Market briefing: Breaking down the Scandinavian modern luxury economy.

Consider the following numbers. Sweden: 9.8 million. Norway: 5.2 million. Denmark: 5.7 million. All told, Scandinavia is home to only 21 million people. For context, that’s three million less than the total population the city of Shanghai. Still, despite its comparatively small size, Scandinavia is a veritable Goliath in the modern luxury sector.

For one, the region consistently produces top quality modern luxury companies (MLCs) — each of which is a specialist with the pedigree to compete on a global stage from day one. And though the amount of brands Sweden, Denmark, and Norway all produce is quite small, what’s notable is the sheer density of the Scandinavian MLC portfolio: Stutterheim (raincoats), Vifa (wireless speakers), Mismo (bags), Byredo (fragrance), Rose & Born (contemporary men’s tailoring), SNS Herning (knitwear), Berg & Berg (men’s accessories), John Sterner (knitwear), Très Bien (men’s boutique), Norwegian Rain (rainwear), Bravur (watches) and ATP Atelier (women’s leather footwear).

On pure luxury consumption numbers only, Scandinavia will never match traditional powerhouses like the US or UK, for instance. But by this brands list alone, Scandinavia stands as one of the elite producers in modern luxury today.

Cultural backgrounder: What makes Scandinavia different?

A remarkably high standard of living. Sweden, Norway, and Denmark are all deeply focused on ensuring a high quality of life. In the 2017 United Nations World Happiness Report (a ranking based on GDP, social support, and life expectancy, among other criteria), all three of countries ranked in the top ten: Norway #1, Denmark #2, and Sweden #10.
A unique economic structure. One big topic of discussion that arose during the 2016 US election cycle was the Scandinavian model for economic prosperity. Scandinavia, comprising social-democratic welfare states that officially formed at the end of WWII, was more radical than its neighbors in Western Europe at the time. In the decades since, Scandinavian governments, led by strong social-democratic parties, have installed broad initiatives intended for universal social protection, touching industries like healthcare, education, transportation, and, importantly, housing (this, arguably, shaped design in the region).
Red thread. Scandinavian design is, without question, a cornerstone for the modern luxury space. From the luggage brand Away to sneaker maker Common Projects, minimalist design is a red thread running through most MLCs. It’s now firmly established as the go-to aesthetic in this industry.

Stutterheim’s classic raincoat in Jaguar Green | Stutterheim

Stutterheim’s classic raincoat in Jaguar Green | Stutterheim

What’s behind the rise of Scandinavian MLCs?

The rise of mid-century modern minimalism. The minimalist-functional tradition of design that’s become a defining feature of Scandinavia, first emerged in the early 20th century and stretched through the Post-War period in the 1950s. This was in tandem with the welfare developments discussed above. It’s within this socio-political backdrop that Scandinavian design came to be. As Norwegian art historian Widar Halén writes, “Traditionally, Scandinavian design has been associated with simple, uncomplicated designs, functionality and democratic approach.”
An embrace of the Scandinavian mindset. On Scandinavian design, Peder Kraugerud, apparel and footwear analyst at Euromonitor International, explains that design is intimately connected to social-democratic values, which is a big part of the Scandinavian mindset. But, he says, “[it’s] also rooted in functionality and quality, two important product characteristics. In short, there’s fair bit of pragmatism that goes into Scandinavian fashion, clothes are meant to worn time and again, and at that last for a long time.”
Benefitting from Ikea and H&M. Says Kraugerud: “There has been a conscious effort [by] the industry to both help and promote local brands internationally. Many Scandinavian…brands [have] undoubtedly benefited from global popularity of H&M and even Ikea — they have helped put Scandinavia, and first and foremost Sweden, on the map. [Today,] global consumers have a relationship [with] the region, and often a good one.” Basically, brands from Scandinavia already enter the market with a leg up, due to the Scandinavian ‘brand’. So in a sense, this helps them find greater success at a faster pace.
Minimalist market saturation: At risk for a future fallout? Is Scandinavian design at risk for bottoming out soon? Tres Bien co-founder Simon Hogeman thinks the minimalist saturation could prove costly for some businesses. “[There has] been a massive inflation in terms of ”minimalist designs,” he says. “[The way that]…design currently looks, it’s hard to keep people interested with another new clean sneaker, [for example]. Personally, I like design with progress and a sense of newness.”

Mismo CEO Adam Bach, based in Copenhagen, echoes that concern: “Many new brands have come along and are tapping into this booming minimalist accessory market,” he says. “We’ve seen examples where distinct design details of ours have been shamelessly copied, something that unfortunately seems to intensify as the market grows bigger and more competitive.”

You can easily see how the ubiquity of minimalism could be the source of its own undoing. But as the aesthetic becomes increasingly commonplace, how can Scandinavian brands adapt and further differentiate?

Some ideas for Scandinavian brands going forward:

Ignoring Scandinavia altogether. Some Scandinavian MLCs refuse to be pigeonholed, choosing to tell their own stories — without the explicit backdrop of Scandinavia. Norwegian Rain co-founders T-Michael and Alex Helle are doing just that: “Our designs are from Scandinavia geographically, but our influences are very global: Ghanaian, Japanese, Londoner, Norwegian,” they tell Lean Luxe. “[Our] approach to design is not rooted in a so-called Scandinavian design formula. Our narrative is based on the fact that we live in the rainiest city in Europe: Bergen. This plays an integral part of our design philosophy.”
Stronger diversification. As a retailer, Très Bien knows not to put all their eggs into one basket. “I do think the market in general is growing more saturated but I…don’t [think we] naturally fall into any one category in my opinion. We aim to curate the best in terms of brands and product from a bunch of different segments.” says co-founder Hogeman. With their in-house brands, Très Bien further diversified their offerings, introducing different product categories to fill new niches, like Sun Buddies, their sunglasses line based on that of those worn by a character in an Ingmar Bergman film.
Doubling down on unique strengths. Bach says is best here: “All brands, Scandinavian or not, will have to innovate and evolve to survive in a global marketplace dominated by [transparency]. The more fierce the competition the more I believe you have to sink into the details of your product. If you’re thorough, and dare to innovate down to the last fibres of your product, if you have an eye for your customer, and where they are going, there will always be a story to tell, someone to tell it to, and a product that stands out.”

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