Most people ask themselves, «What is Luxury?» Is a simple touch, a smell, riches, an object, a journey or even a word the true meaning of luxury?! Because of these uncertainties, we wanted to get a better understanding of the opinion of Helena Amaral Neto – one of the personalities to have best transmitted the concept of luxury. She has a degree in Economics from the Universidade Católica Portuguesa and a Master’s degree in Finance from City University, in London. After several years working in investment banking; designing innovative eco-design, with the Tela Bags brand; among other positions she has held throughout her career, in 2013 she took over the coordination of management courses in the Luxury area at ISEG. In addition to all this, in 2017 she created Luxulting - Luxury Consulting, a consulting company in the Luxury sector. Here, in an interview, Helena introduces us to the variants of luxury: «luxury concept», «luxury business» and «luxury strategy».
How, as a teacher, do you convey the true meaning of luxury? Can luxury be taught? And what is luxury? Can luxury lie in the privilege of little things like: going out, shopping, a friendship, eating, travelling...?
The word luxury always arouses interest, since it is associated with a world of dreams and inspiration. As a professional focused on this market, it is important to distinguish between the various areas of luxury: luxury concept, luxury business and luxury strategy. Luxury has existed since the beginning of humanity, and has been evolving with the values of society over time. The concept of luxury is subjective; it depends on numerous factors – from culture and religion, to geography and generation. Luxury for an American grandfather is different to luxury for a Chinese young man. The grandfather may prefer a golf trip with friends, where he puts value on experiences throughout the trip, while for the Chinese millennial buying the latest model of Gucci sneakers is more important... and posting them on Instagram!
The luxury business, which is reflected in the business activity of luxury brands, represents a very interesting sector in terms of value and growth. This is a market with annual sales in excess of 1.2 trillion Euros, split between various sectors – from the car market, hospitality, accessories and personal goods, jets and yachts, cruises, furniture, art, to beverages and fine food. Despite being a niche market, it has around 350 million consumers, with products ranging from Chanel lipstick, at €30, to a Lamborghini Urus, at €300,000. It is a business that has been growing in recent years, and with excellent growth prospects, mainly due to the boom in the Chinese market.
Luxury strategy is the value creation model underlying the most valuable and durable luxury brands. It represents a complete reversal of traditional marketing rules, and is the structural basis for building brand equity over time. As a professor and coordinator of luxury management courses at ISEG, I am focused on the knowledge we can share with professionals. Not only people working with luxury brands, who come to broaden their experience, but above all else people who want to set their product or service apart. Luxury brands are the finest examples of value creation, and an excellent source of inspiration for any brand in any sector. All brands and companies can learn from luxury management. Apple is not a luxury brand, but implements many luxury strategy techniques – highly visible in its product design, distribution control, thoroughness of communications, and pricing policy. In other words, any brand can increase its differentiation value with examples of luxury management. In executive courses we have a fully practical approach, focused on the implementation of concepts to business, in the most varied sectors and stages – from wine startups, to experienced hoteliers, or fashion retail and textile industry producers. Everyone can learn from luxury and create value in their business.
«Luxury for an American grandfather is different to luxury for a Chinese young man»
In the professional world, you strive to teach luxury communication strategies in companies with which you collaborate. How do you do this?
My work as a consultant is very varied, and entirely customised according to the project and the company. The basis of the work done is knowledge – from strategic management, marketing and communication to training and curating luxury conferences. The focus is on creating value, and from there building the best teams for each project. We work with various sectors – from hotels, real estate, retail, or automotive, to media and services – always geared towards the luxury and premium segment.
In terms of communication, the most important thing (and the most difficult) for a luxury brand is to ensure the consistency of its message and image. The brand and what it represents is what makes it unique and aspirational, and should be present in every detail and touch point with the customer – from the logo, or posts on social networks and choice of influencers, to interaction in online sales. It represents an ongoing work focused on excellence and brand vision, and this is what makes the difference. That’s why successful luxury brands are few and far between, but very valuable!
And what can we consider to be luxury in Portugal? What future will the luxury segment have in Portugal and in the world?
The global luxury market grew 5% in 2018. The sectors with the highest growth were cruises (7%), accessories and personal goods (6%), beverages and fine food (6%) and fine art (6%). It was an exceptional year, with sales records for the main groups, LVMH and Kering, owners of the main luxury brands. The driving force behind this growth was Chinese millennials, which represent an increasing share of the consumption of iconic brands. Europe and the United States also contributed to this growth, and forecasts are very positive for the sector.
Portugal is going through a unique period, in which the world is discovering us and this world is increasingly looking for what we have as intrinsic and unique characteristics. Our traditions, history and countless stories, manufacturing, the quality of craftsmanship, creativity, culture... and, of course, people, with our famous hospitality and authenticity. These are values that are increasingly sought after, especially in the world of luxury. This is clear to see in tourism and real estate, in which extraordinary projects come into being from north to south, and which place Portugal on the ‘Luxury Map’. It is up to us to value and protect what makes us so special, and focus clearly on the quality of what we have to offer to ensure sustainability over time.
The forecasts for the luxury market are very encouraging. Consultants estimate growth rates of 3 to 5% by 2025 for most categories of the luxury market. The outlook is positive for this sector in Portugal too, largely due to the tourism boom and the impact of luxury shopping tourism. I believe in preserving, positioning and promoting Portugal as a luxury destination – a tourism and investment destination.
«Portugal is going through a unique period, in which the world is discovering us»
What does a brand marketing strategy have to have so that it becomes a prestigious and luxury brand?
Luxury brands have characteristics that distinguish them from all the others, from mass market to premium brands. It is this series of factors – exclusivity, timelessness, excellence (quality alone is not enough) – that contribute towards creating a dream aura of desire around the brand. Other important factors are history and tradition, as they convey the values of the brands, while fuelling the storytelling fundamental to today’s communications. The customisation of products and services is also important, from engraving someone’s initials on a golf bag to designing an exotic journey with all its personalised details. Design and beauty are part of each brand’s aesthetic codes. And innovation and creativity are increasingly critical factors in luxury (and not only that) - to keep the brands contemporary and different from the rest. Luxury customers want to be amazed and inspired, which is why permanent innovation is key – and the greatest challenge for luxury brands!
«I believe in preserving, positioning and promoting Portugal as a luxury destination – a tourism and investment destination»
There are certain brands that are true icons because of their timelessness. Are these brands beyond luxury? Will they have a permanent place or can everything change? How can a major brand fall too?
There is a lot of confusion around what is considered luxury. As we saw above, luxury brands have characteristics that make them special, including timelessness, which is not always the case with premium brands. For example, Mercedes and BMW are excellent car brands in the premium segment. They are comparable with each other; invest in the functionality of their cars (better performance, more comfort, etc.). Ferrari is on another level, it is a true icon of the automotive sector, incomparable and therefore true luxury brand.
But everything can change, and in the case of luxury brands, very quickly. The investment needed to maintain the luxury status of a brand is very large. The largest luxury group in the world, LVMH, owner of 75 brands, such as Louis Vuitton, Don Perignon and Bulgari, on average invests 11% of sales in advertising alone. The demand is huge to maintain the consistency of luxury in all markets and channels over time. Some brands can’t resist the pressure of short-term results demanded by investors, especially listed brands, and make decisions that generate immediate results at the expense of brand value. A historical example is Pierre Cardin, which was one of the biggest French haute couture brands, but which went through an excessive licensing process that eventually destroyed the brand. The greatest value in luxury lies in brand value, which must be preserved and built with consistency and with a long-term perspective.
«As a consultant and professor, I believe in brand value above product value»
At the moment of buying something, what is more important: brand or product?
As a consultant and professor, I believe in brand value above product value. Especially in a market where the luxury experience has an increasingly important role; consuming is not limited simply to the product. Anyone buying a brand wants to enter the values universe of the brand, and belong to a community that shares this lifestyle, especially in this era of social networks in which Instagram has become the largest shop window in the world.