Key trends defining the future of luxury

Key trends defining the future of luxury

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  THE FUTURE of Luxury
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  10 key TRENDS shapingthe FUTURE of LUXURY
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  #1 Developing brandecosystems Revolving around products, services and experiences Luxury customers are driven more and more by the desire for experiences, engagement and connections – not only with loved ones but also with like- minded people. This shift is leading luxury brands to transform into brand ecosystems that provide equally experiences beyond products and services. As a result, related communities have been formed, embracing the “raison d'être” and the promise of the brand. Louis Vuitton, for example, has the potential to build an ecosystem revolving around its very essence - the art of travel, which will include in addition to its fashion and leather goods: luxury cruises, high-end travel agencies or a future partnership with Orient Express. Few days ago Louis Vuitton announced its first café and restaurant - called Le Café V located on the top floor of LV’s new four-level boutique in Osaka 1 BCG (2018) 2 Dialogue (2017) 58% of Millennial consumers say they would be likely to spend more money on a brand if they are part of brand communities2
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  #2 “Money-can’t-buy” experiences Experientialluxury vs. personal luxury The value of experiential luxury segment (€585B) has already overpassed personal luxury (€327B) in 2017.1 It has become paramount in all solid brand ecosystems. Instead of solely buying and owning luxury items, affluent customers now have a growing desire to indulge in ‘luxury experiences’, seeking emotions rather than possessions. Almost 50% of all consumers say they are buying fewer products and purchasing more experiences4 Marriott has launched The Moments, a reward program that offers frequent guests once-in-a-lifetime experiences, ranging from exclusive concerts and festivals, VIP access to sports events to meet and greets with celebrities. Experiential luxury will account for nearly of the total luxury market by 20223 ⅔ 1 2 3 4 BCG: Luxury Market Trends – Digital & Experiential Luxury (2018) Experiential luxury is valued at €585B in 20172
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  #3 The luxuryof well-being Health and wellness beyond materialism Luxury consumption is moving beyond material objects as consumers are placing more value on health and wellness in almost every facet of life (e.g. health, fitness, travel). Facing strong desire for health and wellness, luxury brands have to carefully rethink what and how they deliver to customers. $4.2T global wellness market in 2017, +6.4% annually, nearly twice as fast as global economic growth 1 78% of affluent travelers want to incorporate wellness into their travels2 1 Global Wellness Institute: Global Wellness Economy Monitor (2018) 2 Skift: U.S. Affluent Traveler Survey (2019) In addition to perfumes, skincare and cosmetics, Guerlain offers customers a unique experience of relaxation and well-being through its spas and beauty institutes.
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  #4 Time, theultimate luxury The absolute measure of luxury If time is the measure of all things, it will become the measure of luxury of the future. On the contrary of a "everything, right now” society, luxury gives time to time. The luxury of tomorrow is being able to spend friends. But time is not just simple stories, it is also history that is written over generations. Owning a piece of history, buying a property that has once belonged to a historical figure or is part of a particular heritage is a new trend of luxury. And when the ultrarich cannot buy what they dream of, they create it. Liu Chonghua, a Chinese millionaire, built six European-style castles in China, one of which resembles Britain’s Windsor Castle.
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  #5 Diversification or hyper-specialization Chooseyour way to build uniqueness To exist in the future of luxury, two approaches are possible: hyper-specialization around a product or service, or diversification to build a brand ecosystem. A brand can choose to constantly improve its expertise in a particular domain and master specialized knowledge to differentiate itself from the crowd. On the other hand, a brand can enrich its universe through coherent diversifications, increasing the fields of action and the uniqueness of the brand. Tesla specializes in innovative driving technologies and shapes the future of driving with electric vehicles and autonomous driving capabilities.
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  #6 Hyper-personalization A newway to regain exclusivity Luxury brands can no longer depend only on one-size-fits-all approach as luxury clients increasingly demand personalized experiences. Hence, hyper-personalization, with the help of data analytics, has become an integral part of creating one-of-a-kind customer experiences to regain exclusivity and generate customer loyalty in the long run. 1 Deloitte: Global Power of Luxury Goods (2017) 2 Deloitte: Bling It On – What Makes a Millennial Spend More? (2017) Fred has launched L’Atelier Fred, a device that allows clients to customize their bracelets with over 100,000 combinations possible. 45% of luxury consumers are asking for personalized products and services1 >79% of millennials in the US, the UK, Italy and China would probably pay premium for personalized luxury items2
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  #7 The riseof the 2nd-hand market The end of ownership dictating new business models A move away from permanent ownership, greater affordability and broader accessibility to rare items have immensely driven the growth of the luxury 2nd-hand market. These factors also spark the emergence of new business models such as pre-owned, refurbished, repair and rental businesses upon subscription. €22B luxury 2nd-hand market in 2018, accounting for 7% of total personal luxury market1 60% of True-Luxury consumers are interested in purchasing pre-owned luxury items2 1 2 3 BCG-Altagamma: True-Luxury Global Consumer Insight (2019) Founded in 2009, Rent the Runway allows customers to rent high-end clothing and accessories. The company is now valued at $1B within 10 years. 34%of True-Luxury consumers sell luxury items, to primarily empty wardrobe and finance new luxury purchases3
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  #8 Multiplication of distributionformats The transformation of luxury retail The distribution of luxury goods has gone far beyond physical stores. With the development of the digital channel in luxury markets, customers can now can enjoy convenient access to a wide range of luxury products. Meanwhile, physical store concepts will continue to evolve to offer more dramatization, services and experiences. Nearly 20%of sales of personal luxury goods will be online by 20252 Gucci Wooster, Gucci’s SoHo flagship, immerses customers in Gucci’s creative world. The store features a projection room with Muzik headphones and innovative 3D video screens, seeking to give customers an immersive brand experience. Online luxury shopping grew 22% to nearly €27B in 20181 1 Bain & Company: Luxury Goods Worldwide Market Study (FW 2018) 2 McKinsey: The Age of Digital Darwinism (2018)
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  #9 Luxury leadingsustainability Becoming the standard-bearer of sustainable development More than ever, consumers are becoming eco-conscious and seeking brands that promote sustainable practices. Luxury brands and related groups will lead the way towards a greener future as various initiatives can been seen in a vast number of announcements of luxury brands. Kering CEO François-Henri Pinault announces plan to unite fashion and luxury leaders on sustainability during Copenhagen Fashion Summit in 2019. 30% of Millennials always made sure a luxury item is sustainable or from an ethical brand before purchasing1 59% of True-Luxury consumers’ purchasing behaviors are influenced by sustainability2 1 Statista: Importance of sustainability and ethical brands to Millennials when purchasing high-end fashion or luxury items worldwide (2017) 2 BCG-Altagamma: True-Luxury Global Consumer Insight (2019)
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  #10 Inclusive yetexclusive The new strategy for luxury brands The advent of streetwear and the success of brands like Off-white have shattered the codes of luxury reserved for some Happy Few. The future of luxury will therefore have to deal with the classic notion of concept of inclusivity. Exclusivity comes in the form of product rarity and limited editions while inclusivity can be achieved through global distribution and the digitalization of distribution and communication channels. Louis Vuitton X Supreme collaboration represents inclusive creativity by bringing streetwear into luxury fashion while maintaining exclusivity through limited production.
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