The need for a code of ethics in luxury
In what seems a never-ending international expansion of luxury especially in major emerging markets has definitely served its financial purpose for most brands, which have seen their distribution networks, in some cases, even double especially in the past 5 years. For a select few which have been expanding with direct operations such as Louis Vuitton, implementing the brand’s DNA in each market has been easier than for the majority of brands which have been expanding with franchising, joint venture or wholesale.
Irrespective of the market, the number one challenge facing luxury brands in all emerging markets has been ensuring the same level of customer service as in their flagship stores in the developed markets, recruiting and training of personnel playing a crucial part. In most countries, the lack of previous luxury experience has driven luxury brands to attract professionals with services background, however, motivating these professionals isn’t proving to be an easy task. High initial investment costs especially in store design and fittings as well as the need to ensure a generous capital for stocks, have made human resources investment a lesser priority. This has translated into salaries of luxury retail professionals, especially in fashion and accessories ranking among lowest of all services industries.
In most emerging markets, a luxury retail professional such as a sales associate, earns 30% less than a sales associate in banking, insurance, telecom, IT etc. There are also striking differences between luxury sectors, for instance, a middle manager in luxury fashion or accessories retail being expected to accept a lower income than a similarly positioned professional in luxury cars or hospitality. Throughout our 8 year experience in emerging markets there is one question we keep hearing constantly ”How can I motivate staff earning 300 euros to sell a pair of shoes which costs 500 euros?”.
As an direct effect, the lack of motivation does not make up for the passion personnel would have for the luxury sector they work in and, therefore impacts negatively the level of customer service provided. Although an obvious solution, training is not a priority for newly opened stores and so called ”training trips” of 2 or 3 days made by training managers being considered sufficient.
Another major challenge facing luxury brands in emerging markets is developing and maintaining a long term relationship with consumers. The profile of the luxury consumer varies from market to market, there being important differences which need to be address by luxury brands when elaborating their communications and sales strategies, yet there is one common characteristic in emerging markets and that is the fact that consumers have a compulsive shopping behaviour and command a low level of brand loyalty.
If major luxury brands run extensive sustainability campaigns, why wouldn’t they invest more in training customer service professionals of all position levels especially in these ”new markets”, who are in my view, equally important to designers and creative profeesionals.
The level of motivation of personnel, their loyalty to the brand they work for, and their level of professional education are critical in providing what I call genuine and fair customer service. Few realize when they step into a luxury store that it is sales associates who hold the critical correct information on the products they sell. How many times have you wondered whether the particular product you like is indeed made of the materials stated on the label ? or whether the price you see on the label is a fair one (close to what other stores charge worldwide, for the same product.) or whether the product does indeed belong to the ”new” or ”current” collection or whether it is from an older collection, therefore stock or outlet.
Suprising as it may sound, India, an emerging luxury market in its early days of development has probably the most transparent policy when it comes to fashion retail. By law, retailers are obliged to include on the labels the country from where the product was imported, the collection or season the products belongs to, the name of the company which imports the respective products, as well as its full contact details, including address, email and telephone number. I am sure luxury consumers in other major luxury markets such as China, Brazil or Russia would be thrilled if such measures were implemented in their countries. I reckon that such transparency would also be crucial for persuading an important segment of consumers to buy locally rather than shop abroad.