Horizontal diversification in Luxury

Horizontal diversification in Luxury

What is exactly horizontal diversification ? When you google it, the first definition to pop-up is the following : « a type of diversification under which a firm develops or acquires new products that are different from its core business or technology, but which may appeal to its current customers. » The idea is to enlarge the brand to cover multiple fields of activity that may not  be related to its original core business. It offers numerous advantages such as strengthen the brand’s DNA by turning it into a 360° experience or the customers’ loyalty by keeping them somehow « trapped » in the brand’s universe. As we know, we’re living sort of a renewal of the 90’s label era so the goods are kind of becoming secondary in the brand’s image building. The main goal is basically  to develop the brand’s uniqueness through the use of multiple channels and ensure your customers the feeling of being part of your tribe. It’s a thrilling challenge as the brand must enter a field as a new player but any moves has to be compatible with its legacy not to damage the brand’s equity. A wonderful example of this is the furniture’s collection from Versace Home whom highly decorated plates in a baroque style reflects the brand’s legacy so well. It is something relatively newer in France where rumor has it that Dior will open a restaurant within its iconic Montaigne flagship whereas Burberry already has a café in his flagship for years. In more recent markets such as Dubai, more and more brands are giving horizontal diversification a try for instance by opening hotels ( Armani Hotel, Bulgar Hotels…). Among the many advantages it offers, we can quote reaching different microcosms, potential buyers. People that will go window-licking in Paris streets may not be the same as the ones staying in Dubai a couple of days for work. It will strengthen the brand both by anchoring it geographically and allowing the different sections to support each other depending on which one is the most successful at a point.

2018-11-14T23:21:54+00:00