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05 December, 2018 - 08 December, 2018
12 December, 2018 - 13 December, 2018
It is the first Monday in September and we are in Shanghai. Amazingly this is being written while enjoying a coffee and a cookie in a delightful waterside setting where the traffic noise has been beaten out by birdsong. Not an easy spot to find in any Chinese city.
For the leather industry China has been about two things: highly competitive manufacture of all things made of leather which changed the look of the global industry in less than two decades, and the consumption of what we call luxury goods.
I've complained before that we are far too loose with the term "luxury". My coffee and cake cost me US$7.00. Is that value, an extravagance or a luxury? It depends where you are coming from. Take Chocolate bars. Luxury chocolates are frequently to be found in some stores but companies like Cadbury want chocolate bars to be accessible, so they like to use the term "joy product" and stay clear of any term like "luxury". Sounds a bit silly but it wins as it pulls us away from all the collateral that comes with the term luxury.
Leather in itself is not a luxury and just because hide prices are high does not make any quality and any grade fit the definition. Leather is a wonderful component for pure luxury goods; items that offer exclusivity and rareness but the value of leather is much stronger and more fundamental than this. It is all about bringing value to the consumer in terms of functionality - durability, strength, flexibility - and sensory aspects - look, smell, touch - in a wide variety of price points and end uses.
In the 12th Edition of Bain’s “Luxury Goods Worldwide Market Study" the lead author and Bain partner in Milan, Claudia D’Arpizio, explained that “the luxury goods market is becoming more and more complex and, in some aspects, starting to look like more competitive industries such as fast-moving consumer goods. Brands find themselves having to adapt by bringing in the level of detailed customer insight that food or drink brands need to drive growth."
This is not good. It has come around because brands have found it convenient to stretch the definition of luxury beyond breaking point so that with only a few exceptions most of the so called "luxury" products are just loudly promoted goods with logos on them. Some of them are very disposable and not many really feel authentic. Anyway how can an item be exclusive if it is available in every airport shopping arcade and every major city in the world? Is a Coach bag a luxury if everyone owns one.
I have a Coach bag with me here in Shanghai. I bought it in 1986 in New York and have used it continuously apart from a brief period when I kept it clear of those 5kg lap tops. Its old but looks better for it. I had to save to buy it, but I never thought of it as a luxury. I thought of it as good quality, as an item that would last a long time and be reliable. It has done all these things, without having to be called a luxury.
By sliding into the "luxury" business, accessible or not, Coach managed to confuse its customers and itself.
Value and integrity in materials, construction and customer communications are much more important to most brands and the majority of tanners than living a life of luxury.
Follow Mike Redwood on twitter: @michaelredwood