Old Company's New Leaders: Employment Proposition for Millennial Leadership in Luxury Retail

Introduction

When considering similarities between luxury retail organizations, one common theme is that of a long history, often established over centuries of operation. With this comes the potential for said organizations to have a more traditional culture and structure, which in turn impacts on their employment proposition and poses risks for the future prosperity of the organization. The importance of this potential risk is more apparent today than ever before, as traditional luxury organizations compete against younger, non-luxury companies for talent that might have been considered easier to attract previously. This is because advancements in technology over the past 20 years have enabled relatively young organizations to grow at a speed, and to a scale, that can make them not less attractive to work for as much more established firms (Rampl & Kenning, 2014).

New, exciting companies always have, and will continue to, emerge and begin competing with more established organizations for the best talent. However, previously, the larger easily recognisable companies had the advantage of size, scale and brand over emerging companies, creating an ‘employment brand equity’ (Ewing, Pitt, De Bussey, & Berthon, 2002) which would make them more attractive to talent than emerging companies (Rampl & Kenning, 2014; Turban, 2001). This is no longer the case. With increased globalization brought about by an exponential step change in technology over the past two decades, emerging companies can grow at a speed not possible before, enabling them to reach a comparable level of employer brand equity and allowing them to compete for the best talent against the more established organizations much sooner.

Luxury Retail (Table 1) is a specific sub-section of the retail sector focusing on products that are of a perceived higher quality and price point than non-luxury alternatives. Traditionally, luxury retail was an industry that relied upon craftsmanship and material rarity (Sicard, 2005). However, since the 1990s luxury brands have been targeting a wider consumer base, made possible through an evolution in production methods that moved from craft to mass production, as well as an intensification in distribution methods, both of which have supported the opening of retail locations throughout the world (Dion & Arnould, 2011). To manage the paradoxical challenge of selling mass-produced goods on the basis of craft and quality, luxury retail organizations have needed to evolve their offering to the consumer; a purchase needs to be for more than the functional reasons. It is not only the perceived product quality that justifies the price consumers are willing to pay for luxury items. Kapferer (1997) describes luxury products as those that give extra pleasure by flattering all senses at once. Vigneron and Johnson (2004) propose that psychological benefits, rather than the functional benefits, are the key distinguishing factors that differentiate luxury from non-luxury products. Managing a brands ability to deliver this feeling is akin to that of art re-production, with products needing to ‘possess an aura of authenticity which surrounded the original – nonmechanically reproducible – work, endowing it with qualities of uniqueness, distance and otherness’ (Dion & Arnould, p.503).

Adapted from Deloitte (2017a)