LVMH: Going big on little luxuries
Luxury companies are expanding their portfolio into fragrance and beauty products, as seen by the creation of entire new divisions and string of acquisitions lately.
Facing a little hangover from the luxury surge during the pandemic, luxury goods companies are feeling the heat from the waning global demand. Chinese consumers, who in the recent decade have been avid luxury goods shoppers, have scaled back their demand especially from the aspirational class. As they incline towards alternative ways to continue treating themselves amidst the challenging economy, premium powerhouses are motivated to steer consumption towards relatively accessible peripherals to fuel their revenue.
Luxury conglomerates, with their comprehensive portfolios, have no lack of options to pivot to. LVMH ("Louis Vuitton Moet-Hennesy"), for instance, has continued to appeal to the Chinese market with its perfume and cosmetics arm. One unmissable brand would be Christian Dior.
In its bid to penetrate a younger demographic, Dior Beauty not only dominated the vanity of Generation Z consumers, the House also successfully drove desire over its body care products through strong fashion codes in its packaging. With the launch of Le Baume, a multi-purpose and ultra-fashionably designed body care balm, Dior Beauty provided consumers with an accessible entry point into the coveted couture brand. The brand swiftly upped the ranks in the premium body care category.
Another brand under the radar of LVMH is French luxury beauty brand, Guerlain. Investment in Guerlain is especially visible in the realm of celebrity endorsement, a quintessential way to court young Chinese consumers. Recent high-profile spokespersons include Dylan Wang for fragrances and Zhao Lusi for skincare, both highly regarded young stars in the Chinese entertainment scene. Moreover, to elevate its offerings, Guerlain introduces limited edition exceptional creations from time to time.
Since 2006, the House has collaborated with different Ateliers to create Muguet Eau de Toilette in limited edition numbered bottles as a tribute to Spring. In 2021, Cherry Blossom Eau de Toilette was added to this tradition. These highly collectible avant-garde pieces provide a desirable touch of exclusivity.
In this context of driving little luxuries, beauty company L’Oreal Groupe likewise played the luxury card to win the hearts of Chinese consumers. Of late, cross-category brand collaborations are increasingly prevalent in the Chinese consumption space, leveraging synergistic brand qualities to expand their reach. One instance is the collaboration between L’Oreal’s high-end beauty brand Helena Rubinstein with innovative electric vehicle manufacturer Tesla. Tapping on the disruptive and power-packed characteristics of Tesla, Helena Rubinstein’s Powercell Immunity campaign sought to portray the same. In key cities like Shanghai, high impact cross-brand collaterals painted the streets green.
Other brands emerging at the forefront of L’Oreal’s investment efforts include couture brands Valentino, Prada and Ralph Lauren. Valentino’s foray into perfume and cosmetics began in 2021, where the Italian designer brand unveiled visually impactful packaging emblazoned with its iconic logo. Zooming into the Asia Pacific region, Valentino Beauty engaged A-lister Dilraba Dilmurat as their fragrance spokesperson, entering the Chinese market with much fanfare.
Capitalizing on this trend further, Prada Beauty recently added colors to its portfolio and broadened its offerings from fragrance into makeup. Ralph Lauren as well, put the spotlight on their fragrance line Ralph’s Club lately, via an introduction of new scent Ralph’s Club Elixir. This campaign is fronted by brand spokesperson, Chinese superstar Xiao Zhan.
The observed gradual polarization in consumption patterns of beauty products towards the two ends of premium and mass seems to be affirmative of this trend. Now that these luxury beauty brands have sealed their positions as a way for young consumers to still pamper themselves in this dynamic economic environment, what’s next?
To elevate these young shoppers within the brand, ultra-luxury introductions could be taking centerstage before long. Think expansion into new uber-luxury lines with heftier price tags and more aspirational stories, plus re-branding of existing lines to make them relevant to a younger audience. In addition to checking the boxes of big-name Chinese celebrity ambassadors, iconic brand packaging and high-profile collaborations, another critical facet to propel that added ultra-luxury edge would be services. Lavish, exclusive, and personalized offline consumer experiences could be the next turn for beauty brands very soon.
