shelby durham.
How The VIC Has Forever Changed Luxury Retail
Written by Shelby Durham for Columbia University
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Luxury retail peaked at record-breaking annual revenues following some of the darkest times in recent history: the COVID years. Brands were flooded with clients as they reopened their doors after almost a year of exclusively acting online. Some brands with lines that wrapped around multiple city blocks, and people waited hours just to experience the luxury brand’s selling ceremony. These lines were filled with what the industry calls “Aspirational Clients”, (McKinsey & Company) or people who are first-time shoppers of the brand, and usually are buying items at entry-level price points (which are usually up to a grandiose $10,000).
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One would think these lines cascading city blocks are the population that keeps mega brands such as Dior, Louis Vuitton, and Cartier’s lights on. In a few swift years, these clients have disappeared. First-time clients, once eager for a chance to purchase $1,200 sneakers, are nowhere to be found. Brands in 2024 have announced catastrophic profit loss, including luxury conglomerate Kering reporting down 11% in Q2, while their cash cow brand, Gucci, reported profits down 20% in Q2 (Business of Fashion), and Kering as a whole operating 42% down on the year (Vogue Business). The pendulum of the luxury business model has swung.
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So who is keeping these brands afloat?
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Welcome the VIC, or the Very Important Client. These ultra HNWI account for 40% of annual luxury sales, while only being 2% of the luxury shopping population (Business of Fashion). Brands obsessively took notice of their new business model to cater to these top clients. ​​​
​Luxury conglomerate LVMH’s namesake brand Tiffany & Co. unveils its newly renovated NYC Flagship, “The Landmark,” and hosts a private high jewelry event in collaboration with Givenchy Haute Couture for select VIC LVMH clients (2023).
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Brands such as CHANEL, Gucci, and Tiffany & Co. opened salons that are only accessible by VICs. A true pay-to-play, these clients don’t attract the attention of brands until they are spending upwards of a quarter of a million dollars, and even then a brand can choose whether or not they want to engage.
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“$100K doesn’t do anything anymore,” says an L.A.-based stylist,
“Now it’s $200K a year,” they say” (The Cut).
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Shopping becomes a competition of uniqueness when you have a client who can buy anything they want. “What do you offer the people who have everything to get them to buy even more?” (The Cut). The client’s expectations for brand activations have skyrocketed.
With accessibility to VIC special moments being at an all-time high with social media, brands must have perfect experiences. Our hyperconnected world blasts these intimate moments – it’s difficult for brands to keep up.
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As we began the post-pandemic decade, we saw how detrimental a loss of client population can be to archaic brands and their profits. Accessibility to specially curated brand experiences has allowed clients of all spending levels to see everything that brands have to offer, leading to VIC clients having exceptional expectations for experiences. Going forward, brands need to decide if they will continue catering to a specific client sector or cast a wide net of experiences for all levels of clientele.