Many luxury brands are like zombies. They exist, but they can only move forward with a vague desire to feed. But even zombies will die if they encounter an extreme disruption.
During the current COVID-19 crisis, I believe that up to 50 percent of today’s luxury brands will collapse. You read that right: up to half of them. The brands that claim to be luxury companies yet don’t create extreme value will be the first to go. In other words: the ones that think charging high prices is equal to “luxury,” which is a fatal error.
The virus will be named the “official” cause of death, but in reality, it will have been something else. In most cases, brands will be to blame for neglecting the most fundamental task: delivering significant value to customers so that they’re willing to pay a significant price.
For years, a lot of luxury brands defended their overreliance on physical stores with the claim that they provide experiences for their customers. But few top brands excel at creating memorable experiences, and most brands only deliver lip service.
If there’s no memorable experience, then there’s no value. And if there’s no value, then there’s no distinct value creation, which means no loyalty or buzz. Unfortunately, I’ve found dramatic shortcomings in this area for most of the brands I’ve studied. Creating memories does not happen by chance. It depends on a precise brand definition, a clear value creation model, and excellent execution. This call to action was years ago (not during this pandemic), but many brands didn’t see the writing on the wall.