The landscape of luxury is shifting. What was once a market that was saturated with a certain type of luxury consumer, brand identity and image, has now experienced a huge shift. The luxury space is now a far different place to navigate, with more complex and multifaceted consumers.
But fear not – we’ve just released an extensive report (which you can download here) all about the latest luxury trends. Check out the highlights below.
“What’s obvious about luxury consumption is that it’s irrational. However, this doesn’t mean luxury shoppers are spending stupidly, instead, making irrational decisions is what makes us human.”Crobox, 2021
In this recap we’re going to dive into the key takeaways from the report. Whether you’re an agency, inhouse or a client, these insights are golden nuggets that can improve your knowledge of current luxury markets.
We used a multitude of brilliant sources for this report, as well as our own insights using GWI (Global Web Index). GWI surveys thousands of people across the globe every quarter in order to learn more about their attitudes, motivations and behaviours. Using this tool we coded four iterations of luxury audiences that are applicable to our different clients and different markets.
Importantly, these are data-led insights that give us human answers.
The Luxury Consumer is Changing
Perhaps the biggest Easter egg we can reveal from our extensive research is that the luxury consumer is evolving. Gone are the days of mink fur-wearing socialites; today’s luxury consumers are far less predictable, with a range of needs and expectations.
Millennials and Gen Z are key – if not vital – players for luxury brands.
These audiences are maturing. The oldest millennials are approaching middle age and have families; their younger counterparts are stepping into more senior workplace roles, meaning they have more financial fluidity
The oldest Gen Z are now in their mid-twenties. They are growing up fast and are taking their views, opinions and habits into the world with them.
As well as this, both audiences have grown up in a rapidly globalised and digitalised world. What they care about, their thoughts, feelings and actions are reflective of this and are, in turn, having an impact on the very DNA of industries.
Luxury brands are sometimes thought of as having a somewhat invincible status – however, this is far from the case. If luxury brands want to keep looking towards the future, they must keep innovating, growing and changing for the better.
Luxury Audiences are Conscientious
The luxury consumers of today expect brands to be actively sustainable and inclusive. It is no longer enough for luxury brands to rely on image, reputation or heritage.
We found that 61% of our audience would pay more for an eco-friendly product, rather than the 39% who would be happy to pay less even if the product was not eco-friendly. Similarly, we found that amongst luxury consumers, being eco-friendly and being socially responsible were in the top three answers of what you want a brand to do.
The issue sustainable luxury companies face is that they have to do more than just create an item out of recycled materials to call themselves green. There must be a more systemic change within the company itself, with attempts to change things like air miles, manufacturing and emissions – and they must be authentic. Brands and businesses must tread very carefully so that they aren’t labelled as greenwashing. Take a look at our blog post on the importance of brand authenticity and how brands can build it.
Diversity and Inclusion
Diversity and Inclusion (D&I) can be equally as problematic. Companies can be guilty of weaponising D&I for marketing and PR purposes as opposed to embedding it within the organisation itself. The luxury industry has historically faced backlash over its D&I. For an industry that has thrived on being exclusive rather than inclusive, changing public perception around what luxury stands for is challenging.
“American Gen Zs consider diversity and inclusion more important than fashion or reputation.”GWI Gen Z report, 2022
As if to showcase this, big brands are still making big mistakes, particularly in the world of fashion. Prada has spoken out against racial injustice on social media, yet the company has also been forced to apologise for merchandise that was deemed racist. Elsewhere, Dior launched a message of support and solidarity accompanied with a black background following allegations raised against them for cultural appropriation (The Conversation, 2021).
However, there are companies making big steps in the right direction. For example, Steve Madden, Jimmy Choo, Versace and Michael Kors use a recruitment app called Hello Hive to hire more diversely (Crobox, 2021).
Many of these luxury trends we have seen come into fruition in real time. What these audiences expect from their brands has started to shift the way the markets are moving.
Markets are in Flux
The changing luxury consumer, the effects of a post-pandemic world and the cost of living and energy crises are causing turbulence in key markets. There are numerous variables and brands must remain vigilant in the stormy times ahead.
Few sectors around the world have had a more turbulent journey over the past few years than travel. With the cataclysmic effect of the pandemic, which brought overseas travel to a virtual halt, the sudden rise of ‘staycations’ and now, the recovering rising market, travel has been on a roller coaster. What’s interesting to consider is how this has and will affect the luxury travel sector.
Below are some of our key insights from our report:
- We conducted a multi-market research project in GWI earlier this year to study different luxury travel audiences around the world. 55% of the audience was between the ages of 25 and 44. A further 15% were between 16 and 24, meaning 70% were under the age of 44 – Gen Z and millennials
- A large percentage of the audience from our research describe themselves as ‘price conscious’, despite falling in a ‘high’ or ‘very high’ income bracket
- Luxury customers want an experience that is personalised, authentic and perhaps off the beaten track. The demand for ‘blow-out trips’ to mark a return to travel is high. Consumers are looking for the kind of experiences that ‘can’t be found in a guidebook’ (National Geographic, 2022)
- In a recent survey conducted by Virtuoso – a luxury global travel agency – 82% of travellers said the pandemic has made them want to travel more responsibly and 78% said it’s important to choose companies with strong sustainability policies (Schroders, 2022)
Of late, the property market is a hotly debated topic. In the aftermath of COVID-19, property prices soared around the UK. However, with rising inflation and cost of living, the market is set for turbulent times ahead, with whispers of a crash looming on the horizon.
- In 2022, we carried out research into luxury audiences in London using GWI. We looked at the richest 20-30% of London residents. 60% of this audience had savings from £65-£650K. When looking at the demographics, a whopping 72% of this audience were under the age of 44 – so Gen Z and millennials – and a staggering 70% of them were male
- In the prime market across the 25 cities tracked, Knight Frank’s global research teams now expect prime prices to rise by 4.4% on average in 2022, down from 6.1% six months ago (Knight Frank, 2022)
- According to Knight Frank, both prime and super prime markets will remain active in 2023 before returning to more normal patterns
- The homes of wealthy Americans are responsible for nearly 25% more greenhouse gas emissions than those in lower income brackets (Knight Frank, 2022) – it is one thing for a luxury buyer to want to be sustainable and another step to make them actually be sustainable
Experience and the Online World
Experience in luxury has always been important but now – in a post-pandemic world – it is like gold dust to a consumer. The luxury consumer today seeks a tailored, authentic and one-of-a-kind experience that speaks to them on a personal level.
Luxury travellers are seeking deeper connections with the places they visit, in order to have a more authentic experience that they will remember. If the pandemic has taught us anything, it is that time is of the essence
In our own research, we found that 55% of this audience would rather spend money on an experience than spend money on a product. Brands have started to push more ‘pop-up’ and ‘studio spaces’ to showcase their brand in a different way. For example, Dior invested in pop-up boutiques at choice beaches (Forbes, 2021).
What’s interesting, though, is that this experience needs to be more transparent than ever. Not only do brands need to show, they also need to tell.
“As in the physical world, there is no one-size-fits-all approach to digital. Luxury brands need to master integrating the physical and digital touchpoints to create extraordinary experiences in both worlds.”IMD, 2022
For work and play, the online world is part of our lived reality. How luxury consumers navigate the online as well as the physical world is key to marketing to them and creating authentic online experiences.
In our own research, we found that luxury consumers are a digitally engaged bunch. As many of our audience turned out to be busy working professionals, they (unsurprisingly) over-indexed for having various devices, likely for business and for pleasure. They also are an audience that over-indexed for social media usage. Instagram and Facebook were the top social media choices, followed by Twitter, TikTok and LinkedIn.
“Digital natives expect personalised, seamless customer experiences. The brands that come out on top have adopted flexibility and stayed open to change. “Crobox, 2021
Bespoke and personal experience are the bread and butter of luxury consumers. Creating personalised experiences online where consumers can engrave, craft or design their own product or experience is something that can work in many different ways, and will usually go down a treat.
Social media gives brands nowhere to hide. Previously untouchable companies now have the democracy of the comment section, which can expose them to scrutiny.
Luxury brands have an opportunity to monopolise this space and leverage their powerful voices. What brands say and do on social media has a big influence on younger generations. Similarly, brands can experiment with their image, take risks and have some fun. For younger generations, for example, the use of memes or trending content is a language in and of itself.
“Never again will luxury brands be able to decide between either digital or physical; it will always be both. The most successful companies will be those that are able to reconcile these tensions creatively and continue creating the dreams and fantasies that fuel our desires. “IMD, 2022
Final Thoughts on the Luxury Matrix
Today’s luxury market is complex and in some ways, contradictory. Brands must show and tell, they must pull out all the stops while remaining sustainable, they must offer a sense of exclusivity while also serving diversity and inclusion and they must create a brand that is authentic and down to earth while remaining, of course, luxurious.
However, these apparent obstacles should be viewed as opportunities to stand out from the crowd, make your mark and connect with your customers in ways you have never done before.
Want to read more? Download the full report here. At Passion, we always want to stay ahead of the curve and keep up to date with the latest insights. Why not take a look at our other whitepapers to see more of our in-depth insight pieces?