Rapaport Magazine

What Jewelers Can Learn from Luxury Giants

Top brands have shown it’s possible to shed the commodity tag.

By Harakh Mehta

LVMH head Bernard Arnault famously said that “luxury goods are the only area in which it is possible to make luxury margins.” But what does it actually take to shed the commodity tag and position a product firmly as luxury? More importantly, how can we apply this to the diamond and jewelry industry?

I recently traveled to Paris to complete an invitation-only course on luxury, in which several representatives of major brands shared their expertise. I learned that beneath the glamorous imagery and stunning showcases of this sector is a robust ecosystem rooted in the pursuit of excellence and quality.

For select members only

“There is nothing better in the luxury world than to create something that you cannot have,” says Philip Vergeylen, one of the course’s speakers and the man credited with launching the American Express Black Card. This card began its existence as a rumor in the US press, which declared it a mythical item and the closest thing to a fairy godmother. But after years of research and painstaking efforts, American Express turned it into a reality.

When it finally offered the invitation-only card in the late 1990s, the company was inundated with telephone calls from across the globe requesting applications for invitations. It hardly had to do any marketing; news about the card and its benefits, especially the concierge service, spread like wildfire through word of mouth. To this day, membership is tightly controlled through a process shrouded in secrecy. Needless to say, the Black Card remains a highly coveted object.

Vergeylen attributes his success at the company to a “deep understanding and appreciation of the premium and the super-premium market.” When Christian Dior started his store in the late 1940s, he knew every single one of his customers personally. Well before the internet became ubiquitous, brands were making significant investments in tracking customer behavior, tastes, preferences and spending habits. They analyzed their findings in detail and laid out plans to create the exact experiences that would speak to their clients. Whether it was to make customers feel a sense of belonging or accomplishment, or simply to boost their self-esteem, the brands implemented both micro- and macro-level strategies, collecting feedback and acting on it. As a result, they were able to make accurate predictions of what truly motivated and inspired the various consumer segments.

Fellow course speaker Leslie Serrero — managing director for France and Monaco at Fendi — sums it up in one line: “Luxury is the ability to make people dream.”

Quality, quality, quality

High-fashion house Hermès has a legacy of creating products that can withstand the test of time.

“My grandfather, Robert Dumas, who at the time was the chairman, proudly stated, ‘A luxury object is an object that can be repaired,’” relates Guillaume de Seynes, a sixth-generation member of the family that runs the maison. In addition to its distinctive designs, the company’s rigid insistence on the use of high-quality materials and superior craftsmanship techniques lends a sense of authenticity to the brand.

With little to no dependence on outsourcing — the house controls the vast majority of its own production — Hermès has developed several proprietary methods, all with a single goal: to make the product as long-lasting and durable as possible. A man ahead of his time, Dumas understood and inculcated sustainability long before it became an anthem for all things luxury.

Beyond storytelling: Building icons

A luxury house’s management needs “to nourish and modernize the value and storytelling of the house,” according to Bertrand Stalla-Bourdillon, group vice president for retail development at LVMH.

While both successes and failures naturally occur in a brand’s life cycle, there are certain events that the company handpicks to celebrate. These distinguished moments morph into tales that define the DNA of the brand. Think of the little black dress from Coco Chanel, the trunk from Louis Vuitton, the saddle from Hermès, and — closer to our own industry — the Tank watch from Cartier. The people behind these innovations also go down in history, whether they are founders like Dior or designers like Karl Lagerfeld.

These notable products and people eventually make up the unforgettable stories that become classics in the luxury universe, cementing their heritage. Just as a piece of art gains value when we learn the artist’s inspiration for it, a luxury product’s significance and brand equity increase dramatically when we communicate its iconic stories.

Employee confidence and loyalty

During the course, one thing that struck me was the extreme level of passion the representatives shared for their respective brand heritages — the sense of gratification they got from simply being associated with the company. It seems this is not limited to the customer-facing sales staff; the culture of enthusiasm and respect for the brand’s shared mission comes straight down from the boardroom and spreads to all areas of the business. In turn, this nucleus of confidence radiates outward to all who come into contact with the brand, whether they’re vendors, service providers or customers. That in itself sends a strong message.

One employee at a well-known luxury house’s flagship store told me, in fact, that the Covid-19 period was most distressing for her because it kept her away from work. Being allowed to make sales calls on Zoom to some of her VIP clients, she added, came as a slight reprieve.

Tapping into technology

Technology helps companies in the luxury industry do the things they already do, but better. During the pandemic, some brands opened up e-commerce sites for the first time ever. This let them reach a whole new set of consumers, unrestrained by geographic location.

“Through technology, we now have the ability to communicate differently to different consumers in an efficient and qualitative way,” says Serrero.

The benefits extend beyond sales and distribution to other core areas of the business. For instance, the resources to create new materials — such as vegan leather, which appeals to an entirely new consumer segment — have become more readily available. Craftsmanship techniques using robots and algorithms are also in development and can ultimately lead to a higher-quality offering.

Stalla-Bourdillon likens the creation of a luxury house to a deep-rooted tree in full bloom. The parts we see are the leaves, flowers, branches and trunk, which he compares to the beautifully packaged products, the store displays, the attractive PR and ad campaigns, the alluring imagery, the fashion shows, and all other high-visibility events. Less visible are the roots of the tree, which represent the founders’ message, the obsession with quality, the attention to detail, the efforts of craftsmanship throughout years of experience, and the associates’ shared passion for the brand mission.

His advice for building a luxury brand is simple: “Start at the roots.”

Fourth-generation diamantaire Harakh Mehta is the founder and creative director of New York-based jewelry brand Harakh.

Takeaways from the top brands
  • Jewelers and diamantaires get overly fixated on the inherent value of metals and stones. Other industries have built equally luxurious products with non-precious materials, focusing entirely on design, quality and craftsmanship. Try shifting the focus toward these attributes.

  • Pick your customer segments and target their specific needs. Trying to please as many people as possible is a mistake our industry often makes. Nothing could be more mass-market than falling for the trap of mass appeal. Having a narrowly defined set of clients and catering to their tastes will build greater loyalty and a stronger following.

  • Less is more. Focus on a few different, well-made products rather than a huge offering. Allow just a few points of distribution, but make sure they’re the right fit. This will contribute to the exclusivity that a luxury consumer desires.

  • Time and time again, I have heard that selling jewelry is like selling ice to Eskimo. The luxury brands have proven that even this is possible, as long as the Eskimos are convinced they want to be part of the story the ice brings with it. Invest heavily in genuine, heartfelt storytelling.

  • Motivate your staff, team and associates. Make them feel proud to be associated with your company, and with the diamond and jewelry industry in general. There is no end to what a small and passionate team with a shared mission can achieve.

  • Harness the powers of technology. Our industry is notoriously — and self-confessedly — behind in keeping pace with the latest advancements. Use technology not only to make your business more efficient, but also to increase the rate of return on your invested resources.

Image: Chi Lok TSANG/Unsplash

Article from the Rapaport Magazine - September 2022. To subscribe click here.

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