of the main ones is to awaken admiration from almost everybody, i.e. from the vast majority that cannot afford it. Admiration that will be directly related to the exclusiveness achieved thru its very high price.

So what happens when fake items are commercialized? That you destroy brand value, because people that cannot get the original item, get a fake one and give the impression (if the copy is good) that they are carrying the real one…

If this is the case of fake items (that can be eventually discovered), imagine the situation when you consider original items that can be rented!

There are ways in which you can compete against fake items, but the situation gets more complicated when people that would not purchase the item under normal conditions, can give the impression of owning it by renting it.

If the number of rented luxury purses increases dramatically (as the fake ones are currently doing), what I predict that it will happen, is that the demand for these items will collapse. Because loyal customers will not be up to paying for something that “regular” people can show up and look for other alternatives that cannot be copied at ease, or decide to start renting for themselves.

What can the brand do about this? On the one hand, keep attacking with al legal resources the fake purses traded. Many initiatives have been taken and other can also be considered. On the other hand, try to stop these companies of renting the purses. They have to find a solution. If not, I foresee a dark future for these brands and their luxury items.

Do you know about any other similar situation? What would you do if you were in charge of a Luxury brand like Chanel?

Prof. Ignacio Gafo

Comments

akhil doegar April 28, 2007 - 10:45 pm

I have always wondered do the movie rental stores have a different license (from the one individuals buy) for the movies they buy? I am pretty sure they do.

If I had a luxury brand, I would:

1) Introduce different pricing for individual and collective use.
2) First sell merchandise with individual license, and later with collective license (like movies). This will help me in selling ‘last year designs’ today to willing recipients.
3) Customization for clients with unique identifiers (is it feasible?)

I can also imagine this happening for software one day.

jose ignacio gafo July 10, 2007 - 6:30 pm

There are many things you can do. Take a look for instance at the blogs of Levis and Coca-Cola. They refer to FMCG (Fast Moving Consumer Goods) but applicable to other products.

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düzce parça kontor market March 15, 2009 - 9:21 pm

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Anna Kompaniyets July 25, 2010 - 4:59 pm

I like LV stratgy: if you have faked bag and enter their store – out! No sales, no old collections, serial numbers with possibility to track, burning out of unsoled bags…… and series of other myths and truths!!! Just very good communications strategy! Maybe Chanel should think about it:) Also, to my point of view, the problem of Chanel is that bags are not their prioryty – cloths, eye-galasses are. So why don’t they just make special brand foor their bags, which from one hand will associate with Chanel, but from the other hnd won’t be so sexy anymore for fake dealers. For instance, call all bags CHNL:)

Coach Laptop Bags March 3, 2011 - 10:40 pm

Very interesting article. It is a fine balance between maintaining a high quality image while reaching out to other consumers. I love the new poppy line of Coach bags because if fits in with my budget. It works for Coach because they other models that may be more expensive but also more high end.

http://coachlaptopbag.com

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