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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:

Luxurytypes

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.

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