September 2, 2016

It’s Time to Concede, American Girl is Not a Luxury Brand

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American Girl has long been caught in a “will they/won’t they?” relationship with its own brand image — namely, whether to commit itself to a “premium” vs. “luxury” label. The company insists it is a premium brand, arguing, “no, we are not a luxury brand, we are not in luxury malls.” If it were as simple as that, there would be nothing left to say, no reason that consumers would write articles about the brand’s exclusivity or cry out “you are a luxury brand!”

Luckily, the fight against this luxury label might finally have come to a head, as American Girl recently announced an exclusive deal with Toys “R” Us to create the first-ever American Girl shop-in-shop and grant Toys “R” Us exclusive rights to carry American Girl’s “Truly Me” line of dolls. Before diving into how this deal can put the premium-luxury battle to rest, it’s important to realize just how wide the gulf is between these two definitions, and how all of the confusion got started in the first place.

Premium vs. Luxury: What’s The Difference?

Good question. And a tricky one, it turns out.

  • A luxury brand is generally identified by a few characteristics, including being expensive, exclusive and rare. More than this, a luxury brand is not for everybody. Take, for instance, a Birkin bag. With bags starting around $15,000 the price tag alone is enough to scare away most would-be buyers, but that’s not enough. In order to perfectly cultivate its image, Hermes, the brand behind the bags, screens potential buyers and exclusively sells to a waiting list that boasts A-List celebrities and socialites. For this reason, the payoff for a luxury purchase is often largely emotional or psychological, a feeling of belonging to an elite and prestigious set.
  • A premium brand is another thing altogether. While luxury brands build their reputations on exclusivity, premium brands are made available to anyone who is willing and able to pay. True, premium brands are more expensive than their commodity counterparts (think $30 for “professional” shampoos vs. $3 for a bargain brand). But unlike with luxury brands, the higher price proportionally reflects value added rather than acting as a barrier to entry. Both premium and luxury brands pride themselves on high-quality, authentic products, but premium brands are accessible as well as masterfully crafted. In sum? For premium brands, it’s more about the quality of the product than the psychological payoff.

American Girl And The Luxury Brand Label:

It’s understandable that a brand with a narrative around inclusivity would resist being called a “luxury” brand, and yet it’s been a label that has been tough for American Girl to shake. So how did this misnomer – if it is one – take root?

One of the more common arguments is that the price, when compared to competitors, is exclusive. After all, not everyone can afford the hefty $115 price tag for a doll, let alone the $600 or so it would cost to fully equip her with all of her matching clothing and accessories.

Another possible reason for the misattribution is that, until recently, the dolls were only available online or in one of 20 elaborate American Girl stores. In other words, the dolls were inaccessible. The stores offered psychological rewards as well. Reservations at the American Girl store bistros – where dolls get a seat at the table — fill up a month in advance for weekend dining. That’s quite the waiting list to join an inner circle of doll owners.

There are other reasons too. For instance, some dolls are only available for a limited amount of time, making them rare and, in the words of their creator, an “investment.” On top of that, discontinued dolls can end up selling for thousands of dollars online. This sort of appreciation is yet another hallmark of a luxury brand.

Becoming a True Premium Brand

What it comes down to – in most people’s minds – when considering American Girl as a luxury brand is two things: price-based exclusivity, and inaccessibility.

Like any true premium brand, however, the price tag is pretty much a non-negotiable. And while the price is certainly higher than a competitor like Barbie (which retails for around $10), the same is true for other premium brands simply because of the extra effort and higher costs associated with manufacturing. While the price excludes some, it isn’t so high that would-be buyers are intentionally kept from purchasing the dolls – rather, anyone who can reasonably afford the dolls is welcome to join the club.

What makes a luxury brand truly a luxury brand in many ways, then, is its inaccessibility. Hidden-away Birkin bags are a status symbol not just because they are expensive, but also because they are so hard to get. Like an exclusive club, you have to know someone on the inside – and they have to know you, too. Despite American Girl dolls being sold online, their brick-and-mortar presence was limited to a mere 20 stores, which bustled with booked-up bistros and doll hair salons, where tenants of luxury hotels like the Beverly Wilshire came after purchasing the American Girl Package offered by the hotel for a child’s birthday party. The key to finally casting off its luxury illusion was to make the dolls and thus the experience — more accessible.

What American Girl Did, And Why It Matters

By striking a deal with Toys “R” Us, Mattel (the brand behind American Girl) is bringing its American Girl dolls to the masses. There will still, undoubtedly, be a high price tag. But by putting the dolls in front of parents and kids who aren’t actively seeking them out, Mattel is extending the reach of the product. Now, anyone who can reasonably afford the dolls can buy them in-store. The dolls’ presence in a major toy retailer is a clear signal that they exist for everybody, a signal that a luxury brand would never dare send.