You are welcome to share your thoughts on this article written by Darren Foley, Managing Director at Pearlfisher, London

We are all too aware of the ongoing economic difficulties and retail caution with Habitat, Thornton’s and Jane Norman three more casualties of the British High Street. But all is not doom and gloom. The Royal Wedding and choice of British designers and British brands favoured undoubtedly gave yet another boost to the British economy, an iconic ‘Cool Britannia’ message is being heralded in the run up to Britain’s hosting of the 2012 Olympics and we are welcoming the news (19 June) that luxury British fashion group Mulberry announced a sharp rise in profits—reporting a jump to £23.3m from £5.1m a year ago.

Mulberry—and the luxury sector as a whole—does indeed seem to be bucking the retail trend and we maybe need to look carefully at the factors governing this success and recognise that whilst mindful of cost—and that we are maybe not buying as much—what we are buying is of a perceived quality and that provenance is once again a huge driver for consumers —and that this could not only continue to boost the luxury sector but maybe unlock a new direction for the whole brand landscape.

But, the meaning of provenance is changing as a brand’s audiences and biggest fans are no longer traditional home-grown loyalists but a global audience driven by cultural diversity and the ease with which we can now explore the new (retail) worlds open to us. The success of luxury goods is no longer just about literal roots and origin but about the positioning of values and message.

In 2006, British brand Burberry was pilloried for moving its production to China. The backlash seemed to centre on losing jobs for British workers rather than a worry that we may lose the iconic British identity and design of this ‘heritage’ brand. Ironic then maybe that Burberry bought out its longstanding Chinese business partner for £70m last year. It also recently opened a store in Beijing with plans to expand from 60 to 100 shops. But, even away from home, the Chinese are a shopping force to be reckoned with and the brand is hiring Mandarin speakers in the UK to ensure sales are not lost in translation. On top of this Burberry has opened the first store (May 2011) for its ‘Burberry Brit’ fashion label in London’s Covent Garden and made a public declaration that the brand is increasingly using its British’ness as currency around the world while increasingly looking to the Far East for sales.

The Far East, and China in particular, is fast becoming the new brand powerhouse and just last week, the Chinese Premier visited the UK to negotiate a potential £1billion trade deal between the two countries. We can not ignore the need for brands to now embrace and gear themselves towards cultural diversity but—just as brands will need to embrace said diversity—they will also need to look at how the brand proposition of a recognised global icon can and should translate —both behaviourally and aesthetically —in the different markets with which they choose to partner.

However, it is potentially a double-edged sword. Brands do now need to have a presence in growing markets but, balanced against this, is the need to weigh up the negative and positive consumer response to a luxury brand’s source and place of origin. Traditionally, the search for superior quality—and manufacture in a country perceived to be associated with high quality or particular expertise —has been the most powerful motivator for consumers when purchasing luxury goods. Can we now shift the balance to both promote the brand and correctly position place of manufacture to influence the consumer towards purchase?

There is, of course, no prescriptive answer. And it will be interesting to see just how the UK’s largest drinks company, Diageo, faces this brand balancing act. Diageo has announced that it is taking a controlling stake in Quanxing—one of China’s oldest companies—and which owns ShuiJingFang, one of China’s best-known baijiu spirits. This marks the first time that a foreign company has managed to gain control of a popular brand in China and Diageo has advised of a plan to turn ShuiJingFang into an ‘internationally successful iconic Chinese brand’. What we don’t know is just how the masters of drinks branding will position, design and market this product for a new International audience to widen its appeal but keep the quintessential Chinese heritage front of mind…

But what we do know is that—with no status quo—we all need to move away from previous obligations and conceptions to embrace open-mindedness and learn to exist in new guises in the constantly evolving world order that we the consumer have created with our changing desires.

About the Author

Darren Foley, Managing Director at Pearlfisher, London,  joined the company in 2002 as Realisation Director, inventing the concept of realisation and advocating a design process in which our technical and creative teams work in harmony from the beginning. He has worked in the design industry for close to 25 years, starting out as a junior production artist, and amassing an unparalleled depth of knowledge for the discipline.