NEW YORK — Affluent consumers may be highly aware of a particular luxury fashion brand — but that’s no guarantee they’ll accord it high social status.
In fact, some of the best-known high-end brands command the weakest cachet with the well-heeled set. Six of the 10 luxury brands scoring the loftiest ratings for social status in a recently concluded study by the Luxury Institute were present in the minds of between 21 and 59 percent of a nationally representative sample of 500 wealthy consumers.
Bottega Veneta, which led a list of 21 designer brands evaluated for their social status — a designation based on their association with people who are admired and respected — nonetheless ranked at the bottom of the awareness scale, as assessed by the 500 adults, ages 21 and older, surveyed. The group had a median annual income of $318,000; a median net worth of $2.5 million, including home equity, and a median age of 49.
Although Bottega garnered the awareness of just 21 percent of the participants in the fashion portion of the second annual Luxury Brand Status Index, 58 percent of those who knew of it strongly connected the brand with social status.
Given Bottega’s cachet with people in their 20s, 30s and early 40s — and the brand’s relatively low awareness — Milton F. Pedraza, chief executive officer of the Luxury Institute, anticipates a big upside for the label. “There’s double or triple the sales opportunity for Bottega Veneta, even in mature markets like the U.S. and Japan,” Pedraza projected. “It is understated, not gimmicky. It is not so involved in labeling itself. I think it will become the flagship brand of Gucci, over time.”
Thomas Maier, Bottega’s creative director, declined to forecast Bottega’s business, but nevertheless was bullish, saying via e-mail: “There is huge potential.” The brand’s first-quarter sales surged 77 percent, and will be lifted later this year by the opening of a handful of boutiques, including shops in Hawaii, Hong Kong and Tokyo.
As with Bottega, wealthy consumers familiar with Dolce & Gabbana and Ferragamo rated them highly for status, but they were known by a significantly smaller group. Dolce was ranked 18th for awareness, recognized by 46 percent of the affluent set, yet placed fifth on the social status scale. Ferragamo, which ranked 17th in brand awareness, known by half of the participants, nonetheless came in seventh in the status measure.
With exclusivity and uniqueness being important aspects of the traditional luxury experience, Pedraza said, often high-end brands achieve greater awareness by expanding and broadening their distribution.
The two best-known names, Polo Ralph Lauren, recognized by 79 percent of the wealthy adults, and Calvin Klein, known by 75 percent of the opulent group, were rated 19th and 20th for their social cachet, respectively, among the array of the 21 designer brands that were evaluated.
The wide availability of designer labels at discounters is a long-term challenge that some high-end companies have begun to address.
Nancy Murray, Polo’s senior vice president of public relations and financial communications, said, “We’ve cut down dramatically, to the point we feel comfortable. As recently as the past two years, we sold to as many as 30 off-price chains,” Murray noted. “We’re now down to one.” According to an industry source familiar with Polo Ralph Lauren’s business, that off-pricer is T.J. Maxx, where less than 1 percent of Polo’s sales now are being transacted.
One exception to the down-market status chill, Pedraza said, is Giorgio Armani, which “has diversified but has maintained a halo effect.”
Indeed, Armani was the third-best-recognized designer brand, known by 74 percent of the affluent adults, and was a close second to Bottega Veneta in the realm of status, as 57 percent of those who knew the Armani name strongly agreed it was worn by people who are admired and respected.
Fundamentally, protecting the integrity of the Giorgio Armani masterbrand rests in the way its marketing campaigns and retail distribution are managed, said Robert Triefus, executive vice president of worldwide communications at Giorgio Armani SpA. “There’s been great attention paid to the top of the [Armani brand] pyramid,” Triefus said. “We always go into new locations in the world with the top brand. We will never threaten that brand with the distribution of our lower-priced brands.”
That approach, Triefus said, reflects an “important and delicate balance to strike, between the various collections,” which include Armani Collezioni, Emporio Armani, Armani Jeans, Armani Exchange and Armani Junior. For example, last year Armani introduced its Privé couture collection, as well as revealed plans to expand its entry-level A|X Armani Exchange franchise.
The youngest segment of the affluent group, those ages 21 to 44, constituted the largest share of people attaching status to each of the 21 luxury fashion names they considered. Two other age groups participated in the study, those 45 to 54 years old and those 55 and older.
In the 21- to 44-year-old cohort, Bottega drew the greatest percentage of people according social status to the fashion labels they knew, or 89 percent, while Armani and Hermès prompted the second-highest responses, each getting a 79 percent share. Asked what age group accounts for Bottega Veneta’s biggest slice of customers, Maier said in the e-mail: “There is no age group. It is about a mentality and appreciation for the highest-quality luxury.” Nor does the brand target a particular age group, a Bottega spokeswoman noted.
More broadly, Pedraza said of the age phenomenon: “At 21 to 44, we’re the most impressionable about luxury goods. I call those the peacock years — when you want to look your best, in terms of fashion and style,” he continued. “But I don’t think they’ll become the best customers because they don’t have the biggest wallets.”
In fact, median spending on women’s designer clothing by heads of affluent households ages 18 to 44 was the lowest of three age breaks, while the average spending on such apparel by that cohort ranked second among the three groups, according to the 2005 Mendelsohn Affluent Survey. The median spent in 2005 by 18- to 44-year-old heads of affluent households, with annual income of at least $85,000, was $272, trailing the median expenditures of their counterparts ages 45 to 54 ($311) and 55 and older ($366). The average spending by affluent heads of households, ages 18 to 44, totaled $576, sandwiched between the outlays of heads of households 55 and up ($753) and those 45 to 54 ($565). Mendelsohn drew those figures from the country’s 25 million households with annual incomes of at least $85,000, while the Luxury Institute’s Brand Status Index was culled from households with minimum incomes of $200,000.