Daniel Langer is one of the world’s most renowned experts on luxury in a digitally disrupted world and with Millennials and Gen Z. He was named one of the global "Top Five Luxury Key Opinion Leaders to Watch 2021” by Netbase Quid. He founded the luxury strategy firm Équité and is also the executive professor of Luxury Strategy at Pepperdine University in Malibu. With his team he consults some of the world’s most admired and iconic luxury, lifestyle and consumer brands and also several luxury startups and smaller brands. Daniel is the author of several top-rated luxury management books in English and Chinese and is frequently featured in leading global media publications including The Economist, Forbes, New York Times, Nikkei, Luxury Daily, and Jing Daily. His education includes Harvard Business School and he holds an MBA and a Ph.D. in luxury management.
Q: Everyone speaks about the metaverse. However, frankly, is this not just a fad?
Dr. Langer: The cyber reality is becoming a reality not only in the mind of managers but in real world implications. Take the art world: for centuries, art was physical. Within less than 12 months, everything changed.
Q: Are you referring to NFT’s?
Dr. Langer: Exactly. A NFT is the abbreviation for Non Fungible Token, an item that can be uniquely identified through a blockchain. The buzz for NFTs was amplified when in March 2021 the digital artwork “The First 5000 Days” by Mike Winkelmann, an artist known professionally as Beeple, fetched US$69.3m when sold by Christie’s after being listed at the auction initially for US$1,000, the highest price ever paid for digital art, and the third highest for any living artist, showcasing the potential of digital art as an investment. In an article for the South China Morning Post on 25 March, 2021, I explained that, ‘Virtual art, like Beeple’s, never captured significant price points, so the initial pricing seemed as intuitive as it was wrong. This artwork is different: it is the first entirely digital NFT-based artwork ever sold by a major auction house - an example of Christie’s shrewdly jumping on a suddenly emerging trend for NFT art. As cryptic as it sounds, NFT uses the same blockchain technology that cryptocurrencies apply, making it possible to turn anything virtual into a collectors’ item that cannot be duplicated.’ Being the first of its kind explains the allure for collectors and makes it a perfect example of the new game of luxury where virtual experiences become as critical as physical ones.
Q: How does an artwork redefine the game of luxury?
Dr. Langer: It is an expression of the most fundamental change that ever happened in luxury. And while we experience a quantum leap, the disruption has all the ingredients that creates the extreme value in luxury: it’s rare, unique, highly emotional, one of its kind, and - as we could see by the price point it achieved - highly desirable. It’s luxury par excellence. And upon deeper reflection it reveals that luxury is, in fact, an investment: into unique memories and an investment into significant value increase over time.
Q: Can you elaborate more on the aspect of investing and luxury?
Dr. Langer: Investing instead of just consuming is a further shape-shifting factor as luxury consumers are looking for new categories and offers that don’t only give them the allure of luxury consumption, but also the feeling to have invested in something that can have a substantial value increase. Brands like Hermès (think Birkin bag, the probably highest return investment item over the last 20+ years) and Dior (think Air Dior sneakers not fetching more than 20k USD a pair second hand), but also entire new categories like NFTs, have capitalized on and profited from this trend. This is good news for luxury brands that focused on brand equity building in the past, but bad news for those that focused on transactional sales and relationships.
Q: Let’s get back to the metaverse. In a previous interview you stated that the biggest challenge of the metaverse for brands is not how their avatars look like but, instead, how to create a holistic brand experience across multiple platforms, from the physical to the digital.
Dr. Langer: Indeed, this is the real challenge. The dawn of the metaverse means that brands need to excel on multiple dimensions at the same time in a reality in which change is accelerating at faster rate. This means, only hyper-focused or hyper-capable broader brands will survive. Équité estimates that up to half of the incumbent luxury brands may not survive until the end of this decade. They will be replaced by met averse-native brands who start from a clean slate, able to excite customers independent on their brand access points. Today, most brands are not ready yet. And some even don’t yet understand the magnitude of the challenge.
Q: How would you describe the magnitude of change?
Dr. Langer: The magnitude of acceleration and change is unprecedented. It requires brands to update knowledge, tools, and capabilities faster than ever before. It requires questioning the status quo permanently and changing approaches where needed. It requires getting comfortable being uncomfortable when it comes to cultural sensitivity and savviness, including digital “culture”, tools, and knowledge. And it requires brands to shift perspective from inside-out to outside-in, towards radical customer-centricity. This is how the luxury metaverse is shaping the rules of the new game of the sector. Crating a “metaverse department” may be getting a lot of short-term PR, but, fundamentally, the entire organization has to think in fluidity of customer interactions regardless of their origin. The customer always chooses - do they want to interact physically or virtually? That is what brands need to solve. Almost no brand we audit has figured it out right now.
Q: Why is this new reality so critical for luxury brands?
Dr. Langer: The luxury metaverse is especially challenging when it comes to luxury brand experiences. Think about purchasing anything in today’s high-end ecommerce environment. Most online store experiences resemble each other. They follow the same principle of a physical store. You “walk in,” find your items, place them in a cart, check out, and wait for your items to be delivered. In many cases it takes longer than ordering an everyday item on Amazon. Everything from entering the store to checking out is extremely similar between brands, at least in most cases. However, luxury must never be an undifferentiated experience. Luxury always has to feel personal, exceptional, and of extreme value. The dangers brands face is to underestimate how much brand equity will be destroyed if they don’t get this right. That’s why this new reality is the ultimate call to action for luxury brands: wait and see will destroy your future, leading the change is the only choice.
Thank you.
