Revealing the tactics prestige brands use to keep buyers coming back for more

From the Spring 2024 issue of Kanebridge Quarterly magazine. Order your copy here. 

In the world of luxury fashion, few items evoke as much desire and exclusivity as the Hermès Birkin bag.

Conceived 40 years ago, as legend has it, after a chance meeting between actress Jane Birkin and then Hermès chairman Jean-Louis Dumas on a flight from Paris to London, the coveted rectangular hold-all now has a folklore all of its own.

From rumoured ‘pre-spend’ requirements to stories of eager customers wooing Hermès sales assistants with freshly baked cookies just to get on the waitlist, Birkin lore persists because it can be tough to fact-check anything about the bag, its pricing or the brand’s distribution and sales practices. Hermès is notoriously tight-lipped and didn’t respond to requests for comment for this article.

But this phenomenon is no accident; it’s the perfect example of a meticulously crafted strategy employed by luxury brands to create a sense of urgency and prestige around their products.

“Storytelling, a strong brand narrative and engaging customers emotionally is so important in the luxury retail space,” says Dr Edwina Luck, senior lecturer in advertising, marketing and PR at the Queensland University of Technology.

“Then this is backed up with strategies such as creating scarcity around a particular product or line, which is exactly what Hermès do with the Birkin, to further create that very real sense of exclusivity that drives the luxury sector.”

According to global research firm IBISWorld, Australia’s luxury retail industry has grown 6.9 percent on average per year between 2018 and 2023 and is now worth more than $6.2 billion.

This is despite a trend during the pandemic for some brands such as Tiffany & Co. and Burberry to reposition parts of their business as ‘masstige’, meaning the perception of exclusivity in relatively affordable goods.

It’s a shift that has been exacerbated by the popularity of social media and overt influencer and celebrity endorsements driving such brands to a younger audience than has traditionally been associated with luxury retail.

“What all of that has done is actually make those ultra-luxury brands such as Hermès and Cartier even more exclusive,” says Dr Luck. “So, the gap is widening and as far as luxury brands and consumers are concerned, the more exclusive the better.”

Exclusivity has long been a cornerstone of luxury branding, creating a unique allure that sets high-end products apart from the mass market.

Limited production runs, personalised shopping experiences, and even the physical design of stores (think closed front doors and roped-off entrances) all contribute to the perception that these products are not just items, but experiences worth striving for.

Pre-spending — the concept that a consumer needs to build a “purchasing profile” that justifies their right to buy a certain product — is another tactic that brands use to build a deeper relationship between the consumer and the brand, creating a tiered connection that fosters loyalty and aspiration.

This initial investment, such as a scarf or a wallet, can serve as a gateway to the brand’s more exclusive offerings, such as particular product lines, limited-edition collections or bespoke fashion pieces.

“These strategies turn shopping into an event,” says Kelly Brown, co-founder of retail strategy agency, The Working Party.

“The anticipation, the thrill of securing a limited edition, the urgency of pre-spending — all these enhance the consumer experience.

“Luxury shoppers aren’t just buying a product, they’re buying a story, an experience, and a sense of belonging to an exclusive club. It’s about making them feel special and valued, which is exactly what consumers expect from luxury brands.”

The concept of scarcity isn’t new for high-end brands either. Enzo Ferrari, the father of the Italian luxury sports car manufacturer famously said, “Ferrari will always deliver one car less than the market demands”.

“Ferrari highlights a fundamental principle in luxury branding: the deliberate creation of scarcity,” says Jon Michail, CEO of corporate and personal brand image advisory Image Group International.

“This technique is not just about limiting supply but about crafting a positioning and image of exclusivity and unattainability that even Lamborghini could not beat.

“Scarcity creates urgency and elevates perceived “psychological” status, crucial elements for luxury brands. This perception is vital as it differentiates luxury brands from mass and mid-market options, reinforcing their unique value proposition and maintaining their premium and/or ultra-premium positioning.”

So, what’s next in the luxury sector? Experts predict luxury brands are likely to explore new and creative ways to further enhance their exclusivity and appeal.

“I see luxury brands are set to adopt more personalised and experiential techniques to enhance exclusivity and desirability,” says Brown. “A sophisticated online presence is now essential, but we’ll see luxury brands take more control over their sales channels, particularly online, by reducing distribution through online multi-brand retailers.

“This shift allows them to own the customer relationship which reinforces exclusivity and brand loyalty.”

As for the five-figure Birkin, retail insiders say only customers with an extensive purchase history with the French brand are offered the opportunity to buy one directly from a Hermès boutique.

However, pre-loved bags can often be found through online reselling websites such as priveporter.com (at the time of writing the lowest price Birkin available on priveporter.com was $AUD36,056).

According to Vogue, Hermès “boutiques have their own style offering, with infrequent deliveries and little notice as to which colourways or finishes will be available to purchase at any given moment. For this reason, customers who want a brand new bag should enquire in store and seek advice from Hermès sales experts”.

Even then, they can be hard to pin down, with Birkin bags, and the equally popular Kelly bag, subject to stringent quota systems worldwide.

Good luck.