Last week in New York, Chic Being was participating in Luxury FirstLook 2017, an annual conference of American luxury industry organized by well-know think tank Luxury Daily. An amazing opportunity to learn, share and network among senior executives from luxury brands, retailers, ad agencies, media and market researchers. 2016 was a year of slow market growth & huge transformation of luxury customers’ needs, and it seems the trend will continue in 2017. Almost unpredictably changing consumer behavior and expectations, digital & media disruption, quicker-than-ever technology innovations, slowing down of European and Asian markets and political shifts in major countries will impact the luxury business dynamics. According to the results of research conducted by Unity Marketing, based on 600 responses of people working for luxury brands, overall business conditions in 2017 will be worse (45%) or equal (25%) than in 2016. However, this dynamic environment opens great opportunities for smart, independent luxury brands, agile to navigate in the omni-channel world and create sustainable experience hand in hand with their consumers. Discover major conclusions from 2016 and tips to develop modern luxury brands successfully in the future.
1. EXPERIENCES VS. GOODS.
4Es (instead of 4Ps) is the epicenter of successful branding strategy today. Modern luxury brands are building communities of loyal fans based on unique experience, availability from “everyplace”, exchange of thoughts and bigger ideas instead of money exchange, and brand evangelism. Luxury isn’t as much about the brand exclusivity or the high price tag, but about an open, democratic mindset focused on the mix of functionality and high quality. Since new luxury consumption is moving from opulent to meaningful, and from possessive to experiential, finding the right balance between product focus and brand experience, as well as innovation and tradition will become a challenge for many traditional luxury brands.
TIP: This change is inevitable, so don’t pretend it is not happening. You won’t put the genie back in a bottle. Instead, try to turn your product into a unique and relevant experience by diversifying your portfolio to more experiential products, add services (makeover, pick-up or bespoke home services), and rethink your shopping experience entirely. We recommend remembering Walt Disney quote: “Picture is worth 1000 words, but an experience is worth a million”.
2. LUXURY CONSUMERS OF THE FUTURE
Luxury consumers of the future are today’s digital natives and are very lifestyle conscious. What does it mean exactly? Their offline and online reality is constantly mixed and they feel perfectly comfortable about it. In the same time their environment and priorities are changing, they might have a couple of concurrent jobs in the same time, and will adjust them to their lifestyle. The importance of family and relationships, the sense of healthy nutrition and social responsibility is growing for them, as well as personalized messages and two-way communication with brands. Luxury consumers of the future are builders and collaborators; they desire to share their ideas, to bring value and to be a part of the larger community.
TIP: Focus your brand communication on storytelling about YOUR CLIENTS and not only about YOUR BRAND. Use more personalized content, greater customer affinity, contextual offers and recommendations. Successful luxury „lifestyle” brands are turning more into „living” brands so make sure the conversation is relevant, well curated and stirring curiosity of your target group.
3. OMNI-CHANNEL EXPERIENCE.
In this case the message is clear. Online sales are exploding and even if it’s only 10-15% of total luxury sales depending on the area and the country, it is growing double digit every year. According to Shullman Research Center and its latest report “The Shullman Luxury, Affluence, and Wealth Pulse”, 81% of all American luxury buyers search what they may buy on Internet and 52% of them actually buy digitally. But it doesn’t mean that brick-and-mortar is already dead. On the contrary, it is still alive and doing very well as the first point of purchase for luxury goods indicated by 76% of respondents. Additionally, at both specialty stores and luxury retailers, professional and caring customer service has never been more important than now.
TIP: If you don’t have an online store yet, and 42% of luxury brands don’t, speed up and create one to cater for global market and to respond to your consumers’ changing needs. If your luxury business focuses mainly on online sales, make sure that your points of physical contact with customers (delivery, customer service) are enhancing online experience. Because omni–channel is not about having necessarily offline & online store. It’s about blurring the line between both to create seamless shopping experience.
ETHICS & SUSTAINABILITY.
Ethical transparency, fair trade and sustainability are expected today by most of modern luxury consumers. Luxury brands must embrace this trend and the importance of elements such as: sourcing raw materials in a responsible way, child labor in third world countries, women advancement support or natural world protection. 2016 was the hottest year ever on the earth and it is extremely important to show corporate engagement in saving this planet. Brands that are not investing in sustainability won’t probably last for another 100 years. People care about luxury brands who care.
TIP: Explain the elements of the creation process to justify the added value and ethical business practices of your brand (see examples of Nadaam, Everlane or Kiehl’s). Positive Luxury is an organization that helps brands finding out exactly where they stand in terms of sustainability standards and equip them with the right knowledge and tools to optimize the existing business model. Apply to become a Positive Brand with the Butterfly Mark - a trust symbol synonymous with companies that care.
If you want to know more about upcoming trends in the luxury industry and how to adapt your brand strategy to this rapidly changing environment, contact Chic Being for consultations. We help global, independent prestige brands to embrace their full potential and adjust their strategies to modern luxury consumers needs by providing made-to-measure consulting services within the strategic, creative and communication areas.