We interviewed our CEO, Rumble Romagnoli, to find out what it takes to set up a company in the luxury industry. Since founding Relevance over a decade ago, Rumble has been on a journey of discovery to understand how you build a brand that attracts a high-net-worth and ultra-high-net-worth audience. Below, he reveals his expertise.
How long does it take to fully establish a luxury brand? What does it take to set up a luxury company from scratch?
The timeframe to properly set up a company in the luxury market can take anywhere from a few months from launch to a few years. This depends on factors such as how much space there is in the market for your brand, how well you understand your target audience, and how good your marketing efforts are.
World-renowned brand expert Jean-Noël Kapferer notes that a luxury brand needs to emanate the following ideals: label, rarity, exclusivity, relationship with time, tradition, history, handiwork and complexity. So, before you set up a luxury brand, think to yourself whether you are able to offer these traits, and if not how you can adapt.
Remember that quality is everything with the world’s wealthiest, who will easily be able to distinguish between low and high quality, and so setting up a luxury business requires investment in the best possible materials, produce and people. If not, how can you expect UHNWIs – who have the option of buying anything in the world – to select your brand from any other?
Once you’ve got your business model planned out, turn your thoughts to how you will market yourself to your wealthy target clientele. Marketing efforts need to be so much more than a few social posts and promotional events. You should consider implementing a full, flowing omnichannel experience, taking your audience on a seamless journey to get to know your brand both on and offline. Don’t set up a business until you are sure you can launch with an incredible experience that is representative of your brand – otherwise, you risk confusing and disappointing people. First impressions count.
Take inspiration from Gucci – one of the world’s most famous fashion houses, which has a very unique brand experience. Whether you are using the Gucci app, browsing their social media profiles, perusing their website or even visiting the Gucci Garden in Florence, you are enveloped in the culture of the house.
Also, understand that the best luxury brands communicate not just with their desired clientele, but also with loyal fans who will look to your brand as the highest marker of success. People who can’t yet afford your brand but may be able to one day – such as the High Earners Not Rich Yet (HENRYs) – are important to communicate with in order to ensure that your original HNW fan-base does not simply age and fade out. Likewise, even those who will potentially never be able to afford your brand can add to the aspirational value, as long as you make sure that your primary goal is attracting those HNW and UHNW audiences who can actually afford your products.
What are the biggest challenges of setting up a luxury brand?
When we think about some of the best luxury brands, they are typically ones that have heritage – that have been serving UHNW clients for hundreds of years and have built up a reputation of expertise, tradition and artisanship. That means that one of the biggest challenges in creating a new luxury brand is establishing yourself as a trusted name amongst the world’s wealthiest. So how to do it?
You may not be able to claim the history that some of the biggest brands can, but you can associate yourself with the best of the best. Why not bring onboard someone who has been involved with one of these high-reputation brands – for example, as a luxury watchmaker you could bring onboard a former advisor from Patek Phillippe, or as a new yacht builder you could hire a designer from Feadship.
By linking yourself to a well-known and admired brand, you create a connection with the elite audience of that brand, who will then be intrigued to know what your new luxury business can offer. Be sure to talk about this connection in your marketing materials – make it known.
Another big consideration is where you should sell your products, depending of course on what you are selling. You may be tempted to assert your luxury status by placing your products for sale in luxury department stores, but this is something to think about properly before jumping in.
This is because it is typically easier to retain full control of your brand image when selling through your own store – whether this be a website or a bricks and mortar shop. Your own shop also allows you to better understand your clients, their motivation for buying your products and how they like to shop – you are not just relying on second hand data.
That is not to say that going into retail with department stores doesn’t work for some brands. A nice compromise is to have your own pop up shop within a luxury department store, allowing you to retain brand control while benefiting from the HNW footfall that these large stores enjoy. However, this requires a fair bit of brand power and funding, so it may be best to start online and progress from there.
How do you go about building brand interest from HNWIs and UHNWIs?
Rarity is a powerful lure for the world’s wealthiest: when money is no object, you can easily purchase anything you want. However, acquiring something no one else (or just a very small number of others) can have still holds appeal. Your marketing efforts therefore need to highlight the exclusivity of your product.
To begin to build interest from these discerning clients, you will also need to associate your brand with their world, the events they go to, and their social circles. One of the reasons why you see Rolex sponsoring golf or equestrian events is because it positions the luxury watch brand within the world of their target clientele: people who belong to exclusive golf clubs or own multiple horses which travel to different countries for show jumping.
You can even take this one step further and host your own events, which could consist of exclusive parties, fashion shows, or even sailing regattas – research what your target audience are interested in and host events to which they will value an invitation.
What are your top tips for anyone looking to set up a luxury brand?
The luxury market is filled with powerful players, many of whom have been around for centuries or at least decades, so if you are going to create a new luxury product or service you have to make sure it is bringing something fresh to the table. It has to be something that will potentially pull people away from their preferred and more established brand, because of how exciting the offering is. Before you launch, make sure you have that draw.
What’s more, be prepared to really go into detail with your clients on what sets you apart from your competitors – the vast majority of UHNWIs are savvy business people who will want to see the value they are getting from your brand before committing.
Sustainable luxury seems to be experiencing a boom at the moment, and this is an area where not all of the biggest and best luxury brands have caught on, leaving room for newcomers to set up a company and succeed. Large players such as Tom Ford and Stella McCartney have been leading the charge in eco-friendly fashion, releasing product lines made from recycled materials and brought to life through a sustainable supply chain, as well as promoting animal welfare in their public appearances.
As Ford famously said back in 2007:
“I know many men and women who would pay more, possibly much more, for a luxury item that they knew had not harmed the planet in its production. And if, for example, this item had a tiny detail that communicated to the world that its wearer was not only chic and stylish but also had a conscience and was a good citizen, then would that not be the ultimate status symbol?”
What are some often-made mistakes by budding luxury brands?
Arguably the biggest mistake up-and-coming luxury brands can make is utilising the exact same marketing techniques as they would for a mass-market product – essentially treating their UHNW clients the same as regular consumers.
For example, you may believe that everyone loves a sale, based on your own personal experience, and so you may think that a great way to introduce your brand to the market is with some kind of promotion. However, advertising sales is the antithesis of luxury, and will not bring in the UHNW clients you are chasing. It is true that there are designer brands like Fendi who run sales discreetly, for example having sales associates invite their loyal clients to private sales events, but this offer would never be splashed over social media or the brand’s website in the way that a FMCG (fast moving consumer goods) brand such as Nike would.
Also, understand that the more money someone is spending on something – even someone who has all the money in the world – the more thought they may want to put into the purchasing process. So, don’t be impatient with your audience. Wow them with your seamless marketing experience and your impressive product/service, but avoid being pushy and don’t feel despondent if sales take time. Good things come to those who wait.
Setting up a company in the luxury industry can feel daunting, but with the right idea and the right people by your side, your business can come to life. Please get in touch if you’d like to discuss this further.