The recession hasn’t dented the luxury goods market; in fact, it’s set for solid growth over the next few years. But in this sector, how big a role does packaging play in persuading consumers to part with their hard-earned cash? Simon Creasey finds out.
Few things in life are recession proof. One such item is gold – when an economic downturn hits home, investors check out of risky stocks and shares and plough their money into this precious metal. But another unlikely recession proof sector is luxury packaging. That’s because of the nature of this unique category, explains Stergios Bititsios, associate director, packaging and design at MMR Research Worldwide.
“As in every category packaging plays a significant role but in the luxury sector it has a greater responsibility because you’re talking about premium products here, so there’s an expectation from consumers that the pack will look and feel exceptionally good,” says Bititsios. “As a result it’s not really a ‘nice to have’; it’s a ‘must have’ for this category.”
This theory has been severely put to the test over the last few years as the country has endured a double-dip recession, with packaging specifiers under greater pressure than ever to get greater return on investment on their packaging spend.
But what impact – if any – has the recent economic downturn had on the luxury packaging sector and how large a part does the packaging play in the decision making process for purchasers of luxury brands?
Packaging working harder
Over the last few years, luxury brand owners have been split into two camps when it comes to their packaging spend, says Malcolm Sinclair, export director at Tullis Russell.
“The effects of the recession have been very interesting,” says Sinclair. “Some brands have looked to contain costs while others have looked to accelerate the pace of new launches and upgrade their packaging to create more impact with their customers. The packaging has had to work harder than ever to sell the product to hard-up consumers.”
That’s not to say that consumers have stopped splashing out on luxury products altogether during the worst of the recession, says Bititsios. “I know it sounds contradictory and ironic, but consumers need to find comfort in brands that they trust so they will probably cut their spend on other things so that they can find the money to buy, or emotionally invest, in those premium brands because they make them feel comforted during those tough times.”
That’s one unique factor that sets this category out from others. Another factor is that there are basically only two types of consumer who shop the luxury market, says Christina Repcheck, graphic designer at Sheridan&Co.
“Firstly you have the considered consumer. These are the individuals who want to be 100% certain of the purchase before parting with their money. They’re happy to research the products in advance so they’re fully clued up before heading into the store. For this type of consumer it’s about the customer experience from start to finish. They’re informed and there tends to be a level of brand loyalty among them. Packaging is inevitably important to them and they want it to reflect the quality they already know is on the inside.
“The second group is the swayed consumer,” continues Repcheck. “Ultimately they know the type of product they’re shopping for, but don’t make a final decision until they’re in store. They shop a book by its cover so for this consumer the quality of the packaging design can be a deal breaker.”
Regardless of which category shoppers fall into, the point of purchase effectively begins well before they get into a store. That’s because of the way that brands in this sector aggressively market their wares, according to Natalie Alexander, co-founder of brand design agency ButterflyCannon.
“Luxury brands spend millions building their brand image through all and every appropriate communication channel,” says Cannon. “They sponsor luxury events, they advertise in the glossiest magazines, they hold the most glamorous parties in the most dazzling locations. They tell you about the traditions, qualities and heritage of the brand and associate it with wonder and aspiration in highly creative ways. So when you, the innocent consumer, come into contact with the brand, its packaging, if designed correctly, ignites all these sub-conscious feelings and meaning so you are compelled to spontaneously buy – probably in the most considered way you have ever bought anything.”
In addition to subversively marketing their products to consumers, another key consideration for luxury brand owners, when it comes to packaging decisions, is where and how their product is being merchandised, says Chris Peach, head of packaging and design at Marketing Sciences.
“While the primary pack is seen and used by the consumer, in many cases it is an outer box that initially entices the buyer to choose the product,” explains Peach.
This is particularly the case when it comes to gifting occasions, he adds. “The secondary packaging can be the real reason for purchase with a top quality box, for instance, making a luxury good an attractive gift. Impressive packaging conveys the message that you care about the recipient making the way the product is presented especially important.”
From the available evidence it’s clear packaging has an important role to play in determining consumer’s purchasing habits which is why, as a rule, spend on packaging in the luxury sector accounts for the highest percentage of total company turnover of any sector, according to Chrissy Levett, creative director at brand design agency LFH.
“A study I did a few years ago showed it accounted for 5% where fashion retail, for example, only spends 1% or less. This investment is made because it delivers a return,” says Levett.
And the reason these brands are prepared to spend so big on the packaging of their products is because they treat it like a “living ad,” says Levett. As a result, how it feels and behaves in store and in the consumer’s hand is vital. This means that the right graphics and structure is of paramount importance.
“If a brand stands for quality, but the packaging feels poor or ill-considered then this will do damage to the brand promise,” says Levett. “In that sense the packaging must reinforce the brand promise. As the packaging is often the first touchpoint it plays a vital role in confirming consumers’ opinions about a luxury brand and encouraging them to purchase. And once they have taken that product home it continues that task.”
To the extent that luxury packaging is often so beautiful that it is kept and put to other uses even when the product itself has been used up – as one brand design expert points out: “how many people purchase an iPhone and keep the box?”
The fact that rival luxury goods manufacturers are also significantly investing in their packaging means there is a constant pressure on brand owners to continuously push the boundaries of what’s possible and ensure that they create packaging that has the right look and feel of the brand’s identity, says Cuan O’Callaghan, sales manager at Leo Luxe, who is quick to point out that there isn’t a one rule fits all scenario when it comes to luxury packs.
“The key to getting it right is the precise execution in the end product,” he says. “Luxury packaging must achieve the look and feel that the brand and its consumers desire. And of course, eye-catching finishing techniques or the application of technology into packaging makes the consumer enquire and interact with the packaging increasing the likelihood of its effectiveness in the retail space.”
It’s a view shared by ButterflyCannon’s Natalie Alexander. “Packaging is a physical manifestation of what a luxury brand stands for and so this will dictate the required aesthetic be that opulent, minimalist or another approach,” she explains.
“All you must remember is that luxury brand packaging is about experience, not convenience. It’s not about being easy and so forgettable. It’s about being pleasurable and so memorable. Finishes, detailing and kinetics must all be part of the designer’s palette. There should be nothing fast moving about this consumer good. Consumers will want to take their time to enjoy.”
Thanks to these pressures it’s no surprise that luxury packaging is one of the most intensive users of high-end, and often expensive, finishing embellishments and printing techniques, says Sheridan&Co’s Repcheck
“Luxury has often been associated with embossing foil effects and varnishing. However, the wild success of brands, like Apple, have made the approach more acceptable. Brands are becoming more comfortable with lots of white space on a box and not including quite as much information on the packaging. Less is certainly more.”
It’s a view subscribed to by Lynn Sidebottom, sales and marketing director at Beatson Clark. “Often less is more with brands opting for sleek simple shapes with embossing and minimal labelling to finish the look. Glass on its own is the obvious choice for luxury items so even a standard bottle or jar can give a premium feel. However, we are seeing more and more customers choosing bespoke designs.”
This is a pattern detected by Tullis Russell’s Sinclair who says that there are two notable trends in packaging design at the moment.
“The first is towards more crafted, human looks which are creating increased demand for board surfaces to match with the choice of uncoated products ever more popular. The second is for yet more stand-out either through substrate choice in areas, such as the blue whiteness of our newly introduced Trucard bright white, or in the use of ‘intelligent’ packs using techniques, like applied electronics, to engage with the customer.”
Going forward, it’s highly unlikely that luxury brands will cast off the shackles and ditch the gold foil and embossing completely. Indeed, Michael Sheridan, founder and chairman of Sheridan&Co, says that we’re already seeing signs that the market is prepared to extend that sense of opulence further. “Take gifting as an example, where we’re seeing the return of the layering trend from the 1980s started with brands such as Tiffany and Jo Malone,” says Sheridan. “Gift purchases are once again being wrapped in tissue paper, placed in gift boxes and tied with bows. Retailers are encouraging staff to spend more time with customers which in itself is a luxury. It’s about a renewed focus on the luxury of the whole in-store experience with packaging playing a pivotal role.”
Pack and product connection
That’s because in the luxury goods sector the connection between the pack and the product housed inside is stronger than it is in any other product category, argues David Pike, creative director at brand design agency Osborne Pike.
“Luxury packaging is a fascinating area because it’s less about the product in a way,” says Pike. “Certainly in the luxury drinks sector, unless you’re a real connoisseur one drink is much like another, but the bottle it’s in and the outer case it unwraps from is all part of the brand experience, so packaging is incredibly important in that, and you will experience that product differently depending on how it’s packaged. Packaging and product are inextricably linked. You can’t drag one away from the other.”
The economy has been choppy for several years and, while the UK is showing some signs of recovery, consumers are still finding it tough and austerity continues to bite. Against this backdrop of uncertainty, is the luxury market finding the market conditions tough?
“Surprisingly the luxury market looks likely to continue to grow at 7%. How can this be? Luxury brands have been quick to adapt to the new cultural backdrop. No longer concerned with the conspicuous consumption that defined the 2000s, today’s Millennial consumer looks for more meaningful experiences. The leading brands have responded and are focusing their efforts on offering real quality, longevity and ‘pleasure-igniting’ details for true personalisation. It’s then our job as brand designers to ensure we are not creating just another disposable generic purchase but a unique and multisensory experience.”
“While LVMH has reported a slowing down of sales for Vuitton, it is maximising what is being called ‘the Sephora effect’ – embracing a new cultural and creative opportunity to bring luxury to the masses through cosmetics and fragrance. With a lipstick costing a hundredth the price of a bag, cosmetics are helping many luxury brands embrace newness, innovate and attract aspirational customers outside of traditional channels. But, to create difference, desirability and future definitions of the ever-desirable luxury effect, it’s important that entry into new markets remains tactical and brands understand how to retain their unique sense of exclusivity.”
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The recession has been tough on the luxury market for both products and services, but there is still an appetite for luxury and some categories have thrived. Take the rise of the premium ready meal offering at supermarkets like M&S and Tesco, for example. Consumer behavior has shifted away from dining out, to seeking affordable luxuries which can be enjoyed at home. This has broadened the opportunity for luxury products and packaging alike. Luxury items provide a feel-good factor and light relief from gloomy economic times, so there will always be a market for treats and little pleasures.”
“Times have certainly been tough recently but I think the luxury market is refocusing itself and trying to define what luxury really means for people today and in the foreseeable future. Yes, people have less money to spend but that doesn’t mean that they won’t spend; they are just more circumspect and savvy when it comes to making purchasing decisions. Things like craftsmanship and quality are coming to the fore. There is also another level of luxury which appeals to the super-rich where money is no object.”
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