A new lap of luxury
The total luxury goods market is expected to grow by 21% to 1.4 trillion euros in 2024, according to the findings of the 21st edition of the “Luxury Goods Worldwide Market Study”, making luxury more resistant than any other retail segment. However, consumers are changing the way they define luxury, requiring brands and retailers to adapt according to changing demand.
New target group
Historically, luxury brands targeted consumer groups which were easily identified and could all be defined under a clear income bracket, with names like Louis Vuitton, Chanel, and Burberry being associated with luxury. Market research has more recently established the hybrid consumer, who tend to be significantly younger, average income consumers, that "want to make their lives more enjoyable with luxury goods". This consumer group is willing to pay significantly more for luxury items than everyday goods. However, they tend to combine such items with clothing from discount stores.
According to the Global Power of Luxury Goods 2022 study, whilst Millennials discovered luxury goods at the ages of 18-20, Gen Z’s experience started at age 15. By 2030, Gen Z and Gen Alpha (those born from 2010-2024) purchases will account for one third of luxury brand sales, therefore brands must adapt to the new target consumer group and identify what attracts them to spend.
Sustainability
The younger consumer pays much more attention to environmental and sustainable credentials as well as corporate philosophy. Therefore, investment in sustainability is critical to cater to the expectations of the new generation of shoppers. These customers expect that while prices are high, the highest standards for the environment and society are also maintained. Some examples of where brands are becoming a benchmark for sustainability and ESG strategies include Vestiaire Collective, a global peer-2-peer resale platform allowing environmentally conscious users to put the items they no longer wear or use back into circulation. Additionally, Dolce & Gabbana, Prada, and Moncler have teamed up to research recycling solutions at an attempt to counteract overproduction and overconsumption, with Louis Vuitton, for example, offering jackets made from recycled marine plastic.
Street luxury
There has been an increase in streetwear and luxury brands collaborating to develop exclusive, premium lines to appeal to young affluent consumers, known as ‘street luxury’. Streetwear is defined as fashionable casual clothes – the luxury component in luxury streetwear often stems from its exclusivity rather than price point. Leading sports brands are developing more premium fashion lines, specialist urban brands command a high global following, and established luxury brands are expanding the width of their proposition, recognising the appetite for affluent younger global demographics to spend more in these categories. The North Face collaborated with Gucci (seen above) to produce an exclusive line and hosted immersive pop-ups across the world to appeal to young customers and enhance brand awareness.
Experiential
Although the definition of the luxury market has changed and a new customer group is established, the principles have remained the same. Those who shop for luxury items want exclusivity, quality, and the highest standards possible. However, satisfying these luxury customers requires offering a unique shopping experience, away from the point of sale in specially designed private spaces. Luxury stores should be more than a place to purchase products, with many redefining by embedding immersive and emotional experiences.
Harrods has unveiled its £200m refurbishment to change the way it sells womenswear with a focus on discovery and experience. The upgrade features custom-made fit outs for luxury brands including La Perla, Skims and Agent Provocateur. It will also offer services such as bespoke alterations and personalisation, building on the ‘growing focus and demand’ for tailoring.
ME+EM in London have just partnered with Harper Concierge, a shopping concierge service that brings the in-store experience to the comfort of customers homes. It allows customers to select the pieces they would like to try, book a time slot that works for them, the outfits are then delivered to their door for customers to try on. The concierge team can also stay and offer advice, or return after 40 minutes, providing a seamless `Try Before You Buy' service to all.
Other brands offering hidden luxury suites in stores and separate areas in luxury hotels, complete with their own entrances and excellent service, are ideally suited for these occasions. This exclusive shopping experience includes a selection of specially chosen products at very high prices.
The luxury market is evolving rapidly, but it remains as strong as ever.
Jemima Scott