the below piece was originally published in PhsicsMag's Private issue
Trading down is an interesting but controversial notion. As you would recall, Aquascutum, the 150 year old British luxury fashion brand, filed for administration in April 2012, which led to the house subsequently being taken over by a Chinese consortium called YGM Trading Ltd for a fee of USD 24 million; shockingly absurd don’t you think? For a brand with that much history and tradition, one which is considered as an icon of British culture? In her Redefining the Luxury Concept working paper, Uché Okonkwo introduces two notions; trading down and trading up. In her argument, taking into account today’s macro influences such as a surge in wealth accumulation and the wide accessibility of upscale retail establishments, Ms Okonkwo points out that “fashion brands are for the mass market, whether they are of high quality or not”, and she goes on further to identify luxury brands as being “for a distinct narrow market and are defined by high quality, differentiation and precision in product design and manufacture”.
all digital marketing enthusiasts, order the book Luxury Online by Uché Okonkwo
According to Uché Okonkwo, the existence of “mass-premium” branding has created a situation whereby the Marketing Mix of an H&M or a Zara for example, no longer reflect that of a low to mid-range retail establishment. To counter claim her latter observation, one would agree that indeed there has been a blurring-out of the differences in the Marketing Mix between low to mid-range brand and retail establishments with luxury ones, but there hasn't really been an effort by luxury brands to justify their high prices effectively, because Zara, H&M, Uniqlo; all these fast fashion establishments are proving to be more relevant on the high street each day. In trying to understand the trading down concept, and whether it contributed to the likes of Aquascutum’s demise, I would like to introduce the notion of brand constancy.
Unlike Burberry, Aquascutum tended to target older and slightly more sophisticated consumers. Unlike Burberry, Aquascutum didn't really have a consistent communications strategy. Unlike Burberry, Aquascutum didn’t evolve into a web 2.0 luxury brand in time, and looking at the company’s history, its previous owners tried their best to keep it rooted to 19th century British ideals. If trading down caused established makes such as Aquascutum to go bankrupt then why didn't it happen to the likes of Burberry? Trading down reflects directly on a brand’s constancy because consumers will be loyal to the brands which have been relevant to them throughout. Brands that die-out in the minds of consumers will simply become replaced. I do agree that the “mass-premium” approach is making it easier for high income consumers to trade down, but does this mean that there isn’t a middle segmented consumer base which is willing to trade up anymore?
