5 Brand Extensions We Can Expect Luxury Brands to Make in The Future

5 Brand Extensions We Can Expect Luxury Brands to Make in The Future


My first experience inside a true luxury store was when I was eighteen and on vacation with my parents in Paris. Before going on our trip, I had been determined to step inside the store of my favorite designer, Elie Saab. I had been to Paris a couple years prior and saw the outside of the store but was too overwhelmed to go in because the dresses were quote, “too pretty”. Luckily, I worked up the nerve to go inside the second time around.

I felt like I was in a dream come true, surrounded by both ready-to-wear lines and couture gowns everywhere I looked. A sales associate came up to me and handed me a bag full of books about the history of the brand, as well as one that showcased the latest collection. I now realize that that was probably a ploy to shoo me out of the store, as 18-year-old American tourists aren’t really supposed to be wandering around the upstairs couture collections with zero intent of buying anything, but if the workers at this luxury brand were kind enough to create such an experience for a consumer like myself, you can imagine what the true experience of shopping in a luxury store is like.

Many luxury fashion labels look to provide a rounded brand experience with business extensions. Most notably, companies have extended their businesses into the restaurant sector in order to provide consumers with a fine dining experience that is cohesive with the luxury brand’s image. For example, in Miami, you can dine at the Versace Mansion; the estate infamous for being the place of death of late Gianni Versace. Or, in Shanghai, consumers who want to have immersive experience with the Gucci brand can eat at the company’s first restaurant, 1921 Gucci. Luxury restaurants like these allow a wide range of consumers to access the experience of a brand, without splurging hundreds of dollars on a handbag. (Think, my 18-year-old self.)

The question we seek to answer is, does a fine dining experience positively affect a brand’s experiential retailing in the long run, or does it simply dilute the brand’s image? Shopping at a luxury fashion store is an experience in itself, so what value are brand extensions really adding?

It doesn’t seem as if brands are slowing down in the race to create the most experiential brand using brand extensions. So, what are the extensions we can expect to see in the future? And more important, will they be worth it?

But first, what makes a brand extension successful?

As we’ve touched on, brand extensions can prove to be unsuccessful if they make the brand too accessible, and less exclusive. Luxury brands hope maintain an elite status, so becoming too available risks hindering a company’s value. However, brand extensions that spark the appropriate amount of brand awareness and intrinsic and extrinsic values for their customers, can be very impactful for not only customer perception of the company, but overall value as well.

Here are the five brand extensions we are going to be exploring in this article:

  1. Hotels
  2. Virtual Reality Experiences
  3. Art Exhibitions
  4. NFTs
  5. Live Events
  6. Conclusions

1. Hotels

Slowly but surely, many luxury fashion brands are making their way into the hotel sector. Some designers are adding their own flare to suites in five-star hotels (The Dior Suite at the St. Regis Hotel in New York, Diane Von Furstenberg’s Suite at Claridge’s, London, and Scholosshotel Im Grunewald Suite by Karl Lagerfeld in Berlin), but other brands are looking to fully expand into the hospitality sector as a part of daily business operations.

Take the Bulgari Hotel line, for example. The Bulgari brand owns hotels in Milan, London, Dubai, Bali, Beijing, and Shanghai, with five more locations opening in the next five years. Rates for these hotel rooms are some of the most expensive on the market, and supplement the luxury rooms with opulent spas, top class Italian restaurants and breathtaking views. It won’t take long for other fashion brands to follow in competitor’s footsteps in creating a hospitality experience that offers a fully immersive experience that is cohesive with the brand’s image.

Hotels that offer this much exclusivity in their stays positively affect customer perception and overall value of a luxury brand. This sort of exclusivity is achieved through not just a high price tag, but with top-tier personalized customer service that is consistent with the service that is expected in stores. In the future, as brands opt for this method of brand extension, they should take notes from Bulgari’s book in order to ensure that their transition into the hospitality industry is a value-adding proposition.

2. Virtual Reality Experiences

In the technology-driven world we are living in today, there is no shortage of ways that luxury labels can utilize augmented reality as a brand extension. Chanel, for example, has used VR lenses, available through its app and platforms like Snapchat, to let any consumer with a smart phone experience its holiday pop-up shops. Many luxury makeup-brands, like YSL Beauty, have offered a virtual reality try-on option in order to test out products via a camera before purchasing. In the future, brands may look to offer augmented reality runway experiences, letting any member of the public view a runway show through their phone as if they are there in person.

There does not seem to be much downside to letting the general public experience a brand in this manner. If anything, this sort of experience can raise brand awareness for a low cost and generate excitement about new collections. However, a caveat to augmented reality brand extensions may be that some exclusivity is lost in the process. Although this may be the case, it is not likely to dilute the value of the brand, considering products and services are not becoming more accessible to the public, simply just more widely known. Virtual reality options like lenses and fashion shows provide more of a secondhand experience for consumers, instead of the full experience of a luxury retail brand.

3. Art Exhibitions

Throughout the years, countless brands have opted to extend their brands via art exhibitions in fine arts museums. A particularly interesting exhibit of couture fashion was the Balenciaga: Shaping Fashion exhibition at the Victoria & Albert Museum in London back in 2017. Hundreds of archived pieces from the Spanish designer Cristóbal Balenciaga collection were on display, some even never before seen designs. The dresses on display were a nod to not only the creative mind of the designer, but also to the artful construction of the dresses. Alongside the gowns were x-ray depictions of how the interior was crafted. This exhibition was able to show viewer’s firsthand the intricacies of Balenciaga’s craft, who was described by Coco Chanel as “the only couturier in the truest sense of the word”.

Art exhibitions such as Balenciaga’s largely add value to a luxury brand’s image. By displaying merchandise in a fine art setting, consumers can compartmentalize the brand to be considered fine art as well. This helps maintain a perception of exclusivity and high value for a brand. If a brand wants to maintain a sense of luxury in the public eye, displaying pieces as part of an art exhibition is certainly one way to do so

4. NFTs

Non-fungible tokens are taking over the tech world, and the fashion world is not far behind. NFTs are completely digital assets that can be bought and sold on an online marketplace. These assets are traded on a principle called blockchain, which is operated on a global network of computers that keep permanent transaction records for every asset bought and sold on the marketplace. Usually, NFTs take the form of images, GIFs, videos, or any other digital artwork.

Not many brands have taken the full step into the NFT marketplace just yet, but a few are coming close. Gucci, for example, has released digital shoes for purchase with virtual sneaker app Wanna. The sneakers can be purchased in app, with a pack of 25 pairs running for about $12. The sneakers do not have a real-life counterpart, so the only source of value for the consumer is digitally trying them on through their camera lens.

This sort of digital asset is an example of a brand extension that has the potential to dilute a brand’s image. It is likely that the only people interested in buying digital shoes are already very interested in the Gucci brand, even if they may not be repeat purchasers due to the brand’s steep prices. If this is the case, this business extension is not truly raising brand awareness, and it is losing a sense of exclusivity. While this has not seemed to harm Gucci’s brand, it doesn’t seem to be adding much value, either.

Another risk with fashion brands joining the NFT marketplace is the fact that the target market for luxury fashion has not shown much interest in buying and selling NFTs. Purchasing an NFT is a rather complicated process to fully understand, fashion brands interested in expanding their business into this industry in the future should be sure to sell assets that their target market would be interested in to make it worth going through the hassle to purchase them.

5. Live Events

The next new thing for luxury brands to explore may be live spectator events, either in person or via live stream platforms. Recently, online luxury retailer Moda Operandi explored a virtual trunk show stream. While models were showcasing new apparel, the designers could share their thought process behind the designs, and shoppers could pre-order items in live time. This live interaction allowed customers to understand the story being the lines and the purpose of each individual piece. Apps like LivePitch also make it easier for shoppers to connect with stores by offering face-to-face virtual interactions. As far as in-person live events go, there are of course runway shows and fashion weeks to give consumers the inside scoop about new collections.

Events such as these allow customers to feel connected with different brands by providing the opportunity for them to learn the intent behind pieces, as well as the opportunity to engage with the creators. Because this enables viewers to form a personal connection with the brand, which adds value to a customer’s shopping experience. This type of brand extension could very well prove to be a value-added proposition for luxury fashion brands.

6. Conclusions

It’s no doubt that when you’re shopping for a luxury item, part of the high price you’re paying for is the experience that comes along with it. Fashion brands are always looking for ways to elevate their experiential retailing; many have found their ways into the restaurant industry in order to provide consumers with a fine dining experience and customer service that is cohesive with that of its stores’. However, brand extensions could run the risk of diluting the image of a luxury company by making the bran too accessible and less exclusive in the eyes of the consumer. Fashion labels have to walk a fine line in order to strike a balance between brand awareness and exclusivity.

The first brand extension we can expect more fashion brands to try is expanding into the hotel business. By providing consumers with an on-brand hotel, they can be fully immersed in the company’s experiential retailing. If done right, expanding to the hospitality sector is a great way to maintain an exclusive image. Second, companies may look to incorporate Virtual Reality experiences into their daily operations. This way, consumers can connect with brands without losing exclusivity. Third, more fashion brands will likely look to display archived pieces in an art exhibition in order to showcase the value of their collections. The fourth brand extension that fashion brands are beginning to explore is the idea of selling NFTs. With this method, companies should be wary of the fact that not all consumers are interested in going through the hassle of figuring out this complicated technology. Last but not least, fashion companies are beginning to test the waters of live events where designers and consumers can connect in real-time, allowing shoppers to form a personal bond with the brand.

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5 Brand Extensions We Can Expect Luxury Brands to Make in The Future Luxury brands get to monetize their intangible value in many different product lines, let's look at what the future might hold.
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