To create luxury – whether streetwear or not – is tricky: brands need to have a good story, excite, inspire and create a lasting memory. The best ice cream in town View this post on Instagram A post shared by Kith (@kith) on Feb 26, 2020 at 6:36am PST When you visit one of the most unusual and luxurious streetwear stores in the world, Kith, whether in Soho, New York, in Los Angeles, or Tokyo, you may be surprised. A bunch of 16-year-old kids mix and mingle with some 30-year-olds, and some customers far above 50. The word timeless finds its best expression here. Amid the spectacular architecture of the stores, people are strolling around with ice cream. View this post on Instagram A post shared by (@xxrisa99) on Oct 14, 2019 at 7:47pm PDT Not any ice cream, one of the best, according to Time Out . There you can also read that the founder of the store, Ronnie Fieg, the streetwear guru and designer from New York, secretly got his cereals as a kid in exchange for his packed school lunch. The reason? His parents prohibited him from eating cereals. View this post on Instagram A post shared by Louisville, KY ️ all over (@chowdownlou) on Oct 26, 2019 at 12:21pm PDT And now, free from constraints, he sells cereal-infused ice cream in his fashion store, so good that people in Tokyo and all over the world don’t flock to Kith only for the merchandise, but secretly for the best ice cream in town. Why fashion and luxury will never be the same after coronavirus This reveals a few crucial things about luxury. Luxury is the ability to create extreme value, through a good story (think of the one you just heard), through a (sometimes secret) desire and the creation of a unique experience and the element of surprise. All of this creates a memory. Luxury brands are in the business to create unforgettable moments. Normal for the untrained eye, a luxury for those who know View this post on Instagram A post shared by Kith (@kith) on Dec 17, 2019 at 10:18am PST Kith also has an unparalleled section for sneakers. For the untrained eye, they may look like a “normal” sneaker, but some things may seem off. For example, I remember a dirty sneaker by Maison Margiela that looked like it was used. The price was around US$800. Unbelievable for many. A bargain for some. Let me explain. The value is not in the materials; it is something else. And it is something that makes the management of a luxury brand elusive and challenging. By our human nature, we look for reference points, and we get confused when those reference points don’t seem to work. The value is in the eyes and the perception of the consumers. And value drivers are often hidden. Few managerial tools exist to determine the price of a luxury product. I spent half a decade in developing what has become now one of the most commonly used pricing tools for luxury, the Luxury Index. And still, pricing a luxury right is one of the biggest challenges for managers of luxury brands. Don’t trust your gut when you price a luxury View this post on Instagram A post shared by tora northman (@toranorth) on Apr 10, 2019 at 3:15pm PDT When I apply the tool, I regularly get surprising results. In one of the last columns, I compared women’s handbags with men’s workbags and explained why women have to pay much more, currently, for a bag that may be much smaller and has less material. We consistently see that pricing a luxury is extremely difficult, often done wrongly. Why do women’s handbags cost so much more than men’s bags? In many cases, brands are priced too low, leaving significant profits on the table. View this post on Instagram A post shared by PALACE (@palaceskateboards) on May 8, 2020 at 6:07am PDT This may help us to understand why streetwear can be a luxury. I could show in my research that any category can develop a luxury tier if brands figure out how to create extreme value in that specific area because luxury is never about the price. It is about value creation at an extreme level, which enables brands to price for it. This is particularly difficult to understand when it comes to categories that people, including many managers of luxury brands, are not familiar with. Every group has its codes and norms. And those can – and often will – be very different in comparison to other groups. Especially in the digital age and with the youngest consumers, Generation Z, these codes are critical. And they change rapidly. What was the it-item yesterday, will undoubtedly differ from the one today. The speed of change was never as fast as it is now. If you are not relevant for the young, you are not relevant View this post on Instagram A post shared by Off-White™ (@off____white) on May 1, 2020 at 7:00pm PDT One particularity of Gen Z is that they create their personal brands, carefully curated, according to their values. How they dress and which brands they choose to connect with in shaping their image are a very conscious decision. The choice of the right sneaker at the right point in time is a critical component. It is not about an off-white sneaker, but maybe at some point, preferably in a specific brown colour and a particular shape that is only relevant in a specific window in time. How do they know? Because they understand the code, while all other groups may never even know. This creates extreme value and reflects in the price. View this post on Instagram A post shared by Balenciaga (@balenciaga) on Jun 21, 2019 at 6:50am PDT Luxury brands are only relevant to younger consumers if they are considered influential, inspiring, and innovative. Brands have to be able to not only identify the desired codes of specific target groups but to shape and define them. Brands that are seen as following the pack will quickly become irrelevant and will be replaced with trend-defining brands. Digital is accelerating this tendency. Covid-19 gave the catwalk to VR models – can humans reclaim the spotlight? To many traditional brands, this sounds weird and something not relevant. In the end, if their target group are those above 40, who cares? Well, they should be concerned. Because every generation imitates the generation before. The 45-year-old looks to those around 25-30 when they choose their brands. And the preferences of a mid-20-year-old is shaped by those below 20. Streetwear is a luxury for many consumers. Not all brands, and not all products. But some brands can create so much value that their price points get into surprising dimensions. View this post on Instagram A post shared by Garage Of Boxes Sneaker Studio (@garageofboxes9) on Mar 16, 2020 at 11:05pm PDT A pair of vintage Nike Mag 2016, first spotted in Back to the Future II , and only possible to produce years later, will set you back around US$25,000 and their value increase has even surpassed the Birkin bag over the last years. View this post on Instagram A post shared by BUSCEMI® (@buscemi) on Sep 16, 2016 at 9:51am PDT The Buscemi 100 MM Diamond will set you back US$132,000, more than a Porsche 911 Carrera S Convertible, at least if you restrain yourself with the options. And Nike’s Moon Shoe constructed from nylon and sewn together with fishing line for runners at the 1972 Olympic Trial sold at a Sotheby’s auction for US$437,000. Remarkable for a streetwear item that many people would never identify as a luxury. Our favourite Blackpink streetwear looks My verdict View this post on Instagram A post shared by Supreme (@supremenewyork) on Feb 20, 2020 at 8:00am PST To create luxury is particularly tricky, yet intriguing. It brings us back to the beginning. A luxury, whether streetwear or not, better have a good story, excite, inspire and create a lasting memory. And sometimes it comes with a scoop of ice cream. Want more stories like this? Sign up here . Follow STYLE on Facebook , Instagram , YouTube and Twitter . Help us understand what you are interested in so that we can improve SCMP and provide a better experience for you. We would like to invite you to take this five-minute survey on how you engage with SCMP and the news.