Why Poor Service Will Destroy Your Luxury Brand

Whether it’s a store, art gallery, fine dining restaurant, or luxury car dealership, brand managers have been describing physical experiences as the heart of the luxury market for decades. Luxury, for many, is expressed through human-to-human contact.

Maybe because the idea of personal interaction as the ultimate luxury experience is so ubiquitous, most brands fail to deliver on this count. They open a store location, invest a lot of money in its decoration, and declare what they’ve built to be a luxury experience. But later, when this strategy inevitably fails, managers have no idea what went wrong.

When we audit luxury brand spaces, their managers often brag about expensive architecture, fine leather fixtures, complimentary drinks from high-end espresso machines, and private rooms. They swoon over these “ultimate” features — even after we have reviewed their statistics and shown them that their flagship stores produce numbers deep in the red. I have repeatedly seen some of the most iconic luxury brands struggle to fill their stores, and now, COVID-19 has dramatically accelerated this trend.

To add insult to injury, many stores are not just unprofitable; they also destroy the brand’s equity. That may be surprising at first. After all, isn’t this type of personal touch what makes luxury brands flourish? A visit to a store is a huge customer investment in that brand. Including driving and parking time, a visit to a luxury brand store can easily exceed two hours. Brands must add value to peoples’ lives, not destroy it.

Above all, luxury is about extreme value creation, and service delivery is a big part of that. If brand service is not creating significant customer value, then that customer interaction will decrease a brand’s equity. Design and a luxurious ambiance don’t make the luxury experience; they are simply expected in a luxury setting. They cannot substitute for crucial aspects like brand storytelling. Those are much deeper issues.

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