As brand director of the global licensing group at Informa Markets, Steven Ekstract believes both luxury and licensing “work as a result of emotional connections made by the consumer.”
Here, Ekstract discusses the challenges brands face in the current climate and how licensing is evolving to help redefine the luxury retail landscape.
WWD: The luxury market is a trillion-dollar industry, but despite such revenue, luxury retailers are facing new challenges in today’s evolving digital marketplace. Can you speak to these challenges?
Steven Ekstract: The biggest challenge is the definition of what luxury is now versus 10 years ago. The lines are blurring, particularly with fashion. The old school fashion designers that used to control the business are no longer in control and the print fashion magazines that supported them have a fast-aging audience. Traditional luxury brands are shifting their marketing and media expenditure to social media and influencer messaging. Social media and influencers have become much more critical to the promotion of luxury fashion brands.
Many of the major luxury brands are focusing much of their marketing efforts in Asia, and in particular, China, as China is the fastest-growing luxury market in the world today. I also believe that there is a new type of luxury for Millennials, and in particular Gen Z, which are the new streetwear brands like Supreme. I think Supreme has changed the concept of luxury. We are now seeing major luxury brands like Gucci and Louis Vuitton doing streetwear.
WWD: How does licensing help luxury brands overcome these challenges? Any examples?
S.E.: Licensing has been a major factor in the democratization of luxury. Many luxury brands have embraced the idea of collaborations [when two or more brands work together], which is a type of licensing we are seeing much more of. For the luxury marketplace, these collaborations are usually limited run drops and specifically designed to create a buzz around the brands participating. The limited run makes them difficult to get and therefore in higher demand. Isn’t that part of the appeal of luxury?
For example, Champion, a brand you can find at Walmart, has done limited-edition collaborations with Supreme, Kith and Vetements. I would say a $300 Champion hoodie is indeed a luxury. Supreme is a great example of a brand/retailer that does this all the time. Supreme has become synonymous with luxury despite the fact that most of its products are casual streetwear. But, the idea of a limited run and being hard to find makes the brand super valuable to their customers.
Hypebeast is another example. It is an online retailer with editorial that its fans follow religiously for the latest “drops” they have to have. New luxury is about indulgence, rarity, and limited editions.
WWD: How will brand extension strategies impact the future of the luxury goods market?
S.E.: Luxury and licensing both work by appealing to consumers emotions. Luxury represents the idea of indulgence and licensing taps into the power of an emotional connection with a brand. Together they make a great marriage for luxury brands attempting to stay relevant in a crowded marketplace where the medium has become the message. What consumers see on social media becomes necessity and indulgence, and if it is in limited supply, it is an aspirational indulgence.
WWD: Collectively Millennials and Generation Z will represent more than 40 percent of the overall luxury goods market by 2025, compared with around 30 percent in 2016, according to research from Deloitte. How will retailers continue to attract this growing demographic?
S.E.: Millennials and Gen Z grew up with the concept of “merch” as well as franchised entertainment. They not only are comfortable with it they expect it. They also are much more about experiences than possessions. Why buy a car when you can take an Uber? The same holds true for luxury. They will experience luxury differently, which is why smart luxury brands are opening hotels and restaurants or licensing their brands into these areas.
WWD: As consumer shopping behaviors continue to evolve, how can brick-and-mortar retailers in the luxury market leverage licensing strategies to drive in-store foot traffic?
S.E.: Brick-and-mortar’s success lies in its ability to create great experiences for shoppers. Licensing is the perfect tool for this as it brings theatricality to the consumer. Whether it be through licensed collabs or co-branding with hit films, music or celebrities, the need for theatricality at brick-and-mortar retail will drive consumers into the stores and help move merch.