The many forms of Luxury

The luxury industry is varied and brands fall into many categories. Bain Consulting classifies luxury brands as follows:

Product Type	Characteristics	Brands
Accessible Brands	Affordability, Status and Membership	Coach, Ralph and Lauren
Aspirational Brands	Lifestyle, Club, Limited availability	Gucci, Louis Vuitton
Absolute Luxury	Elite, Heritage, Exclusive	Hermes, Loro Piana

A more traditional approach using supply chain concepts is:

Product Type	Characteristics	Brands
Functional	Long life cycles, predictable demand, low margins	Staples like fine chocholates, tea, fragrances  etc
Innovative	Short life cycles, volatile demand, high margins	Fashion apparel, high end electronics etc

Considering theimportance of brand in SCM-luxe, one must classify products as a mixture of these two classifications

Product Type	Functional	Innovative
Accessible	Godiva, Thorntons	Coach, Ralph and Lauren
Aspirational	Cuban cigars	Bose Systems
Absolute Luxury	Vintage champagne	Patek Philippe

The strategies for each of these groups will have to be customized taking into account their market dynamics:

Product Type	Functional	Innovative
Accessible	· Make to Order ·  Quick and efficient delivery · Keep costs low · No significant After Sales service	· Assemble to Order (Modularize and Postpone) · Develop Demand Analytics Models · Keep costs low
Aspirational	· Assemble to Order (Modularize and Postpone) · Balance between costs and quality · Focus on Fill Rates	· Assemble to Order · Focus on after sales service, warranty mgmt etc · Manage suppliers for quick turnaorund to changes in demand
Absolute Luxury	· Make to Stock · Focus on Quality · Maintain relationship with customer after sale (Repeat purchases need to be tracked)	· Make to Stock · Keep inventory turns high and inventory levels low (VMI, if possible) · Comprehensive after sale services

Of course, this would be a simplistic view of SCM-luxe product based strategies and one would have to consider the particular market, product, brand ethos and compony policy to customize appropriate strategies for individual products. For example where would jewellery be classified? High end heritage jewellery in Absolute luxury-Innovative and wedding rings in Aspirational-Functional? Again a single brand like “Cartier” will cater to all markets, does that mean SCM-luxe needs to be fragmented for each sub-market? As in all things, one will have to take a rational, balanced, case by case view and develop an appropriate strategy taking into account costs and expected benefits from the Supply Chain.