This analysis really deserves our attention because, on several points, it corresponds to the analysis that I develop on BrandWatch since its inception: Luxury brands have lost the notion of price - by charging prices that are far too high, the meaning of quality - by providing products unworthy of their image, of rarity - multiplying sales points, and of emotion - by vulgarizing their offer and their relationships to clients.
So I decided to cast a prudent eye on Mauboussin, to answer (in my own way) the question that agitates the world of luxury "Mauboussin, is it still luxury?". I propose to do so by making a list of radical decisions taken by the brand … and drawing some conclusions:
- 2002: Purchase of the brand by Dominique Fremont from the Mauboussin family - and arrival of Alain Némarq. Of course, the press highlighted the fact that he had taught marketing at HEC, but I think it is a lot more interesting to note that he successively worked in Boussac (in charge of manufacture and home decoration), at Balsan (carpet manufacturers), at YSL Homme, Kenzo Homme, at Tehen (knitwear manufacturer) and finally at Vestra (men’s clothing). He completely transformed a company in deficit into a "creative laboratory, a tool for upgrading industrialization techniques and an instrument for promoting and distributing brands”. The owner thereby placed a man that mastered brands, production and trends at the head of Mauboussin... and not a man from the luxury or jewellery sector. Thus a man who looked at it with a new viewpoint - closer to the consumer (like Robert Polet of the Gucci Group) than a man from the gilded circle would be.
- 2004: Mauboussin decides to always display the prices of their jewellery. This is a mass-market practice but it allows the customer to enter the store with prior knowledge - and thus not be faced with the discomfort (shame?) of admitting that the price quoted by the seller is well beyond her/his means.
- 2005: launch of a "general public" solitaire with a diamond that was not of the finest jeweller’s quality. "They cried foul, said we were breaking the codes of luxury. The success of this band was enormous. We sold 40,000 of them in less than four years".
- 2007: launch of a first television advertising campaign. The disapproval that this media is looked upon with in the luxury world (which prefers the cinema - more noble?) does not prevent perfumery and beauty products from employing it, with delight.
- 2008: advertising campaign in the Paris metro (prices displayed of course). Mauboussin invests this symbolic mass-market place ... and causes a scandal. But why would the subway be scandalous and not Decaux posters in bus-stops where luxury brands are regularly advertised?
- 2009: A one-week sale of 500 limited-series diamond rings at 450 € each... using the free distribution press as a medium of communication.
Along with this low-price strategy, substantial investment was made (increase in the network of boutiques) and heavy investment in communications (17% of turnover, compared to Bulgari’s 11%).
The results are interesting: the turnover of the brand increased from 12.3 to 35 million Euros in 8 years. My model for analyzing progress in luxury brand turnover shows that Mauboussin is positioned as average (like Tiffany, to name another jeweller - but doing better that Hermès). Nothing exceptional. The rub is the profitability of the brand: after losses in 2007, Mauboussin announced a net profit of 1% in 2008 and is aiming for 5% in 2012. Jeweller brands on an average show net results of 10% to 15% (Bulgari 13.8% in 2007, Tiffany 11%). The financial results therefore are only the reflection of the "affordable luxury" policy of the brand: lower prices, lower margins than the sector, significant investment.
A strategy of "affordable luxury" only works if two conditions are met:
- The volume should be sufficient – this is what the example of Coach (an example of an "accessible luxury" brand) teaches us, having grown from $ 500 million to over 3 billion in 10 years, with profitability that increased from 3% to 24%.
- The brand image should elicit emotion, desire, a certain form of rarity persuading customers who discover it through its low-price range to "climb" towards the more expensive products in the collection. In this regard Cartier can be cited as an example: the brand was saved 30 years ago by the creation of the Must collections; after being discontinued they were re-launched last November. Luxury brands need an entry-level and a high-end collection. It is from the "tension" between the two that desire is born.