A stock market analyst once told me that the two sectors he watched to “bracket ” consumer sentiment were: (1) fast foods – particularly McDonald’s (performance tends to improve as consumer uncertainty increases), and (2) luxury brands (usually the last sector to be really hurt by consumer uncertainty). That theory is tested pretty easily by going back to the height of the Great Recession: 2009. Forbes reported that McDonald’s January 2009 performance was up 7.1%. In the meantime, according to Bain, the global luxury good market fell 8.4% in 2009 (only to rise again in 2010 by 13%), compared to almost 50% for the NYSE Industrial Average.

So maybe the tip is a good one.

“Uncertainty ” was been the new normal since 2008, and as a result two trends have emerged. One has been well documented by RSR – retailers’ non-stop discount frenzy in response to more demanding, better informed, and less loyal consumers. The other is the more-or-less constant whiplashing of consumer confidence as the result of global events like wars and terrorism, Brexit, wildly fluctuating energy prices, political turmoil, etc.

Sooner or later, “uncertainty ” becomes a drag even on the long-term performance of luxury brands. But the biggest change of all is a demographic one. The world is transitioning to a very new kind of luxury consumers; younger, tech-savvy, entrepreneurial, more socially conscious, and fundamentally global in their world view. In January 2016, a website called Luxury Society listed several luxury trends that “will make or break luxury brands in 2016 ” as a response to the new demographics, including the following:

• “The rise of the thoughtful luxurian “- luxury from “aesthetic, conceptual and cultural perspectives “
• “The rise of HENRYs ” – “High-Earners-Not-Yet-Rich ” shoppers who “prefer to spend it on experiences and lifestyle enhancing products ”
• “Getting over the Digital hump ” – according to the website, 40% of hi-end brands do not have websites yet!

A Walk Down The Champs-Élysées

I had a chance to see what (if any) impact these trends are having on the luxury brands while on a recent visit to Paris. The Champs-Élysées in Paris is a must-see for retail observers; there are many established luxury retailers such as Cartier, Givenchy, Louis Vuitton, and Chanel. But other retailers that target younger consumers, such as Levi’s, H&M, Adidas, and Nike, have also established flagship stores there as well. And now there’s even a McDonald’s on the boulevard, just a block from Cartier! (more on that in a minute).

Despite it being a Monday, the Champs-Élysées was crowded with people and stores were fairly busy. I visited several like H&M, Levi’s, and Adidas just to get warmed up, and the first thing I noticed was that each retailer offered free WiFi, although there were various versions of what “free ” meant (for example, Levi’s really was free, with no protocol for identifying yourself, whereas Adidas was “heavy ” – asking name, age, email, and mobile phone number). Of course these two retailers both openly target a much younger demographic than the one I belong to, and most of those younger shoppers were indeed keeping one hand on their mobiles while searching through the racks- so free Wifi made perfect sense.

Once in the full window-shopping groove, I targeted two “legacy ” brands to visit: Louis Vuitton and Cartier. As I walked into Louis Vuitton (a legendary brand with over 150 years behind it, and the “LV ” of the LVMH corporation), and I immediately noticed, “no more free Internet “. Regardless, there’s nothing “stodgy ” about the Brand; I was struck by the “elegant hip ” vibe to the collections on display. Later I looked for the retailer’s mission or vision statement, and was able to find one for LVMH that fits pretty well:

“The mission of the LVMH group is to represent the most refined qualities of Western “Art de Vivre” around the world. LVMH must continue to be synonymous with both elegance and creativity. Our products, and the cultural values they embody, blend tradition and innovation, and kindle dream and fantasy. “

After a few minutes, I bumped into the store’s Men’s Leather Coats manager, Sibille. She offered that L-V is taking it slowly when it comes to blending the digital and physical shopping experience together: “We really want customers to come to our store and to view us as something more than a retailer – maybe the right word is ‘partner’, to help them find what they are looking for. ” Although the store has an iPad app for assisted selling, I didn’t see one in action. For the record: checking later on the retailer’s website, after a few clicks the site offers typical online shopping with a Click & Collect option. However, none of the “online ” side of the retailer’s offer was visible to me in the store.

So for fun, I asked the retailer to “sell ” me her favorite leather jacket on the floor (I have to say, Sibille has great taste! The jacket was a “bomber style ” with remarkably soft leather almost like chamois with a soft wool collar, all for the modest price of 1200+). There was only one of the jackets on display, so I asked her how would she handle that? The answer: the in-house tailor would take my measurements, and a custom-fit jacket would be ordered for a 4-8 week delivery. The good news would be that (1) I’d have something truly one-of-a-kind, and (2) L-V would have my measurements on file so that when next year’s style comes out, Sibille could contact me ( “as you choose – by phone, e-mail, or text “) and we could get my wardrobe up to date.

That was “it ” as far a technology goes. Sibille said, “we don’t stress technology. Our customers want service most of all, and we’re in no rush to use technology for the sake of it. ” Regardless, their strategy is working; Forbes magazine listed Louis Vuitton as #19 on its list of Most Valuable Brands. With the company’s steady revenue increases, its stock price has gone from its low in 2009 of about $44 to over $156 now.

For my second look at how high-end retailers are reacting to the trends noted earlier, I visited Cartier, truly one of the highest of high-end brands featured on Champs-Élysées. Forbes rates the 170 year old company #58 on its Most Valuable Brands list. The first thing that I encountered upon entering the store was a stony-faced security guard, but then I was greeted by Layla, who guided me around the store. Talk about one-to-one! As far as I could observe, Cartier makes no effort to cater to a younger demographic, instead depending on its timeless elegance to draw the consumer into the Brand.

Like Sibille at Louis Vuitton, Layla did not think that “digital ” had much of a play for Cartier: “sure, you can buy some things on the Internet, but why would you? It’s better to experience it (the product) in the store. ” I later got onto the website, and while it is possible to buy something on the site, it isn’t convenient – or meant to be (one must first establish an account with Cartier before making a purchase).

Cartier is owned by Richemont, a French conglomerate which also owns several other luxury brands. Although (at least as exhibited by Cartier), the company doesn’t seem swayed by changing demographics, it is certainly impacted by global uncertainty. According to New Zealand’s Financial Mail, “Richemont’s 10% increase in sales in the year to end March was made up of a very strong first half (up 24%) and a weak second half (down 5%)… until terrorist attacks in Paris and Brussels, sales had been supported by increased tourism that in turn was driven by a weak euro. “

What About The Digital Hump?

I’m not sure what can be generalized from a sample of two retailers, but there’s enough of a difference between the two brands I visited to affirm two of the trends mentioned by Luxury Society website ( “The rise of the thoughtful luxurian “, and “The rise of HENRYs “). While Cartier sticks to its legacy, Louis Vuitton has a more global and younger demographic. The difference shows in each company’s performance.

As for the digital hump? My conversations with Sibille and Layla caused me to think about the advice RSR gives to retailers: “before you focus on the technology, first ask yourself, ‘what do you want the Brand experience to be?’ ” There is no one “right ” answer to that, but from my limited sample in Paris, it might be the more “one-to-one ” the experience is, the less technology should be on display.

So, where was technology on prominent display on Champs-Élysées? You guessed it: McDonald’s! Customers queued up to order from big wall mounted iPhone-shaped screens, then queued up again at a counter to pick up their orders.

So perhaps the real conclusion about blending the digital with the physical shopping experience should be, the more “self service ” your Brand wants to promote, the more you should invest in tech. If that’s to be the case, I doubt we’ll see much tech in Cartier and even Louis Vuitton for a very, very long time (but! I’ll gladly go to Paris periodically to check).