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Abundant rarity: The key to luxury growth
Jean-Noel Kapferer
1
HEC Paris, 78350 Jouy en Josas, France
1. Luxury: A nancial dream
Bernard Arnault, founder and CEO of Moet Hennessy
Louis Vuitton (LVMH), said straightforwardly that
Luxury is the only sector that can provide luxurious
margins (Kapferer & Tabatoni, 2011, p. 1). Since
July 2011, after 3 years of paralysis, Americas
afuent class began fueling luxury growth once
again. It is difcult for such Americans to indenite-
ly postpone this unnecessary, but very appealing,
desire to buy luxury products. Interestingly, even in
this time of nancial struggle, it is the high-end,
inconspicuous, and fully priced products that are
ying off shelves (Clifford, 2011). Todays economic
crisis has prompted the afuent populationthe top
20% of income earners who together represent 60%
of the marketto refocus on real value and great
classics, and to pay the price for them.
A sign that the sector is booming once more, 2011
was a year of new acquisitions of luxury companies
and brands by investment funds in Asia and the
Middle East, and by luxury groups such as
LVMH, PPR, and Richemont. In all cases, the high
multiplesaround 20measuring the valuations of
these companies demonstrate that investors share a
dream. They believe that the sectors prospects for
Business Horizons (2012) 55, 453462
Available online at www.sciencedirect.com
www.elsevier.com/locate/bushor
KEYWORDS
Luxury;
Prestige;
Brand equity;
Growth;
Elites;
Marketing syndicates
Abstract Although Western economies have not yet transitioned out of crisis, the
luxury sector is growing again, especially at the high end. In emerging countries, the
luxury sectors expansion has reached double digits. However, as luxury products
continue to penetrate global markets, the prestige of brands like Louis Vuitton has not
declined at all. This seems at odds with the concept of luxury being tied to rarity and
exclusivity. Thus, how can we reconcile these facts with theory? In order to capture
mounting demandsnot only from extraordinary people, but also from ordinary
individualsluxury brands enact virtual rarity tactics, construct themselves as art,
and adopt a fashion business model while deemphasizing exceptional quality and
country of origin. Rarity of ingredients or craft has been replaced by qualitative rarity.
Further, the cult of the designer is a potent tool in building emotional connections
with a vast number of clients. Today, brands in the luxury sector are actually selling
symbolic and magic power to the masses. There exists a culture gap between Asia and
the West; namely, Asian consumers feel safer buying prestigious Western brands with
which individuals around them are familiar. The insights offered herein provide clues
for entrepreneurs attempting to launch luxury brands.
# 2012 Kelley School of Business, Indiana University. Published by Elsevier Inc. All
rights reserved.
E-mail address: kapferer@hec.fr
1
Pernod-Ricard Chair on the Management of Prestige Brands
0007-6813/$ see front matter # 2012 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.
http://dx.doi.org/10.1016/j.bushor.2012.04.002
Author's personal copy
growth are huge, and they are right; the future is
bright, especially in the BRIC countries (i.e., Brazil,
Russia, India, and China) and soon in the CIVETS
countries (i.e., Colombia, Indonesia, Vietnam,
Egypt, Turkey, and South Africa). In all these coun-
tries, gross domestic product (GDP) growth is high, a
ne prospect since Bernstein Research nancial
analysts showed that luxury market growth is strict-
ly correlated with GDP growth because the latter
creates a middle class and fosters optimism. Unlike
consumers in Europe, consumers in these countries
generally do not save for their retirement but rather
spend money on newly available products, especially
those that confer status and serve as symbols of self-
achievement. In BRIC and CIVETS countries, there is
no middle range. Consumers buy local brands or
global fast-moving consumer goods brands to meet
their everyday needs, and luxury foreign brands to
spoil themselves. Having developed consumption so-
cieties quite late, people in these countries advance
by leaps and bounds and claim their right to luxury.
For instance, visiting newly built luxury malls is a
favorite leisure-time activity for individuals in these
countries. What was once described as the Malling
of America (Kowinski, 2002) has now become the
malling of Asia, or even of the world, with retail
and entertainment mixing into retailment within
superb luxury stores.
To take advantage of the mounting demand for
luxury goods in newly rising cities, major luxury
retailers are now engaged in a very dynamic
store-expansion strategy. For example, Louis
Vuitton announced that it would enter so-called
third-tier cities, mainly provincial capitals, in China
to attract more consumers. Today, the brand has
37 stores across 29 cities in China. This move is
driving other luxury brands, such as Gucci, Zegna,
Coach, and Burberry, into these same third-tier
cities to get a cut of the prot.
This fast-paced retail expansion strategy would be
good news for the luxury sector if only it could twist
thebasic equationthat luxury = rarity, which predicts
(Figure 1, A) that a products luxury statuswhich is
crucial for charging high priceswill be diluted when
its penetration rate increases because too many
people will own it. A less stringent prediction is that
increasing penetration rst boosts a products luxury
status by making the brand visible and recognized,
but then reaches a tipping point beyond which luxury
status dilution occurs (Figure 1, B). Returning to
our example, third-tier Chinese cities represent
big numbers demographically speaking, but by en-
tering such cities, luxury brands run the risk of
becoming provincial themselves.
Brands like Louis Vuitton have thus far succeeded
in postponing this tipping point. Half of the women
in Tokyo ofces own a Louis Vuitton bag (Chadha &
Husband, 2007); however, according to Ipsos (2011)
data, consumers in Japan still regard this brand as
the most luxurious. Is the luxury industry actually
creating a new phenomenon (Figure 1, C) in which
luxury status is not diluted, but actually reinforced,
by penetration rate?
2. The many meanings of luxury
Why is there apparently no contradiction between
the high penetration of a luxury brand and its resil-
ient luxury status? It could be due to the many
meanings of the word luxury itself. To understand
this seemingly contradictory state, we need to
make a clear distinction between the notions of
luxury, my luxury, the luxury sector, and the luxury
business model.
2.1. Luxury as an absolute concept
Luxury as an absolute concept typically evokes im-
ages of rich and powerful individuals lives; that is,
the ordinary of extraordinary people. As Castare`de
(2008) noted, it is no surprise that luxury DNA can
be found in the history of societys elites. Luxury was
rst found in religious temples, churches, pagodas,
Egyptian pyramidal tombs, and so forth, in the form
of tributes to god(s) and attempts to buy mercy
through the sacrice of wealth. Later, luxury be-
came a signal of rank in aristocratic societies
(Podolny, 2008). As Bataille and Hurley (1991)
showed, ones rank is demonstrated by his/her
ability to sacrice productive resources to buy
non-productive items. In the past, luxury was the
consequence of social stratication. Only recently
has there been a paradigmatic shift: luxury now
creates social stratication in countries in which
it did not previously exist (Kapferer & Bastien,
2009). As a newly rich Chinese man, participating
in a focus group, put it: What I like about luxury is
454 J-N. Kapferer
Figure 1. The luxury-rarity relationships
Author's personal copy
that it is expensive. This is luxurys core, latent
sociological role, despite the overt excuses or
rationalizations that consumers may provide when
asked in surveys why they purchase luxury items for
themselves.
Interestingly, when asked, What examples of
luxury spontaneously come to your mind? typical
answers mention inaccessible products or lifestyle
elements of the very rich: helicopters, private jets,
and private islands in paradise seas. Luxury as an
absolute concept needs no brand (Kapferer, 2010) as
people talk more about lifestyle elements than
about products. However, if the interviewer instead
asks, What brands come to your mind when you
hear the word luxury? then the answers change
and refer to products or services with the list being
more or less the same worldwide: Louis Vuitton,
Chanel, Gucci, Rolex, Ferrari, Dior, Prada, Bulgari,
Ritz Carlton, et cetera (Ipsos, 2011). Note that these
brands are more accessible than the former evoca-
tions. They also communicate a lot in the media and
through their extravagant stores.
2.2. My luxury
My luxury has a different meaning, most often
referring to a small personal luxury purchase. Take,
for example, the lipstick effect: a term attributed
to Estee Lauder, founder of the skincare company,
who was surprised by the increase in lipstick sales
during the Great Depression. This notion is an exam-
ple of the well-known phenomenon whereby, after
experiencing psychological stress, individuals pur-
chase affordable luxuries as a substitute for more
expensive items. For instance, a woman may pur-
chase Dior lipstick ($30.00) to feel a sense of luxury.
My luxury is clearly a break from plain, normal lifeand
its many constraints: an escape into an ideal world of
beauty, pleasure, taking care of oneself, and a bit of
eternity. Individuals compulsorily buy what they do
not needwhether it is a product or serviceat a
pricefar abovewhat functional values command, and
they do this to pamper or reward themselves. How-
ever, in order to feel the full effects of my luxury,
these products or services need to be from prestigious
brands. That is, self-healing requires big names for its
magicto operate. This is exactly the samemechanism
underlying the placebo effect, by which patients
illnesses disappear because they believe they are
taking a real medicine. The lipstick effect only works
with brand names that evoke the lifestyles of the rich
and famous. It also requires a sacrice of money. As
Hubert and Mauss (1981) showed, this high-price
sacrice is necessary for the product to become
sacred and to endow the buyer with its luxurious
effects.
2.3. Luxury as an economic sector
Luxury in the form of economics is the meaning
implied when one talks about the growth of luxury.
In fact, Bain & Co, a consulting company specializing
in the luxury sector, regularly publishes forecasts
about luxury sales. How does Bain generate these
forecasts? Its analysts add up gures fromcompanies
that syndicated authorities consider to be part of
the luxury sector. In Italy, France, Germany, and the
United Kingdom, there are syndicated authorities
that act as representatives for the collective inter-
ests of luxury companies; namely, companies that
belong to these syndicates. The luxury syndicate in
Italy is called Altagamma. In France, it is Comite
Colbert, which represents a fourth of world luxury
sales, twice as much as Altagamma. These luxury
syndicates are not independent of the companies
themselves, and the system works like a club. Any
new member has to be co-opted and must behave
according to a set of criteria and values to be
admitted. However, not all members would be wide-
ly perceived as luxury brands. For instance, in
France, although almost no one considers a Lacoste
polo shirt to be a luxury product, Lacosteas a
companyis part of Comite Colbert. As a result,
Lacostes sales are taken into account in French
luxury sector forecasts. Similarly, Illycaffe is part
of Altagamma, while Corneliani, the Mantovian lux-
ury mens fashion brand of Italy, is not part of the
Italian syndicate even though its stores are located
just in front of those of Zegna (an Altagamma
company). Cornelianis sales are, therefore, not
included in Italian luxury sector data. Bains fore-
casts do not encompass automobiles, ve-star
hotels, or resorts; rather, they concentrate on luxu-
ry fashion, leather, watches, skincare products,
fragrances, jewelry, and shoes. In order to continu-
ously grow and following LVMHthe worlds number
one luxury group with more than 50 luxury brands
these companies have decided to democratize the
sector and capture part of the massive demand in
emerging economies (e.g., BRICS, CIVETS) in which
the middle class is growing with an appetite for
recognition, status, and pleasure. To do so, many
luxury brandsconsidered as such by the corpora-
tive syndicateshave moved away from the classi-
cal luxury business model in two major ways.
First, many luxury companies now base their
prots on logo-typed accessories or second lines
produced on a larger scale and sold as fashion
objects such that consumers feel the need to buy
new products each season as the fashion system
dictates. For example, the notorious It bag
changes from season to season depending on trends
and popularity (Aspers, 2010). Fashion is about the
Abundant rarity: The key to luxury growth 455
Author's personal copy
contagion of desire (Girard & Gregory, 2005). Thus, a
high number of consumers buying the same fashion-
able product ceases to be a problem, especially in
Asia where Confucian rules discourage individuals
from being too original. Unlike in individualistic
Western societies, in Japan, wearing the same Louis
Vuitton product reinforces a feeling of together-
ness, which is very important in that culture. In
fact, in Asia, luxury creates both distinction from
others and a sense of belonging at the same time.
Second, many luxury companies have abandoned
a major obligation of the luxury business model: no
delocalization. For example, by making some of its
products in China, Prada has reduced its production
costs and improved its gross margins thanks to low
labor wages. In addition, the company is even more
appealing to Asian investors who can now buy the
companys shares on the Hong Kong stock exchange,
and lower production costs also allow brands to
invest more in communication to build the dream
consumers associate with them.
2.4. Luxury as a business model
Finally, luxury is also a business model that has been
empirically ne-tuned over time by luxury brands
that dominate worldwide, such as Louis Vuitton,
Chanel, Gucci, Herme`s, Ferrari, and Rolex. These
companies, many of which are still family owned,
have crafted a common, yet unique, business
model: a pillar of their resilience and protability.
This business model runs contrary to most present
business models in any sector. It rests on strict
principles that maintain the uniqueness of luxury
and preserve the non-comparability of those luxury
brands that adhere to its guidelines (Karpik & Scott,
2010). Here are a few examples, some of which have
been called the anti-laws of marketing (Kapferer &
Bastien, 2009):
Do not delocalize production: Luxury is the am-
bassador of the local culture and rened art de
vivre.
Do not advertise to sell: Luxury communicates to
build the dream and to recreate it. This is not
measured by short-term sales increases because,
unlike fast-moving consumer goods, possessing a
luxury good dilutes the excitement one had be-
fore the purchase was made.
Communicate to non-targets: Part of the value of
owning a luxury good is the quality craftsmanship
of the product, but another necessary part is
recognition by non-owners. This is why Aston
Martin, although a very small brand, used product
placements in the blockbuster James Bond
movies; that is, so everyone in the streets could
recognize one, thus endowing the driver with
admiration.
Maintain full control of the value chain: From
ingredient sourcing to the retail experience, lux-
ury quality can only be delivered if the brand has
100% control.
Maintain full control of distribution: Distribution
is where one-on-one service and interaction
should take place. The experience must be ex-
clusive.
Never issue licenses: Licensing necessitates loss
of control and increases the risk of consumers
having a bad experience. Luxury promises excep-
tional quality and an exceptional experience, but
licensors must be protable even after paying
important licensing fees. This can only be
achieved by reducing the quality of the products
themselves or of the distribution. This is why
between 1998 and 2008 Ralph Lauren retail sales
from licensing decreased from 60% to 35%. The
U.S. fashion brand bought back many of its li-
censes worldwide.
Always increase the average price: Since the
middle class gets richer, to remain its dream,
the luxury brand should never trade down nor
cut its prices. If it does create some accessible
lines, this must be done on a limited scale and
must be counterbalanced by systematic trading-
up. For example, when managed by Ford, all new
Jaguar models were designed to make the brand
more accessible. The brand never created its own
S Class like Mercedes did.
Develop direct one-on-one relationships with cli-
ents: Luxury means treating all clients as VIPs.
This necessitates direct, personalized, one-on-
one interactions, ideally in exclusive stores that
represent the dream in 3D.
This luxury business model can be applied to
companies in any sector. Thus, Apple, MINI, and
Nespresso are typical examples of companies that
are not considered to be luxury, but nevertheless
follow the luxury business model. There are other
business models among more high-end labels, in-
cluding the fashion business model and the premium
business model. The main characteristic of the fash-
ion business model is that it delocalizes production
in search of low-cost labor forces. Unlike luxury,
fashion does not sell timelessness. As soon as the
456 J-N. Kapferer
Author's personal copy
fashion season ends, sales and super-sales slashing
margins are employed to eliminate inventory. Fash-
ion does not worship quality like luxury does.
As for pricing, in the luxury business model,
average prices should always go up because there
are enough newly rich consumers to justify this
strategy as long as they dream of the brand. When
this dreamfalters, many luxury companies prefer to
expand downward, selling to more people thanks to
protable accessories that have more accessible
prices and can be produced in larger quantities in
countries with low labor costs. Such accessories can
then be bought repeatedly by consumers, a sign that
the luxury brand has moved to a fashion business
model where originality and change are valued, not
rarity and timelessness.
The premium or super-premium business model
rests on a brands willingness to create the objec-
tively best product. Grey Goose super-premium
vodka, for instance, advertises itself as the worlds
best-tasting vodka since it has received many
awards from expert juries. Unlike luxury, which
refuses to bear any comparison, super-premium
brands look for it and build their fame through it.
3. How scarcity creates value
It is a basic law of economics that when demand
exceeds supply, price goes up. In one behavioral
experiment, social psychologists Worchel, Lee, and
Adewole (1975) made a particular brand of cookies
suddenly unavailable to one group of people, while
another group was still able to buy them. Post-
experimental measurements showed that the per-
ceived value of these cookies was higher in the rst
group than in the second. Similarly, Apple capitalizes
on this effect by creating an articial scarcity at each
new product launch: people wait in line at Apple
stores for an entire night and become price insensi-
tive, even though they know almost nothing about
the new product. The same effect can be seen in
services. For example, it is a good signal of value
when one has to book many days in advance to get a
table at a restaurant. Should the restaurant owner
then increase the number of his/her tables and cap-
ture a higher daily turnover? Of course not! Doing so
would reduce the line and dilute the scarcity effect
and, thus, the attractiveness and pricing power of the
restaurant. Remember el Bully in Spain, which was
widely considered to be the best restaurant in the
world? Its creator decided to close it, but the waiting
time for a table was more than 1 year. Wouldnt it
have been better to create a second line with a
few restaurants located in fashionable areas, with
more accessible prices but still a reservation waiting
period? This is typically what most famous chefs
holding the Michelin three-star recognition do. The
second line builds the chefs star brand awareness,
and the three-star restaurant keeps the ame alive
for those rare few who can access it after a long wait
and an important sacrice of money.
4. From scarcity to qualitative rarity
Romanee Conti vineyards produces only a few thou-
sands bottles of wine per year. Ferrari also restricts
its production, as does watch maker Patek Philippe.
Herme`s Kelly bag sales are limited by the actual
scarcity of more-than-perfect crocodile skins avail-
able globally. These famous examples entertain the
myth of luxury as a rarity business. However, physi-
cal rarity/scarcity is not welcomed by shareholders
of listed luxury groups because it prevents fast
growth. Even though some brands, such as Herme`s,
hold to this objective rarity, the luxury sector has
grown thanks to a shift in what may be termed
virtual rarity: the feeling of privilege and of exclu-
sivity (Groth & McDaniel, 1993).
In fact, objective rarity is quite boring and
insufcient if the involved components are not per-
ceived as elementally desirable. For this reason,
sustainable luxury is difcult to grow. For example,
based on her personal conviction as a vegan, Stella
McCartney refuses to use leather in her fashion lines
andaccessories. As such, her craftsmen painstakingly
make use of alternative fabrics, albeit ones that are
commonly thought of as less precious than leather.
This is a typical premiumfor a fashion endeavor, but it
lacks the dream factor attached to luxury.
It is time to acknowledge that modern luxury
enacts a qualitative rarity. It embodies a level of
over-quality that runs contrary to all the trends of
modern industrialized production processes and de-
es all laws of value analysis, the method by which
the costs associated with product/service features
are reduced while maintaining the features target
value for the consumer. This qualitative rarity can
be enacted through the production process if, for
instance, handwork is needed to tie a precious red
ribbon on each Chloe fragrance bottle or to engrave
a seal on each Royal Salute bottle of whisky. Non-
delocalization is also part of this construction of
value, as is the culture or historical reference that is
embedded in the product.
5. Introducing virtual rarity
Rarity can also be articially induced. One method
of sustaining consumers desire for brands that now
Abundant rarity: The key to luxury growth 457
Author's personal copy
offer longer series and extended production entails
regularly launching limited editions, which capture
media attention and uphold desirability of the brand
via ephemeral rarity.
Another essential lever for creating an aura of
privilege is selective, if not exclusive, distribution.
Luxury rarity is built at the retail level. Thus, for
instance, until now, there was no Louis Vuitton
fragrance because the brand refuses to sell anywhere
but in its own stores. Fragrances, however, are closer
to mass market and need wide exposure. Most luxury
fashion brands have chosento sell their fragrancesa
key lever of brand awareness, image, and prots
through selective distribution in high-end depart-
ment stores. This practice endows these brands
with a halo of glamour and an air of exclusivity. At
a Chanel skincare and makeup counter within a
department store, for example, any woman can be
cared for like a VIP. . .even if only for a few minutes.
Finally, communication builds virtual rarity. To
construct the dream, the luxury brand must com-
municate far beyond its actual target. The brand, its
products, and its prices must be known by many
even though only a few should be able to buy. This is
why Chanel typically advertises its most prestigious
jewelry line, rather than the more accessible one.
Luxury rms even capitalize on celebrities as brand
ambassadors to spread their luxury branding mes-
sage. Moreover, their systematic use of social events
aims at exhibiting the brands selectivity based on
whoand who is notdeemed worthy of an invita-
tion. Brands must show that not just any celebrity
can attend, but rather only a select few judged
precious enough to represent the brand.
6. From craft to art: Elitism for all
A signicant shift taking place in the luxury sector is
the starication of designers. Unlike artisans, who
are famous for their craft, designers now beg for
recognition as creative beings. Some, such as Karl
Lagerfeld, demonstrate that they have other tal-
ents, like photography or cinema. John Galliano
presents himself as a piece of art, staging the typical
gure of the romantic artist. Little by little, art is
pervading commerce, especially in the luxury sec-
tor. Louis Vuitton promotes avant-garde artists like
S. Sprouse and R. Murakami. The Musee des Arts
Decoratifs in Paris hosts the Ralph Lauren collection
of vintage automobiles. To build its prestigious im-
age, Cartier installed a temporary museum within
the Forbidden City in Beijing. In Seoul, The Prada
Transformer is a striking building in the shape of a
tetrahedron, with the capacity to change its own
form and function. Luxury likes to be associated
with art because, like art, it aims at being perceived
as intemporal; diamonds are forever, as is a Porsche
911. This intense proximity between art and busi-
ness has another goal: to position products as au-
thentic pieces of contemporary art, each one
blessed by the hand of the designer. By doing so,
luxury brands deemphasize craftsmanship, which
requires time and effort and is not compatible with
volume (Catry, 2007). This association with art also
enhances a brands extensibility beyond its core
products (Hagtvedt & Patrick, 2008).
Thus, the transformation of luxury fashion de-
signers as art icons is a consequence of the search
for growth through democratization. Designers who
succeed in the luxury sector are those who have
personality, and are able to create followers and
emotional bonds among larger audiences. Such de-
signers are avant-gardeperhaps even polarizing
and they purposefully do not appeal to everyone,
creating a cultural elite of followers. These design-
ers capitalize on a cultural segmentation; namely,
people who like to think of themselves as the crea-
tive elite. The media and social media make design-
ers into cultural icons, and their charisma is a source
of authority that is embodied as an aura, bits of
which are passed to clients through the designers
products. When one buys a special item in the Marc
Jacobs e-boutiquefor example, a Rubixcoin purse
at $18 or neon rain boots at $28one has the feeling
that these items have actually been designed by
Marc himself. Despite their low price, this feeling of
owning an extraordinary object is reinforced by the
fact that they are exclusively available at Marc
Jacobs stores, just as the luxury business model
prescribes. Finally, the purchase of luxury products
indicates ones advanced taste and serves as a social
marker. Art and culture create elitism for all, which
can be leveraged by selling more products to more
people without diluting their appeal because these
products are held as artistic objects, not as com-
mercial products.
The desire to look non-commercial and appear
fully engrossed in the world of art is exemplied by
advertising. Nowhere should luxury advertising obey
the classical rules taught by Procter and Gamble. As
regards luxury, the less explicit and understandable
advertising is, the better it is. In this realm, adver-
tising seeks to create a distance while simultaneous-
ly trying to communicate to the masses. This social
construction of advertising as art holds communica-
tion as a full product of the creative brand. For
instance, Dior ads are to be treated as its bags or
dresses. This is why luxury brands do not
have communication directors; rather, the creative
director imposes his or her vision on all the
brands productions. To communicate this vision,
458 J-N. Kapferer
Author's personal copy
some luxury brands go so far as advertising their new
ads: discussing the famous director recruited to
create it, the top models featured within it, the
incredible location where it was shot, and so forth.
Similarly, luxury brands now put videos on YouTube
and other social media sites, documenting the mak-
ing of their TV commercials. Since advertising is in
essence non-credible, by focusing on the artful
construction of their advertisements, luxury brands
defuse their commercial undertones.
7. The new reality of Asia: Egalitarian
luxury?
Most of the rules of luxury brand management were
invented in the West. They reect the sociology of
Western societies and are dominated by concepts
like distinction, class differentiation, and elite cul-
ture. In such a context, increasing the penetration
of a luxury brand dilutes feelings of privilege. As a
result, the elite accept paying more so conformists
can no longer afford the higher prices (Amaldoss &
Jain, 2005). This is conrmed by the dreamequation:
the notion that the desirability of a luxury
brand is correlated with the difference between
brand awareness and brand penetration (Dubois &
Paternault, 1994). Unknown brands do not create
desire and magnetism, but when luxury brands are
too mass-marketed and go after all consumers
through the so-calleddemocratizationof luxury, they
lose their cachet (Nueno & Quelch, 1998; Silverstein
& Fiske, 2003). They are no longer distinctive enough,
at least in Western countries, but maybe not in Asia
(Phau & Prendergast, 2000).
Since 1980, Japan has been the gold mine of the
luxury sector. Soon, however, China will become the
worlds largest luxury market. Interestingly, Japan
has a very egalitarian culture, yet it made Louis
Vuitton the worlds number one luxury brand. This
seems like a paradox, but it is not.
One should keep in mind that when it was pene-
trated by luxury brands, Japan had the largest
middle class of all developed countries, with a very
high average income per household: more than
$60,000 USD. Japan is also a society in which the
group is more important than the person, and it has
a very hierarchical structure. Western luxury brands
provided the Japanese with a way to reward them-
selves, but also enabled individuals to behave ac-
cording to their rank in society without disturbing
social order/conformity. In Japan, owning an un-
known luxury brand meant taking a risk. The fame
and distribution of mega brands, such as Louis
Vuitton, was very reassuring from a face-saving
perspective. Furthermore, these brands made a
wide array of products available, ranging from attain-
able accessories to extremely expensive items. As a
result, both the Tokyo administrative assistant and
the CEO could buy the same brand at the same store,
but of course they bought very different products.
Thus, price distributes rarity through discriminatory
levels. There is a price for the many and a price
for the few. Even the lowest price must be seen as
a sacrice, though, or else the magic of luxury does
not work.
The same process is now taking place in China,
with millions of consumers eager to show they are
succeeding while they remain novices in terms of
knowing what is or is not a luxury product. Chinese
consumers love leading brands. This is clearly an
advantage for brands with high brand awareness and
a network of stores in all major capital cities, and
now even regional cities. For a local Chinese con-
sumer, buying a luxury good is a way to participate in
the world of consumption. It is also egalitarian.
8. Is the cult of luxury religious?
A religious phenomenon seems to be occurring in the
luxury sector. As described by Chadha and Husband
(2007), there exists in Asia a cult of luxury, which
appeals even to teenagers. Western youth have also
adopted luxury brands, mixing and matching luxury
accessories with casual clothing. Why has luxury
extended so far past its natural borders? If Fukuya-
ma (1996) is right, since the collapse of communism,
there are no more ideologiesat least none that
promise paradise on earth. Only consumption re-
mains, and in its highest form: through highly he-
donistic luxury goods that embody both creativity
and heritage, and impart quality craftsmanship,
symbolism, glamour, and transgression (through ex-
cess price).
Luxury is a spiritualization process of human-
made objects. This is why price is so important in
addition to the blessing of cultural and powerful
elites. An excessive price is the measure of ones
desire, and thus of an objects desirability based on
values that have nothing to do with down-to-earth
practicality. By sacricing an important part of her
salary to purchase a luxury bag, the Tokyo adminis-
trative assistant creates the objects sacredness;
indeed, the etymology of sacrice is to make
sacred. Luxurys similarities with an actual cult
are many. We already analyzed how luxury brands
seem engaged in marketing adoration to sustain this
cult, starting with that of the iconic designer. The
iconization of particular products within a brands
range is also signicant. It is how luxury counter-
balances the loss of aura created by large-scale
Abundant rarity: The key to luxury growth 459
Author's personal copy
technical reproduction of products. Iconic products
are meant to look intemporal, almost eternal. This is
achieved in two ways. First, they are permanently in
the catalogue like the Porsche 911, Chanel N85, or
Jaeger Lecoultres famous Reverso watch. They are
also made intemporal by relating them to some
highly signicant moment in the life of the brands
founder. The spirit attached to this moment and the
story that accompanies it endows the product with
part of the aura its production in long series has
destroyed. The iconic product becomes an object of
the cult. One needs to possess at least one of these
products once in ones lifetime. Luxury brands also
cultivate mythical stories about their foundation
and maintain secrecy regarding back-ofce happen-
ings, such as details concerning production sites and
quantities/nance. Their agship stores, magni-
cent pieces of urban art designed by famous archi-
tects, have been compared to modern cathedrals in
which faith is reinforced. In these stores, each
product is put on a pedestal like a holy statue or
icon. The stores act as closed shrines where a subtle
secret order reigns and where one is introduced
selectively, thus leading to lines outside. Consumers
visit the stores in small groups, making a pilgrimage
and wishing to attend rituals delivered on a one-to-
one basis: welcoming services, demonstrations, ex-
planations of the exceptionality of each item, et
cetera. This comparison with religion is most reveal-
ing: luxury likes to present itself as an elevating
cultural force. It belongs to the upper tier of Mas-
lows pyramid, that of self-realization (Maslow,
2011). Religions like big numbers and large commu-
nities, unless they wish to remain a small sect.
As this comparison with religion has its limits,
however, we should instead speak of magic. As its
Latin root suggests, religion ties people together in
their belief of a god in heaven. Magic, on the other
hand, invokes supra-natural forces in action on earth
thanks to the mediation of objects, icons, and sha-
mans. As Arnould, Price, and Curasi (1999, p. 264)
wrote: Their possession links the owner or holder
with immanent powers to achieve certain ends.
There is something magical about possessing lux-
ury goods. They endow the owner with the ability to
become another person just by wearing a blessed
cloth, jewel, or accessory. The starication of mod-
ern fashion designers is an essential prerequisite if
luxury brands want to appeal to larger audiences.
These designers are not mere humans anymore, but
leaders who take their followers into the world of
art, creative culture, taste, and sensory experi-
ences thus far restricted to the elite. Their magic
touch is passed along by contagion from the designer
to the end user. As such, there is no longer the need
to link luxury to rarity or a nite number of clients.
As expressed by the dream equation of Dubois and
Paternault (1994), the larger the number of clients,
the more famous the name must be to keep the
dream alive.
9. Nurturing the symbolic power of
the luxury brand
Symbolic power is now fueled not by rarity but by
the theatrics of qualitative rarity. Unlike main-
streambrands, which have a single logo (e.g., Nikes
swoosh), luxury brands develop a war chest of sym-
bols. Symbolic power is also nurtured by the design-
ers visibility as a very singular entity and by the
brands highly creative communication. Hence, the
importance of fashion shows, those rituals of deles
held in capital cities, acting as did medieval jousts
to designate the bravest to the public. On each
runway, designers agree to compete in front of
the worlds cameras. This is necessary for the main-
tenance of their fame. Similarly, in the automobile
business, F1 circuits play the same role for Ferrari
and Mercedes. This is why giving mass market brand
names to racing teams instead of individual auto-
mobiles makes F1 lose part of its mystique: one does
not hear about Mercedes anymore, but about the
Red Bull team. The widespread extension of luxury
brands communication far beyond the classic glossy
pages of magazines is also part of this phenomenon,
as well as the latebut powerfulentrance of lux-
ury brands to the Internet and social media. In 2011,
Louis Vuitton created its own digital in-house agency
with 400 persons worldwide. Its goal is to diffuse
content about the brand all over the Internet, in-
cluding history, heritage, craft details, social
events, creative interviews, fashion shows, creative
travel guides, and limited editions. If the luxury
brand wants to stand above its many imitations
and look-alikes, selling only an image of luxury, it
must capture attention on the Internet and reveal
its depth and innite creativity.
10. Short-term or long-term policy?
The goal of a luxury policy is to build pricing power,
making clients become price-insensitive fans of the
brand. Pushed to grow by their shareholders, some
luxury brands have decided to increase penetration
among the public while attempting to maintain high
prices. They have achieved this by ignoring many
constraints of the luxury business model, such as
objective rarity and the informal rule forbidding
delocalization. Instead, these brands have adopted
a religious model of community building whereby
460 J-N. Kapferer
Author's personal copy
the adoration of iconic gures, experiential selec-
tive distribution, and highly visible creative com-
munication play a central role in reinforcing the
faith of the many and the symbolic power of the
brand. However, there is a danger: the tradeoff
between the short term and the long term. Know-
ing that luxury can be dened as the ordinary of
extraordinary people and the extraordinary of or-
dinary people, a natural question arises: How long
will the former dream about such brands? These
people play the crucial role as the reference group
for the mass of followers. Amaldoss and Jain (2008)
demonstrated that the elite are ready and
willing to pay more to reduce the number of
followers; namely, conformists. Thus, to keep
these elite consumers, brands must produce su-
pra-luxury products, services, and events. Will
having elite consumers trade up to buy the most
expensive, upper ranges of a brand sufce in main-
taining the illusion of rarity and feelings of privi-
lege? Is there a point beyond which Louis Vuitton
will have gone too far in penetration and diffusion?
For instance, the brand has now decided to
open stores in so-called C-towns in China. From
a quantitative standpoint, these towns are bigger
than many Western capitals. Why, then, do they
not create a luxury market there too? From the
standpoint of Shanghais or Beijings modern elites,
though, what does it mean for the brand to go
deeper into Chinese provinces? If luxury brands
always need to be perceived above the mainstream
to sustain their dream, how does this distribution
strategy maintain the aura? Will stratication be-
tween stores with a clear hierarchy differentiating
a few experiential agships in capital cities from
more normal stores in the provinces be enough?
Brands also develop what could be termed in-
visible luxury: exclusive, very private services for
the rich and powerful. An example would be
organization of a dinner for an elite group of
individuals at the newly-built House of Vuitton
in London. Such invisible luxury is designed to
make even extraordinary consumers feel privi-
leged. As for the hierarchy of stores, luxury brands
aim at making the provincial client in a C-town
still dream of accessing the slightly more upscale
store when he or she visits a more cosmopolitan
city. Clearly, there is a long-term risk here. This
may be one reason why LVMH has taken an unin-
vited 20% share in Herme`s, whose present CEO,
Patrick Thomas, said: When one of our products
gets too successful we stop [selling] it (Kapferer,
2010). Herme`s wants to remain a luxury brand, not
become a fashion brand. It could potentially act as
the post-Louis Vuitton brand in the LVMH multiple-
brand brand portfolio.
11. Clues for entrepreneurs
The future of luxury brands is in the making. Every-
where in the world, entrepreneurs are creating
luxury products and hoping to build their own luxury
brands. They now clearly understand the impor-
tance of positioning their brands more as pieces
of art than as products. Building a luxury brand
takes time. One does not launch a luxury brand as
one launches a fast-moving consumer good brand,
with a D-day signaling the start of an extensive
marketing plan. Instead, entrepreneurs should com-
municate through creative directors and knit close
ties with cultural elites, cultural places, and art
centers with a strong preference for the avant-
gardeespecially if they want to represent the
future. They should also understand that the classi-
cal distinction between products and communica-
tion is meaningless in the luxury realm; products are
communication, and communication should be un-
dertaken with the same exceptional exigency for
style and ultra-qualitative detail as for any of the
products. Also, it is important to build qualitative
rarity that goes beyond objective rarity. Even newly
bred brands should communicate their heritage,
inspiration, cultural references, and stance as an
ambassador of cultural excellence. Ralph Lauren has
paved the way in this context; however, more recent
examples provide interesting benchmarks. For in-
stance, Bell & Ross, a watch brand that is now part of
the Chanel Group, is only 20 years old but looks as if
it has existed since WWII. Everywherefrom adver-
tisements on the Internet to packaging, communi-
cation, and product designBell & Ross references
and pays homage to the right group: those hero
pilots who pushed the limits of supersonic jets. This
is how new luxury brands acquire depth and pres-
tige, thus sparking consumers desire for their very
symbolic products.
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