New York 2008

By João Batista Ferreira

Alshop combines NRF event and the luxury market in the world’s capital city.

Experience:

Making sense is no longer enough – we need to make five senses.
In the United States, a country where there are 48,695 shopping centers in operation, the retail market’s sales totaled US$ 4.361 trillion in 2006, according to data published by Plunket Research. These figures reveal the gigantic proportions of a marketplace that sets the trends for and gives shape to everything retail-related throughout the planet. Retail players operating at these levels know their stuff and, knowing their stuff, they have a lot to teach!

2008 will see the ninety-seventh edition of the NRF Annual Convention & Expo, which will be held January 13 to 16 by the National Retail Federation at the Jacob K. Javits Convention Center, in New York, the world’s capital city. The 2007 edition was attended by 16 thousand visitors from 52 countries, who came to learn about every innovation in topics related to this type of commerce. The event, also known as Retail’s BIG Show, is devised to be the industry’s most significant meeting throughout the world.

This seems to be very logical, even simple, and should suffice to tell you how interesting it will feel being a Brazilian among the thousands of entrepreneurs and professionals at NRF 2008. At the Convention, the best, most renowned brains thinking about and managing countless retail-related areas will be speaking and telling their success stories – many of which took place when facing serious problems, whose solutions have become icons for actions of excellence. The concepts and themes discussed will generate knowledge to be applied by those seeking to achieve positive results for their businesses.

Therefore, following its 10-year tradition and as part of its working agenda, Alshop is offering retail entrepreneurs and professionals the possibility of this experience. And this time around the organization is offering, in parallel with the NRF, a surprisingly attractive schedule in New York: a dive into the fascinating world of the luxury market, a segment that has become a cultural standard for brand promise, quality, style and management.

To Alshop, establishing a partnership with Carlos Ferreirinha, the CEO of MCF – one of the most prestigious luxury market consultancies in Brazil and Latin America –, accomplishes its mission to always put forth proposals for ongoing, innovative actions concerning everything it detects in the marketplace. That is because Ferreirinha is recognized as the best luxury management specialist by those familiar with the subject.

Simply Premium

At 38 years of age and an experienced trendsetter when it comes to marketplace concepts and the theme of luxury, Carlos Ferreirinha defines luxury as one of the most important contemporary management models. In his opinion, there is no business area in the world that cannot benefit from the knowledge that the luxury market has introduced to the marketplace by defining new parameters in quality perception for a product or service in and of itself.

Previously labeled as something elitist and totally dependent on the well-to-do, luxury now has the status of foundation of a global economic trend. Luxury-related sales (including those by new and traditional operations) total a hefty US$ 420 billion, in economic scenarios that point to a skyrocketing growth of this already colossal amount. That is enough money to cause those in charge of the economy in some countries (especially India, China and Russia, since Europe – the birthplace of the luxury industry – is already showing signs that it is approaching the limits to the expansion of this segment) to redirect their domestic and foreign policies to this business.

Brazil is following this path at a slower pace, which is only natural. In order to be introduced as a business agenda and management tool, this innovative business platform requires an inquisitive approach. From minute china pieces to large hotel chains, including apparel, shoes and accessories, beverages, cars and other objects of desire, today even some financial institutions with more of a popular, socially-oriented tradition – like Banco do Brasil and Bradesco, respectively Brazil’s largest government-owned and private banks – have products targeted to premium customers. Previously ordinary products such as beer and mineral water display this differentiation language on their labels, dressing them with an air of delicacies on point-of-sale shelves.

Quality

Products classified under the tags “deluxe,” “premium,” “prime,” “style,” etc. have a rock-solid trait: quality. When speaking of a luxury brand, the question of its quality is “absolutely solved,” states Ferreirinha, who does not even admit the possibility of discussing it. And he gives an example: when you buy a brand handbag, you are also buying commitment to its manufacture, from material and labor to the delivery of its brand promise. All of this implies quality. In the specialist’s opinion, case closed: there is nothing left to be said.

In the advertisement battles that products waged in the 20th century to convince consumers, there was one language: “I am the best.” Ferreirinha remembers a commercial for Omo, Unilever’s flagship laundry detergent brand. In the commercial, pieces of laundry were left to soak in two tanks. The tank containing Omo would make the piece snow-white, while the piece that had been in contact with the other detergent brand looked dingy, almost filthy. The war of “I am good, you are bad” is over. Today, awareness actions by the same Omo brand propose a universe of experiences to consumers because “dirt is good” and the brand is here to solve any problems requiring cleaning as a solution. Which takes us back to the issue of quality. “It is no longer enough to say that the product is superior, at a time when all products have somehow incorporated that excellence into the delivery of their brand promise.”

Another aspect of luxury that must be observed is the extrapolation of old market evaluation standards such as the product itself, market size, brand image. This new path leads to that which one needs to know in order to deal with the segmentation of consumers in their “space of sensations, this ode to emotions that is embedded in people’s decision-making.” If, on one hand, traits such as quality, technology incorporation and other product or service values are more than tangible, it is, on the other hand, the emotional aspect, in its subtlest nuance, that needs to be focused on. In luxury management, this is dealt with in an unprecedented way, with a refined, professional approach towards attracting the consumer’s attention, “an emotional experience, a characteristic that enhances – and facilitates – the perception of other values suitable to the thriving of the luxury market,” he teaches. The world of luxury is moved by desire. The old perspective of products and services for the perception of their primary characteristics is no longer enough. These primary characteristics need to be translated into an understanding of and response to that which people desire.

Exclusivity

No matter that markets have become global and the distribution of a given product is no longer exclusive because it reaches a broader consumer base: the value to be perceived in the product must always be that of exclusivity. Even if a brand like Ferragamo now has four stores in Brazil, that does not make Ferragamo products popular. “‘Popular’ is about the price,” says the expert. “Access is about democratization,” he concludes.

“Desire fee”

Luxury products are composed of quality and excellence in their production – like an Hermès handbag, which takes three months to be crafted entirely by hand by a single artisan in France. This calls for a price differential, which, “in the luxury segment, achieves and accompanies customers’ expectations.” There is a “desire fee” to be paid by those who wish to own the respected French brand’s handbag. There is also the option “not to buy” one; however, when buying an Hermès handbag, it is not the customer’s place to say that it is expensive, because it is not: it simply has its market value.

Access

The accesses and products of the luxury segment are not accessible to just anybody, in just anyway, in just any shape, at just any time or price. This access has to be strategically managed.

Brand is the differential value. In this century, the great divide is between the pre-brand and post-brand periods. Whether local or international, brands, the great wall delimiting purchase decision-making, are increasingly stronger in the luxury, premium segment. It is necessary to create the right associations for a brand, thus imparting to it an absolute perception of timelessness and universality, beauty, precision and harmony: the perception of everything that is reflected in the brand concept. All done through an obstinate quest for excellence.

João Batista Ferreira
ALSHOP Executive Director
CEO - J2 Marketing