Brand allegiance is a funny thing.

When it works well the customer clearly and deeply identifies with the brand. When it doesn’t work, more specifically when the brand lets the customer down in some way, the old loyalty can be almost impossible to win back.

In menswear, brand loyalty has historically been a deep seated thing. While women are still targeted by designer trends, men traditionally stick with a brand they like and trust. Over the past few years, designers and marketing departments have been working overtime to encourage men to think more like women – season to season, for example. Thankfully that tactic has not been too successful.

Ultimately though, that all matters less and less because of what happened during last year’s holiday shopping season. When the luxury retail economy collapsed along with everything else, the jig was up. In less than one year, the very concept of brand loyalty and even the basic thought process of how a consumer sees their favorite brand, logo or company had dramatically changed.

The Crash of Mass Couture
It all started with Saks Fifth Avenue.

There were already fears about economic problems in the months leading up to the 2008 holiday shopping season. But as Black Friday rolled around, the retailing earth shook when, without any pretense or warning Saks, the bastion of luxury retail, preemptively slashed prices on designer clothes by 70 percent.

This was unheard of; the designers from whom Saks Fifth Avenue purchased the high-end goods were caught totally off guard and other major luxury retailers were forced to quickly follow suit. Soon after, boutiques and then second tier retailers were forced to massively reduce prices.

A cardinal rule of luxury retail had been broken and overnight already skittish consumers were suddenly wondering if their Louis Vuitton bag or designer jeans were ever worth what they had paid only the day before. (The text of the original WSJ article on this fascinating story and reader commentary can be found here, courtesy of StyleZeitgiest.com)

What occurred next was nothing less than a reshaping of the luxury landscape. Saks had correctly surmised that this was the last hurrah of the luxury-for-all boom years and acted in an appropriately dramatic fashion to try and salvage what sales it could from a rapidly deteriorating market. The rest of the high-end retail universe soon saw the writing on the wall and slashed their already low holiday sales prices to the bone and prayed for the best. Then they slashed again.

For many consumers, the magic was gone; the spell of mass-market exclusivity broken. The value that customers saw in their luxury goods – clothing, accessories, watches and even automobiles – was now being questioned. What is the real worth of my Gucci briefcase?

It was bad enough that mass-luxury retailers like LVMH Louis Vuitton Moet Hennessy, Gucci, Coach, Prada and even Tiffany & Co., had diluted their luxury status by aggressively courting middle class consumers with mid-priced products to drive their incredible growth. Now, they were no longer luxury brands, they were more like luxury image brands.

In a race to capture aspirational money, these companies had targeted average folks who wanted to live slices of the high life by way of expensive accoutrements. In doing so, many left disillusioned the truly wealthy who had helped build up the brand’s cache to begin with.

When the bottom fell out of the retail market, all those teenagers and newly minted MBAs (e.g. those who acted wealthy because they could float a luxurious life on credit) vanished overnight. Just like that, the plastic powered cash cow of mass luxury stopped spending.

Then the other hand crafted cordovan slip-on dropped. As the economic tsunami kept on rolling it ultimately pulled under a formerly recession-proof demographic: truly wealthy people. They may not all be broke, but they sure stopped spending. When people who are actually rich stop buying things you know it’s bad.

As the dust continues to clear only one brand name luxury label remains relatively unscathed – Hermes. The company, while always appreciating and welcoming their less than moneyed customers, never changed its brand or marketing to exclusively attract them.

A brand that did not compromise

Hermes is unabashedly a luxury brand and has never apologized for it. This kind of loyalty to their primary customer base, those with disposable cash money, has helped the company remain relatively secure during this period of upheaval.

In fact, while its peers’ profits are firmly in negative territory, Hermes first quarter sales have already grown by 3.2 percent. And the added benefit of Hermes never embracing “logoed” retailing is paying dividends because it is now considered unseemly, should you have the money, to flaunt designer brands. A Hermes bag, though prohibitively expensive, is luxuriously devoid of logos or even a nameplate.

Hermes, therefore, is able to thrive in this downturn because its obsessive focus on quality, honesty and value (at least to those who can afford its offerings) was always true to the brand. It never lost its mystique, the most valuable asset of a luxury firm.

For all those other brands that had heretofore defined the lives we all were supposed to want, everything had changed. They suddenly looked jaded and false, pretentious and gaudy. In the blink of an eye everyone realized that they had been living in someone else’s marketing plan.

Without those bands and their worlds to define us, how would we now define what brands meant to us?

All About “You”
It turns out that many smaller and specialized brands had been waiting for their shot at the brass ring. At the same time, people began to turn away from mega brands and finally think about what message they were telegraphing about themselves. As they looked around, they began to see other options in design, craftsmanship, cost, style and quality.

Those global brands, while still important, had lost much of their mystique. Luxury prices had been grossly out of whack if only because we kept paying them. No longer did we want the “it bag” or “it shirt” just because a glossy ad said we should. Simplicity as a value was taking hold.

Enduring style and expressing personal taste became cool. As consumers now look for the local and unique, for things with long lived value, craftsmanship is again becoming prized. And that goal of simplicity does not mean cheap or disposable; quite the opposite. At its core, the emerging argument is that if I’m going to buy something expensive and luxurious, I want it to be unique and hand crafted. Instead of five “luxury” off the rack suits, I want one or two custom suits that will last for years.

My things now need meaning and need to fit me, not the other way around.

With consumers taking over the job of promoting or dismissing luxury goods via blogs (like this one), twitter, rating sites and simply by communicating with each other and bypassing traditional advertising altogether, the definition of branding is changing as well.

Your personal style is now your logo

In fact, it seems that now we’re the brand. Designers and marketers are looking for ways to get their products associated with people. It’s not just about us wanting to live in their worlds, now they want to be worthy of our personal brands.

It’s now about the brand of You.

The second half of this essay will discuss how these changes have turned the concept of branding on its head. So stay tuned for part two.

To us here at OTC, this is an evolving analysis on the rapidly changing landscape of branding and retail, and the pendulum swing of influence from marketers to consumers. Please feel free to comment on this essay and add your own thoughts.