From fashion to politics and technology to media, the world that surrounds luxury brands is constantly changing.
What’s happening in society and in the lives of consumers is hugely important, shaping their needs, desires and buying habits.
The rewards of reflecting and responding to new trends can be huge.
It can help boost popularity, increase sales and show customers you’re listening, encouraging affinity and loyalty.
But if you get it wrong, or stay on board with a trend that’s nosediving, it can have the opposite effect, making your brand look tone deaf or out of touch.
So what do companies need to consider before they jump in?
What are the reputational risks of following trends – or trying to be a trendsetter – and what can they do to if the plan goes wrong?
As with any new venture, brands can minimize the risk by taking sensible precautions and having a good recovery plan in place.
Even heritage brands that trade on timeless elegance and craftsmanship need to understand and respond to current trends if they want to win new markets and appeal to new generations of customers.
In the Generation Z era, that means not only reflecting changing tastes and attitudes, but also keeping up with rapid changes in technology and media.
In the Generation Z era, that means not only reflecting changing tastes and attitudes, but also keeping up with rapid changes in technology and media.”Alexandra Walker | Broker Assistant, WTW
Brands are increasingly moving into worlds that may be less familiar to them, such as gaming and virtual reality, in order to market to harder-to-reach younger consumers.
For example, one heritage luxury brand created virtual outfits for video game characters that players can purchase, while another has created NFT (non-fungible token) versions of some of its designs.
Some companies have pushed the envelope further to stay relevant and win new customers.
Two long-established brands recently followed the trend for extreme fashion, one using fake animal heads in their couture designs, and the other making luxury trash bags.
Both received a backlash from some critics and consumers, being accused of insensitivity and bad taste.
The vogue for joining up with social media influencers can also have its risks.
A luxury cosmetics brand enjoyed a meteoric rise in sales partly through its association with two influencers, only to see them fall from grace, with one accused of using racist language and the other of making sexual advances to minors.
A luxury cosmetics brand enjoyed a meteoric rise in sales partly through its association with two influencers, only to see them fall from grace, with one accused of using racist language and the other of making sexual advances to minors.”Alexandra Walker | Broker Assistant, WTW
Some brands may decide that the possible damage to their reputation may be worthwhile if riding the wave of a trend results in wide publicity and higher sales.
However, that can be a gamble, and firms need to balance the rewards with due consideration of the risks involved.
WTW has partnered with some of the global leaders in this field to develop a holistic solution that can help prevent a crisis happening and support the response and recovery if it does occur.
Planning: our Reputational Risk Readiness Review can help organizations define and quantify their reputational risks, identify the potential impacts and map any gaps that need mitigation.
Prevention: to get ahead of events and prevent potential reputational issues escalating into a crisis, the powerful Polecat platform offers real-time horizon scanning. AI-powered algorithms synthesize data from online and social media channels into dashboards and risk alerts for relevant media.
Response: WTW offers access to experienced crisis communications experts who have managed crisis situations of all types around the world, from advice on media handling and strategy to leadership statements and speeches.
Risk transfer: our reputational risk insurance product offers up to $50 million cover for loss of gross profit as a result of a significant adverse publicity event.
This includes immediate interim payments to get through the crisis and support spread over up to 12 months to help you stay afloat in the aftermath.
Rehabilitation: our experts will work with you over the longer term to develop campaigns and communications to help you turn the tide of public opinion back in your favor.
To find out more about our Reputational Crisis Insurance and Risk Management Solution, please get in touch.