Apr 16, 2023

I study the world's most powerful consumers -- The American Affluent Got it! getty Consumers don’t trust brands like they used to, and personal luxury goods brands experienced it too. That is the big takeaway from RepTrak’s latest report measuring how consumers worldwide feel about major global brands, specifically those with $2 billion in revenues and consumer awareness over 20%. This year was the second in a row when the overall RepTrak Reputation Score declined. It dropped from 74.9 in 2021 to 74.2 in 2022, the first time since 2018 that it declined. And in 2023, the average was down to 73.2 on average. Stephen Hahn, global executive vice president at Reptrak, calls it a “reputational recession,” and the company reports even a one-point drop in the score results in a 4-5% decline in customer support that can impact all business outcomes. Imagine losing just 5% of your loyal customers because they no longer trust your brand. Where the report gets really interesting is its list of the top 100 companies among the thousands tracked that have the highest reputation score, measured across seven dimensions: Products & Services, Innovation, Workplace, Conduct, Citizenship, Leadership and Performance. Luxury brands regularly claim coveted spots on that list. This year Rolls Royce, Rolex and Mercedes Benz rank among the top 10, though both Rolex and Mercedes slipped a few slots from last year. MORE FOR YOU Deeper down the top 100 list, the other 12 personal luxury brands also dropped in the ranking, with one exception; Georgio Armani rose from number 53 last year to 47 this. And Adidas, high ranking last year at number 16, fell off the list entirely. Note: The report doesn’t provide the actual reputation score, only the companies’ ranking. Global RepTrak Top 100 Ranking Personal Luxury Brands 2022 & 2023 Graph by Pamela Danziger with Datawrapper Overall, the personal luxury brands slid 16 places on average in the top 100, with LVMH and Burberry down the most. By contrast, home luxury brands rose in the rankings, notably Bosch (number two after Lego); Miele at number 7 and rising six positions; Dyson at 11, up 13; LG at 82, up nine; and Whirlpool at 76, up 23. Only Electrolux slipped from number 84 last year to 92 this year. Crediting much of the home luxury company’s reputational rise to their emphasis on energy efficiency and sustainability, Hahn explained that many companies’ scores dropped this year because of shortfalls living up to their ESG promises. “If companies don’t fulfill expectations around ESG –where we don’t see them as relevant for what we want to accomplish as human beings in society – their reputation suffers. This is a perceptual issue that companies need to get their hands around,” he said. Higher Standards For Luxury Brands But this doesn’t necessarily explain the decline in personal luxury companies’ reputations. “Companies in the luxury goods category tended to score higher in good conduct, good citizenship and focusing on things more than just products. They get more credit in their rankings for social-related issues,” Hahn explained. That means their reputational fall goes deeper than ESG. “The wake-up call for luxury goods companies is that just having good products and services – they already excel here – does not guarantee you strength in reputation. You’ve got to be more than luxurious,” he said. “Luxury brands have to reflect the values that go beyond the extrinsic things of the brands, and that ties back to deeper, more intrinsic values. It’s less about conspicuous consumption and more about capitalism with a conscience,” he continued. “Luxury brands must be more aligned with a sense of self-worth, versus net-worth.” Just addressing ESG and sustainability concerns are mere table stakes today. Luxury goods brands are held to a higher standard because the symbolic meaning of luxury brands is so deeply embedded into their value. Aspiration Turned Inward “We are now entering a new era of conscious consumerism where brands need to cater to both our higher and essential human needs that were long neglected due to focusing primarily on saturating dreams and brand aspirations,” said Dr. Martina Olbert, The Meaning Expert and founder of Meaning.Global. Traditionally, luxury brands have been a marker for status, wealth and worldly accomplishment and their purchase primarily driven by a desire for self-gratification and ostentatious indulgence. But those values conflict with deeper human values that are gaining prominence. “The pandemic accelerated our transition to the new humanistic paradigm where people are no longer interested in buying things to signify social status and impress other people; our primary motivation for consumption has turned inward,” she observed. “We now want to use brands to elevate our everyday lives and well-being, and not to emulate brand values through aspirational ownership.” Luxury brands have a special role to fill as Dr. Olbert reimagines consumerism as a force for good . “We want to use things of high quality with longevity, aesthetics and personal meaning that help us express who we are and complement our authentic selves,” she said and continued, “The fundamental underlying dynamic of consumption and marketplace is shifting from brands to people.” Brand’s Human Connection Just as a person’s reputation in the social sphere can pull people to them or push them away, a brand’s reputation does the same. “Brands are like people. Every brand is a construct in the mind of consumers, where we develop mental models of brands, essentially a heuristic,” observed Chris Gray Psy.D., The Buycologist. “It tells consumers what they are going to get and can expect from the brand. In the field of psychology, it’s called object relations.” “If a brand’s reputation is strong, it is perceived as having high value to the consumer. They are willing to go out of their way to spend resources, time, money, even frustration to be part of the brand,” he explains. And since, by default, taking part in a luxury brand requires a large monetary investment, its reputation is even more important than for other brands. “When a brand’s reputation suffers, that means something negative is happening with that mental model. It can lead to avoidance behavior,” he shared. “Luxury brands can become too self-centered, focused too much on their own appeal. When that happens, it is at the expense of acknowledging its consumers and connecting with their needs,” he continued. “In the same way that self-centered people are difficult to connect with, self-centered brands can be off-putting to consumers, damaging the relationship and driving them away.” Aspiration vs. Authentic Engaging In marketing, the consumers’ perception is the brand’s reality, and brand reputation is a proxy for that. That’s why luxury brands' reputational slip this year should be of concern. It illustrates the aspirational value of luxury brands that is so fundamental to their appeal may be missing the mark. “There’s this implicit message in luxury branding about exclusivity and elitism. When it becomes too explicit, that’s when you start to see negative reactions because it can cross over to superiority and looking down on other people,” Gray observed. Given the stress hangover from the pandemic and the contentiousness we see around us, people are yearning for connection, understanding and inclusion more than ever. “One of the most important human needs is to feel acknowledged, i.e. ‘seen.’ Brands often play an important role in fulfilling those needs,” Gray said. “Not only are they a way for consumers to create and express their identities, but there is also a sense that their favorite brands ‘get us’ in fundamental ways.” That requires an extra dose of authenticity and humility these days. “It’s a matter of messaging and the context in how it is delivered,” he said. “Messaging depends on who it comes from, what position they are in, how they are saying it and the times that we are in. All these contribute to how we interpret the brands.” “Brands that are focusing too much on themselves are misreading or blind to the cultural cues and, as a result, are failing to connect with consumers and their needs,” he said and added: “Luxury brands are all about aspiration. But people are starting to question what am I aspiring to?” Tuning Into The Cultural Cues Gray believes brands can observe the cultural shifts as they occur by tuning into entertainment and reality television. He notes that in the Housewives of Beverly Hills’ days of reality television, the shows were grounded in division, in-fighting, conflict, sabotage, and misdirection. Now the runaway hit reality TV show is The Great British Baking Show, where contestants good-heartedly compete, cheer each other on and even help each other out. “People yearn for connection and comfort,” Gray said, noting that comfort isn’t necessarily the message luxury brands communicate. While aspirational marketing intends to make people desire a connection with the brand, it can create discomfort if that aspiration is unattainable or miss the mark entirely if the brand’s aspiration doesn’t match the consumers. Here’s where luxury brands can be blinded by an innately human cognitive bias. “It’s a bias called naïve realism, where we believe our subjective opinion is objective reality,” Gray explained. “Naïve realism interferes with empathy.” “It’s a fine line for luxury brands to toe. When you’re holding your brand up as the arbiter of all things good, that means other things are wrong or bad. When you hold yourself up, you can too easily look down on others. “Luxury brands can get caught in this trap because of their exclusivity. I’m not going to tell any luxury brand to be all-inclusive, but it’s going to take some time to undo decades of elitism and exclusivity,” he said. “To be a really good steward of your brand and its messaging, keep messages more focused on how this is a great brand and recognize that everyone will not get your brand,” he said. Style vs. Substance It is easier for some luxury brands to navigate the changing cultural waters than others. Luxury brands that provide a functional purpose, i.e. do something, have an easier time than brands that just say something, i.e. fashion which is largely about subjective style. That may explain why the luxury home appliance brands went up in this year’s Reptrak ratings and fashion went down. And it also may be why luxury automotive brands have an easier time, like Rolls Royce, which rose to the number 3 most respected brand in this year’s rating. The aspiration that functionally-purposeful luxury brands celebrate is tied to self-worth, “That sense of admissibility that I worked hard to achieve success and deserve this very special thing,” Reptrak’s Hahn explained. “It is a symbol of self-reward. I buy an expensive dishwasher because it’s quieter, better quality and gives a greater sense of home comfort. The deeper reward is intrinsic rather than extrinsic that might be driven by ostentation,” he continued. Let this year’s slip in luxury brands’ reputations be an early warning for brands to pivot to more objectively, quantifiable messages around greater quality, heritage, value and comfort that consumers will find with them. That should be the aspiration that they should lean into. “Brands have to shift the expression of how they tell their stories in terms of the promises they intend to keep. That is the story they should put out into the world so that people view them in a different light that connects with their humanity,” Hahn concluded. See also: