The luxury industry faced a multitude of challenges in the second and third quarters of 2020. After falling by an estimated 25% in the first quarter, the slowdown only accelerated. Indeed, 2020 was a year of the fall of traditional luxury lifestyle. However, not all was bleak for luxury brands. With dynamic and rapid innovations, individual brands were able to redefine themselves and continue to remain relevant. This happened in a variety of ways.
Firstly, many luxury brands pivoted from their core business offering to become relevant in the short-term, with respect to shift in consumer preferences. For example, many retail brands manufactured custom face masks, and perfumers worked on creating sanitisers. Secondly, brands began to place more emphasis on their values, instead of only their product. While it is a given that luxury products meet a certain standard that validates their higher pricing, brands began to realise that people were looking for more than just a good product or an established brand name. They wanted to wear brands that told a positive story, and endorsed values such as sustainable business. Due to this, many luxury brands turned to enhancing their brand narrative to cater to the new age of consumers.
In this article, Team Luxeveda outline the journey of luxury brands in 2020. We further look at what 2021-2025 could bring for the luxury industry. We believe that there will be an increased focus on sustainable marketing to motivate luxury buying.
HOW HAS THE LUXURY MARKET EVOLVED IN 2020?
Due to the mandatory lockdown regulations imposed by countries across the world– but especially in luxury buying hubs– all categories have seen declines. This is mainly because of a lack of online sales platforms to offset the shutdown of physical channels. The most important brand marketing advice for 2020 would be to ensure that your business has a digital presence and is ready for a situation where physical shopping is in decline.
However, luxury brands need to adapt to the changing ways in which their consumers see the world. On a first level, safety in store will be mandatory. On a deeper level, luxury buying will have to include the magic of the luxury experience, including sustainable marketing strategies to attract customers to store, or to get the product to the customer. Indeed, luxury buying online has increased, and the online channel could represent up to 30% of the market by 2025.
The need for digital transformation is clear when looking at the resilience of online luxury buying. Traditional models of directly operated stores and department stores are in decline, and will continue to be so for almost the entirety of 2021. From a brand marketing advice perspective, luxury brands need to incorporate sustainable business solutions. The key of which being online stores that facilitate a remote luxury lifestyle. This is because even travel retail has been in sharp decline due to travel restrictions and consumers’ fear.
Clearly, three things will now become a necessity instead of an add-on for luxury brands: sustainable marketing and sustainable business strategies, providing an online luxury buying platform, and creating a new ideal of a digital luxury lifestyle.
HOW WILL THE LUXURY BRANDS EVOLVE OVER THE NEXT FEW YEARS?
Moving forwards, collaborations will be the next big thing in the luxury space. Already, traditional luxury brands are partnering with cutting-edge streetwear designers to create high-end collections that are irresistible to the new, young and affluent customer base. For example, Louis Vuitton x Supreme became a highly popular and sought after collection. This allows the exclusivity of a “limited edition” luxury piece, while also making it accessible to a younger target audience. In fact, 67% of Gen Z and 60% of millennial luxury purchases have been of a collaboration or special edition.
As mentioned above, today’s luxury customer is seeking to express who they are, rather than what they have. The new luxury lifestyle is about being ethical, connected and philanthropic, because this is what the consumer wants to reflect through the items they purchase. Luxury brands that speak to this new mindset will have new opportunities to deliver meaningful experiences to their consumers. Indeed, value-laden luxury buying is the elimination of guilt from indulgence.
With climate issues being imminent, consumers are looking to purchase from brands that reflect sustainable business strategies, and use sustainable marketing practices. Consumers are even willing to end long standing relationships with luxury brands that do not actively promote the agenda of sustainability.
Today, customers prefer to invest in luxury experiences, as opposed to luxury products. These include vacations, restaurant experiences, wine tastings etc. Moving forward, luxury brands should focus on creating luxury experiences over and above their goods. For example, Balenciaga is revealing their new collection via video game later this year. Luxury buying will be determined by futuristic and sustainable marketing strategies. Most importantly, the focus will shift from individual items to creating a luxury lifestyle narrative.
In conclusion, the luxury market is changing. Luxury brands must keep up with these changes by implementing sustainable business strategies and focusing more on the overall luxury lifestyle of their consumers. Team Luxeveda has domain expertise working with luxury businesses to create unique narratives. Contact us to elevate your luxury brand into a luxury experience.