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Eco Luxury: Not to Scale, Yet

My big advice to Nau 2.0: Charge more for your clothes. And start as small as you can.

A few months ago, I wrote a post on the rise of Indie and Eco Luxury, and one of the hero companies of Eco Luxury that I mentioned was Nau. They were one of the first attempts at creating a luxury brand that forcefully marketed ecological, sustainable, and stylish clothing through online and direct retail stores.

Sadly, due to a lack of venture capital funding Nau was forced to shut their retail stores and sell off all of their stock at a discount. There's been much talk in the blogosphere about what killed Nau v1.0:

Their unusual, I mean novel, retail model. Nau stores generally carried one size of each style and encouraged store visitors to have their purchases shipped to their home instead of buying them in the store. Critics have noted that many luxury fashion purchases are often made on whim, and the inability to easily carry a purchase out could have been a negative for the buying experience. (I personally didn't care when I had made an purchase there, but then again, I'm not really a luxury shopper.)

Their all-Flash Web site. Nau.com, as much as I love it from a branding perspective, was not created in a manner that made it easy to shop and had weak user experience. When the brand launched, some of my designer friends had hammered on the site design as an example of design trumping usability, which is definitely a bad place to be for a design-oriented brand that focuses on function and form.

Their oversized ambition regarding audience demand. Nau's business plan hinged on continued rounds of investor financing to ensure their continued growth into more retail locations. This is what really spiked Nau's ambition, when you boil all of this down. Instead of fostering an audience through their Web site and then growing that online audience into local retail, where demand had been generated, Nau was looking to expand into new locations even as they were discussing shutting their doors. My neighborhood of Fremont in Seattle was the destination for one of those new locations.

I find it fascinating that a company that wanted to live, eat, sleep, and breathe sustainability in clothing production, distribution, and sales practices didn't launch their business by only selling through the Internet, or intentionally limit their market by starting very exclusive before mass-producing their line and attempting to go big retail. Millions of dollars were wasted in proving that without a strong online customer base, a compelling retail experience in a few upscale markets isn't quite enough to keep the doors open.

Had Nau offered a smaller product line that was made to order and was perhaps more exclusive in both price point and retail placement, my gut tells me that they would have organically created a group of loyalists that would have evangelized the brand when they dove into the mainstream retail market as their own storefront.

Small pioneering eco-luxury brands such as Mink Shoes took about as long as Nau's lifespan to get off the ground, and still haven't achieved any major economies of scale. But they're profitable, and resell through many top retailers. A recent article in Fast Company echoes similar sentiment regarding the need to find sustainability through selling small quantities of green products in the luxury market. You won't see Barney's selling 2,000 of the same pair of eco-friendly shoes. Eco Luxury has a long, long way to go if it's going to scale to the mainstream in any meaningful way.

Hindsight is 20/20 here. And luckily, Horny Toad has swooped in and purchased the Nau brand and legacy, along with much of the original staff, to give it another go. Here's hoping that with this new financial backer, Nau 2.0 will be able to create a sustainable business practice through actual clothing sales that matches the deep philosophical roots that underpin their products.

So, back to what I said at the start of all this...

Okay, Nau 2.0: Now that thousands of your loyal customers have jumped up and down and told you how much we want you to stick around, I don't think we'll mind paying a little more for your clothes -- especially if that will allow you to continue donating 5% of each purchase to charity.

If you're going to try and keep the luxury mantle on your products and your philosophy untouched, that's one of the few ways to keep an edge on the dozens of other fashion brands that are now rolling out eco-friendly lines alongside their usual unsustainable practices.

And we'll forgive you for the missteps along the way... just be sure to be a little smarter about what you're doing this time.

Common Mistakes in Marketing Luxury Brands

Don't associate your products with other brands unless they perfectly mirror a lifestyle.

High-end brands are being extended across categories -- and faltering.

Brands that offer services and brands that contribute to lifestyles (such as Starbucks) can't cross over into luxury goods, and vice-versa, without thinning their brand. Can you imagine a Starbucks BMW? A Godiva Porsche? No way. There's no parity between them. But I believe in the Eddie Bauer edition of the Ford Explorer... barely.

Everyone has their own internal weights and measures when it comes to rationalizing a purchase, but I think it's fair to say this: A jacket is a jacket and is not a car. Don't overreach your category, your brand space, and what your customers will believe. It's better to cross-promote your products to another brand's audience than to badge your products incorrectly or mash your products up to try to be unique.

Don't price based on cost of goods. Price on aspirations.

People are more likely to rocket due to perceived value, not real value.

The luxury category has fragmented by budget. Audiences are asked to pay closer and closer attention to nuanced categories, with the idea that they'll always aspire to a product out of their budget.

This is known as "rocketing" in a product category, see the fantastic book Trading Up for an in-depth treatise about New Luxury or "masstige" marketing and how it differs from the old mindset about luxury goods and how the market is evolving luxury into new forms.

Don't tell a completely new story about your brand when you've already staked your ground.

If you didn't start close to the luxury space, you'll never create cachet around your product without expending a vast quantity of capital to change perception. Start a new brand if you really want to get in the game.

Don't make more! Limited quantity equals controlled demand.

Easy to understand in theory, but very hard to pull off when people start beating down your door waving fat wads of cash. Companies often cave and produce more when they should just have a plan in place as to how they can extend that demand into a new (similar) offering.

And last, but certainly not least:

Don't horse it up.

"Less is more," more or less. With clean design and smart production tactics it's relatively easy to convey an aura of luxury and exclusivity.

This is the expected first route for a designer to take with a luxury product, so don't think you have to beat a path through the weeds to engage your audience and emerge with something too novel from a branding perspective. Does it really convey the right feeling if the design is incredibly busy? Unless you're conveying some level of sophistication, your audience will have trouble understanding why they should pay 2 to 10 times the price of the competition.

The Crasstige Manifesto

A day will come when people will pay more -- by an order of magnitude, I expect -- for things that are not only well made and technologically sophisticated and desirable in the marketplace, but also intentionally crass and funny and ironic and over-engineered and technologically overblown and completely painful to look at.

I'm not talking about vintage revival, chuckle-inducing wagon-wheel coffee tables and 100-dollar torn t-shirts emblazoned with witticisms that elicit stares from fashionistas as they paw through the clothing racks at the upscale boutiques. I'm not talking about fashion shows where people parade down the runway with outfits that look like they're cobbled together with urinals and clothing dredged from dumpsters. I'm definitely not talking about gangsta styling with mass appropriation of high-value items that are then paraded through high-production-value videos on MTV to sell albums full of cringe-inducing props to Dom Perignon and Courvoisier.

For starters, I'm envisioning those who drive cars inspired by the Edsel or the Delorean, because it's crass enough to be cool. I'm envisioning people who spend vast quantities of money for clothes that are just so ugly it's like you're looking at a train wreck. I'm envisioning big hulks of stereo technology that completely dominate your living room, like modern sculpture on crystal meth.

In short, I'm envisioning people standing on the very edge of popular fashion and technological innovation, leaping off of it, landing flat on their face in the mud, rolling around in it, and making sure that everyone knows they paid through the nose for it.

This future trend would come to be known as crasstige. I've Googled the term and it hasn't appeared on the Internet -- until now. And as I'm the one throwing my stake in the ground, let's venture a real definition of the term:

crasstige (n., adj.):

1) a high-cost product that intentionally goes against the grain of popular taste and fashion in its design. Example: Wow, that $2,000 hat he bought is so ugly... It is completely crasstige.

2) a category of products that, when consumers purchase them, immediately broadcast their frustration with traditional notions of luxury. Example: Bob is a real crasstige sort of guy. He bought the Scion xQ with the argyle pattern.

But here's the twist -- the little quirk that makes the idea of crasstige so interesting and of-the-moment:

3) a mashup of attributes between different product categories, creating a new item that seems on the surface to lack functional utility. Example: That's some crasstige handbag you've got there... Yep, it's hip, it has a refrigerator compartment, a clock radio, it checks my stock prices, and I can plug in a little doodad that checks my blood sugar.

The idea of a mashup is so popular in digital culture, it's inevitable that it will bleed into manufactured objects. An item denoted as crasstige would cross boundaries between convenience and utility and product categories for no real reason other than to be crazy. There is no single utility from a truly crasstige item. It's the inverse of the orderly universe of an iPhone.

This is not the kind of trend that will just appear on the street in one year, fully baked. I'm thinking this is the kind of snowball-becomes-an-avalance thinking that will surface when we emerge from recession, as a kind of conspicuous consumption gone haywire, fed by small artisans and then major corporations who smell a trend and dive into it with ferocity.

Like most trend predictions, I hope this one falls by the wayside, never coming to pass. But if it does, let us be ready for the ferocious parade of scary manufactured goods that further contribute to the clutter of the world, and vote with our pocketbooks as designers for items that connote elegant form, utility and function, meaning and sustainability, and some measure of grace.

As designers that seek order and polish, this is a trend that we will passionately hate. So don't shoot the oracle.

The Rise of Eco and Indie Luxury

Designers asked to work with a luxury brand know the general rule of thumb: make it look twice as valuable with half the budget and a fraction of the tangible materials.

Designers also know the dirty, dark secret of marketing luxury goods: quality of design can trump quality of materials. Quantities may run low and costs-per-piece high, since you have a limited audience and a limited quantity. Products may be outsourced to factories overseas and only cost incrementally more than their regular brand cousins. The product always includes a premium markup, to create an aura of value.

And that aura of value is morphing into something new.

The idea of Old Luxury (high fashion, high quality, high touch, high price) has fractured over the past ten years into a number of new and surprising categories that make it even harder to market a product as Old Luxury, but even easier to draw an audience into considering a purchase at a higher price point.

With the coming recession, there is going to be a shift from the New Luxury or "masstige" market into Eco and Indie Luxury:

Old Luxury will never take a major hit, because people who purchase Old Luxury products have enough wealth to support their lifestyle even if their portfolio drops 50%.

But people who consider New Luxury products as part of their lifestyle will seek a greater meaning for their purchases. The new categories that I've noted, Eco and Indie Luxury, provide that meaning above and beyond what an Old or New Luxury brand can provide.

The old thinking went like this: If you want to simplify your life -- if you really want to do more with less and own things that no one else owns -- then be prepared to spend a premium, have fewer options to choose from, and defend your piece of ground with the (limited) members of your tribe. Go to Wal-Mart if you want to get the most for the least. Never mind that the same factory may have made your fancy Coach bag and those Wal-Mart briefs.

The new thinking is much more complex. And exciting.

Eco Luxury

I recently found myself fingering a Jil Sander wool jacket at Barneys Co-op that I could easily see myself wearing. Ten minutes later, a very similar jacket was at Banana Republic for one-tenth of the JS jacket "sale price". Old Navy around the corner, another similar jacket that was one-sixty of the BR price.

The major difference between the three, other than a slight difference in percentage of wool and the cut? The Jil Sander jacket had no label inside it and was the simplest, most minimal design.

This seems pretty obvious to a New York fashionista--they'd know the jacket was Jil Sander when they saw it because of its styling and notch it in their little mental black book. And when you're in that kind of community, you're part of a semi-closed circle that amplifies the value of your lifestyle choices (or devalues them, depending who you run with).

But then I walked over to the Nau store. Welcome to Eco Luxury. Their black jacket that costs the same as the jacket at Banana Republic was made through sustainable practices. It looks sleek and different from all those other jackets. (Full disclosure: I drool regularly over their clothes but have not made a purchase... yet. I also critique them regularly because it's hard to be play luxury and sustainability at the same time...)

This single piece of clothing brings up all sorts of considerations I didn't have when I was shopping at Williams-Sonoma or Tiffany's. Do I want a high-end necklace that's biodegradeable? A high-heat spatula that's recyclable? It doesn't sound so far-fetched in 2008. In 2018 it'll be an assumed part of the buying decision.

In clothing, travel, and a host of other markets, Eco Luxury is poised in the wings to infiltrate and overtake the New Luxury category. In ten years, it's likely that Eco Luxury won't exist as its own category anymore and will be absorbed wholesale into New Luxury -- only because it can be factory produced and has the potential to be marketed on a mass scale. Call it New Eco Luxury, which hopefully will never go out of style.

Indie Luxury

Generate your own fashion. Design your own products. Take it open source. Generate a global audience in a matter of days. It's all possible and it's happening every day. Products can be priced for their scarcity, originality, and impact, and sold within a community that's outside of the traditional purview of corporations insistent on controlling their brands.

A mere decade year ago, the context of the store environment created the tangible value--that was the only place you could get the product. Is that Jil Sander jacket less valuable if I buy it on eBay? Er... what's eBay? Nowadays, sites like eBay and Bag, Borrow or Steal are hammering down the value of Old Luxury and New Luxury brands in mid-size retailers like Nordstrom and Tiffany's.

The old thinking here:

The story I tell about how and where I purchased the product creates the tangible value. Especially if the product is on parity with others in its market. The tribe protects the brand value. Luxury marketers dictate the rules of the game. The cost of entry is the cost of the product. Don't play the game if you aren't serious about being vocal to protect your "investment." Cults and communities online and in the real world defend or destroy the brand value. This happens quickly in the fashion community as different houses veer into and out of style.

The new thinking:

But for the rest of us, the unwashed, the cost of entry can be seen as a psychological barrier, a badge of your inclusion in the tribe, and the only perceived result of the purchase in the physical store.

The purchase is also influenced by economic and social factors. Right now, there's a buzz in the air as banks and investment firms take multi-billion dollar hits to their bottom line from underestimating the risk of sub-prime investment. Why would I blow $5k on a jacket when everyone is suffering?

The Internet has created many more opportunities to access and purchase luxury goods, but also the seeds of their destruction. As more people create online communities around their favorite brands, these communities will communicate about "online deals" as well and further dilute your product value. These communities will also start producing the luxury goods themselves.

I'm paying more attention to this category than Eco Luxury, because it brings the thinking of the long tail into an industry that's always been tight-lipped and inaccessible. And there are people that are doing sustainable work in this area to go head to head with people like Nau, which is exciting.

Of course, companies will try to monetize Indie Luxury by generating communities that ease fulfillment and promotion of product sales. But Indie Luxury as a category will always resist being under a corporate thumb and will generate its own communities and spin-off products that trickle up into the mainstream.