Consumers seem to be favoring style over substance, but where does that leave luxury brands?
Key Insights:
- RepTrack's 2023 Most Reputable Companies report sees consumers losing trust in luxury brands
- Personal luxury brands are struggling most, while home luxury brands seem to be taking the spotlight
- Consumers are looking for more from brands than luxury, with a focus on environmental, social and corporate governance
Brands’ reputations are dropping fast. RepTrack's 2023 Most Reputable Companies report gives audiences a deep dive into the way consumers are beginning to feel about luxury brands. It is no longer enough for a brand to be of high status to achieve success.
Market research indicates that consumers are forgoing style for substance and are looking for more when it comes to the brands they support.
What RepTrack’s 2023 Report Can Tell Us About Luxury Brand Reputation
Luxury brands may need to rethink their approach to branding if they are to remain on the top. According to RepTrack’s 2023 report, global brands with $2 billion in revenue and consumer awareness of over 20% are losing the trust of audiences.
The market research company annually measures the reputation of major brands through seven parameters: Products & Services, Innovation, Conduct, Workplace, Citizenship, Leadership and Performance.
This year marks the second year that the overall Reputation Score has declined for big brands, while 2022 marked the first decline since 2018.
Personal luxury brands have taken a particular hit with many listed in the annual Top 100 dropping in ranking. Among them are Italian luxury company Giorgio Armani, falling from position 53 to position 47.
Adidas took an unexpected turn for the worst, going from position 16 to dropping off the top 100 list entirely. Personal luxury brands fell by 16 positions on average, according to RepTrack.
On the other hand, the reputation of home luxury brands seems to be rising among consumers, with Lego and Bosch taking the first two positions on the Top 100 list. Notably, Miele, Dyson, LG and Whirlpool have also increased in ranking.
Championing Brands With Purpose
This change in the luxury goods industry could be the result of a cultural shift in the way consumers decide which brands to invest in and why.
With countries still recovering from the pandemic, financial instability looming and widespread discussion of the importance of sustainability and social justice, consumers are now looking at luxury in a new light.
Global executive VP of RepTrack Stephen Hahn explains that one of the reasons the reputation of home luxury brands has increased is that they provide functionality and a specific purpose.
“Luxury brands must be more aligned with a sense of self-worth, versus net-worth.”
As an essential key for the reputation of luxury brands today, Hahn notes ESG, referring to a brand’s “environmental, social and corporate governance.”
The success of luxury brands today must go beyond elitism, which indicates a possible reason for the decreased trust in personal luxury goods brands. Instead, they must offer value on both an individual and societal level.
A study by the Zeno Research Group about the strength of purpose indicates that “brands leading with Purpose will yield stronger reputation, brand affinity and bottom-line results.”
“After evaluating over 75 brands, our research found that global consumers are four to six times more likely to trust, buy, champion and protect those companies with a strong purpose over those with a weak one.”
Luxury brands need to put developing ESG to the forefront of their priority lists in hopes of gaining back the trust of consumers worldwide.
Reputable Brands That Speak Their Values
With so many well-known global brands to choose from, it is key to explore which ones have established themselves as reputable and trustworthy for their services and products, as well as for their purpose-driven value.
Lego tops RepTrack’s Top 100 Ranking list in 2023 at first place. Although the construction toy brand has existed since 1949, its recent efforts are just as credited for its reputable success.
Branded for both children and adults, Lego champions sustainability through actions such as implementing sustainable materials and packaging and focusing on its Co2 emissions. Lego’s “Everyone Is Awesome” set also speaks to its values, as a product openly promoting the LGBTQIA+ community.
Italian high-end luxury fashion house Gucci has also fashioned a position for itself as a personal luxury goods brand with a higher purpose.
The launch of its environmentally progressive program titled "Gucci Equilibrium" marks the brand’s transparent commitment to sustainability. The website dedicated to this program reports on the company’s corporate social responsibility policies, structural innovations, employee satisfaction and environmental impact.
Gucci’s “Off The Grid” creative campaign is just one example of how the fashion house combines luxury, entertainment and sustainability.
In the Spotlight: Consumer Loyalty
With brands tackling the problem of consumer loyalty, RepTrack’s 2023 Most Reputable Companies report offers key insight into what existing, and up-and-coming, brands can do to gain the trust of their target group.
All brands, especially ones in the realm of luxury, should ask themselves what they have to offer besides a product. Authenticity, clear and consistent values, and practices that contribute to society have become essential to branding success.
“Brands have to shift the expression of how they tell their stories in terms of the promises they intend to keep,” added Hahn, when commenting on the 2023 RepTrack report.
