Lessons From The Most Valuable Luxury Brands In 2021

Key Takeaways: Five of the list’s ten brands — Hermès, Chanel, Prada, Burberry, and Rolex — are independent, while the other five belong to the three leading luxury groups: LVMH, Kering, and Richemont. European brands are still the dominant luxury powerhouses, an indication that heritage is still crucial in luxury. Relevance with Gen-Z customers is now critical to the success of these top brands, something Louis Vuitton learned early on. BrandZ/Kantar just published a list of the most valuable luxury brands for 2021. Not surprisingly, Louis Vuitton is leading the group by far with a valuation of 75.7 billion, followed by three brands valued between 30 and 50 billion: Hermès, Chanel, and Gucci. A third group of brands owning single-digit, billion-dollar valuations follows, consisting of Rolex, Cartier, Dior, Saint Laurent, Prada, and Burberry. These rankings should always be taken with a grain of salt. For example, Tiffany & Co. was acquired last year by LVMH for 15.8 billion and is not part of the list. However, even with potential shortcomings, these rankings do provide some interesting insights. First, six out of the top ten brands are French, two are Italian, one is Swiss, and one is from the UK, signaling that European brands are clearly the dominant luxury powerhouses (driven, in particular, by France and to a lesser extend Italy.) It is an indication that heritage is still crucial in luxury and that consumers appreciate brand origins and their associated expertise and craftsmanship. Another interesting aspect is that half of the ten brands — Hermès, Chanel, Prada, Burberry, and Rolex — are independent, while the other five belong to the three leading luxury groups: LVMH, Kering, and Richemont. That shows in luxury how both models can work successfully: an independent approach with a dedicated focus on one brand or one where several Maisons are part of a group. When it comes to strategy, there are similarities between the approaches of the top ten brands. All of them have put an enormous emphasis on brand storytelling, especially the top seven. I have dedicated several of my Future of Luxury columns here at Jing Daily to dissecting the success story of LVMH, Gucci's dedicated approach towards Gen Z, and the unique pricing strategy of Hermès. All of these brands were built around a laser-focused brand positioning and a consequent sales approach that prioritizes flagship stores and pricing based on Added Luxury Value. Also crucial: Most of them do not give in to promotions or markdowns. Meanwhile, a relevance to Gen-Z customers is now critical to the success of these top brands. Louis Vuitton practically reinvented itself with its appointment of Virgil Abloh as creative director. And today, it has a permanent knack for disruption due to constantly reinterpreting traditional categories like trunks or weekender bags with new designs, colors, and patterns, making them infinitely more seasonal and collectible. Now, Louis Vuitton's shoe business is a trendsetter due to sneakers, and its backpacks are category-defining. And in perfumes, Louis Vuitton is already a leading player, despite coming late to the category. Hermès has attracted Gen Zers, particularly in Asia, via one of the most value-creating branding approaches, leading to long waitlists for its iconic Birkin bags. The demand is so enormous that the long waits are starting to create a minor backlash among young Chinese consumers who do not want to wait for years or be forced to spend large sums on other Hermès products to get their hands on a Birkin. That is where Gen Zers differ from previous generations, which should make brands famous for long wait times (Rolex, Patek Philippe, or Ferrari) reconsider their future strategies to stay relevant with young, affluent consumers. Chanel was particularly active in Asia with several high-profile digital initiatives. Nicknamed the “Human Chanel” by her fans, one of K-Pop's top idols, Jennie from the group Blackpink, helped shape the brand's image inside critical Asian markets, including China, making the brand more approachable for young affluent customers. The brand's recent 100-year “No. 5 Factory collection,” which celebrates Chanel's 100th birthday, became a worldwide hit by offering an affordable way for customers to get a “slice” of the brand. The star of the collection, an 80 water bottle, sold out immediately. These examples show that the top-ranked luxury brands are excellent at creating dreams and desires through their meticulous focus on brand positioning and equity building. They excite customers with product and influencer initiatives and creative offensives that continue to build on their brand stories, icons, histories. The question is, why don’t the smaller luxury brands adapt to these strategies? Daniel Langer is CEO of the luxury, lifestyle and consumer brand strategy firm Équité, and the professor of luxury strategy and extreme value creation at Pepperdine University in Malibu, California. He consults some of the leading luxury brands in the world, is the author of several luxury management books, a global keynote speaker, and holds luxury masterclasses in Europe, the USA, and Asia. Follow @drlanger

Lessons From The Most Valuable Luxury Brands In 2021

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Published August 16, 2021

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Lessons From The Most Valuable Luxury Brands In 2021