Historically, brand collaborations have been a favoured method for new start-ups to piggyback off of an existing brand and gain access to a ready-made client base.However, the last decade has seen the rise of and increase of collaborations within the luxury market. Favouring loyalty and exclusivity, these new partnerships have gained critical and commercial success as unlikely pairings come together to create something new. Our luxury digital marketing agency look into what the benefits and drawbacks can be and what factors should be considered when collaborating.
Opening Doors…
As we all know, clients are key and none more so than in the luxury sphere where client retention, repeat purchases and brand ambassadors all play vital roles. The ability to gain access to a new target market is perhaps the greatest benefit and main motivation behind many brand collaborations. For example, Louis Vuitton and Supreme’s famous collaboration in 2017 allowed the established French house to gain access to a younger, style-conscious, Millennial market. The collaboration directly fueled Louis Vuitton’s fashion and leather goods revenue which increased by 21 percent to 15.4 billion euros.
Sharing Knowledge and Costs
Pooling resources and talent allows brands to share both costs and knowledge . For example, Dior and Birkenstocks’ current collaboration allows Birkenstock to reinvent its image and allows Dior to use its own expertise to craft an entirely new product based on the expertise and quality within the designs of Birkenstock. Alternatively, brands may look for more unquantifiable expertise, such as in marketing or access to customer lists and distribution channels — where specific items can be sold through certain channels. These types of brand collaborations are less about gaining access to new markets and more about providing current customers with something new, with the hope of further strengthening brand loyalty.
Rejuvenation
Out with the old and in with the new? Piggybacking off of the cool factor or associations with a brand is a proven strategy to reinvigorate an older brand and allow them to draw from perceived quality, exclusivity and style of another brand. In what might just be one of the most unlikely fashion collaborations, Gucci has partnered with The North Face to launch a limited collection of clothing, accessories, luggage, and shoes. The luxury Italian label has also brought its idiosyncratic geek-chic aesthetic to the outerwear label through a selection of camping gear, including sleeping bags and tents. The North Face x Gucci collection was predominantly inspired by the 1970s, which is when The North Face was a successful outdoor retailer based in Berkeley, California, as opposed to the global brand it is today. The logo is a hybrid of the two brands’ individual ones and features The North Face’s three curved lines and Gucci’s famous green-red-green Web stripe. The collection has also been created in line with a sustainability ethos. For example, the luggage contains ECONYL®— a nylon fabric sourced from regenerated materials, such as fish nets, carpets and other scraps.
Choosing the Right Partner
If not planned and executed correctly, collaborations can fail and can cause more harm than good. Selecting the right partner for collaboration is critical and, fFor luxury brands, there is a risk of damaging the luxury image, causing the company to fall out of favour. With sustainability and ethical business practices playing a more important role, particularly in the shopping habits of millennial consumers, brands should also consider any potential partners’ reputation in these areas - excellently manoeuvred and played upon as we have seen with Gucci and The North Face.
Price Check
One of the most important factors to consider for a successful brand collaboration is the price point. As with selecting the correct partner, for luxury brands, there is a worry that offering their products at a lower price may dilute the brand’s prestige in the eyes of their existing and prestige driven customers. Conversely, if the price point is too high, then there is a risk that the collaboration may not be a commercial success. With the Fendi x Fila collaboration, pricing was set in the typical range expected by Fendi customers but likely out of range for those of Fila. For Fendi, the collaboration was less about enticing Fila customers to purchase Fendi products, and more as a method for Fendi to capitalise on nostalgia and logomania trends.
Practicalities
Before a working relationship starts the partners need to understand the firm financial arrangements and implications for a smooth partnership. Distribution, logistics and marketing costs as well as routes to market (pop-ups vs timed releases for example) in order to maximise the likelihood of a positive impact and sales. Returning to the Louis Vuitton x Supreme example, Louis Vuitton insisted that the line was sold exclusively through select Louis Vuitton boutiques around the world in order for them to retain control of the customer service experience, ensuring that it met the high standard of its customers. These considerations should be made early, in order to avoid potential issues among partners down the line.
Conclusion
There is no doubt that brand collaborations can prove to be lucrative for both partners, but their success is not a given. Careful consideration should be made in choosing the correct partner, pricing and route to market strategy. Most importantly, the client needs to be at the forefront of decision-making — the collaboration needs to appeal to clients, as ultimately it is they who will determine whether the collaboration is a success.
At TLMA our luxury marketing agency offer a full suite of services across PR, SEO, PPC and Social media that create meaningful conversations between brands and their clients new and old, For more information and to speak to our team, contact hello@theluxurymarketingagency.com or call +44(0) 7835 2335607.
