Last year we released a report on the luxury trends of 2022, which explored the luxury landscape and how brands could get ahead of competition and resonate with the evolving luxury consumer in 2023. A year later, Andrew – Junior SEO Account Executive – dives deep into the top luxury trends of 2023, so we can open up a discussion on what we’ve learnt and what to expect in 2024.
Who Was the Leading Luxury Consumer in 2023?
Source: https://shorturl.at/AIQV6
The leading luxury consumers of 2023 are a complex and diverse group, yet one thing they share is a sharp focus on personalisation and sustainability. As seen above, 63% of millennials and 60% of Gen Zers make up the large portion of consumers purchasing luxury goods, who not only have the purchasing power but also the inclination to invest in brands.
We know that millennials and Gen Zers care about ethical and environmental initiatives and expect brands to mirror their values, so with these groups making up the majority of luxury consumers, luxury brands should be demonstrating ethical production, supply chain transparency and a strong commitment to reducing environmental impact.
These younger audiences also gravitate towards bespoke experiences and products that reflect their values and identity, making them pivotal in steering the direction of luxury brands towards a more conscientious future.
Top Global Consumers of Luxury Goods
Source: https://www.voguebusiness.com/story/fashion/unpacking-luxurys-growth-drivers-now-and-next-year
According to a report by Bain & Company, the global luxury market was worth €1.5 trillion in 2023, an increase of 8-10% from 2022. While Europe and the Americas dominate, other markets shouldn’t be ignored in a brand’s luxury strategy, China is one of the fastest growing luxury markets.
Luxury Digital Trends 2023
The luxury landscape is embracing digital platforms faster than ever. A luxury brand’s website is no longer just a place for consumers to transact, it needs to offer experiences, a place where luxury communities can flourish and a real digital embodiment of that brand.
Creating valuable connections
In an age where exclusivity defines luxury, personalisation has become key. Successful brands customise offerings to match unique client desires. From monogrammed items to tailored fashion and bespoke travel, personalisation showcases a brand’s dedication to individuality and top-tier service. Treating each customer as a unique individual with refined tastes, luxury brands solidify their status as creators of experiences, fostering deeper connections and loyalty.
A focus on luxury brand loyalty
Luxury brands are employing strategic measures to build and sustain customer loyalty. One method is the development of loyalty programmes that reward clients for repeated purchases and engagements. For example, Harrods have a reward system where you earn one point for every £1 you spend.
Additionally, brands are leveraging digital platforms to offer seamless customer service and personalised digital experiences that extend beyond the physical store, reinforcing the customer-brand relationship. The utilisation of data and analytics to understand consumer behaviour further allows brands to anticipate needs and offer proactive service, meaning a consistently personalised experience that encourages long-term loyalty.
Augmented Reality in the luxury industry and changes in search behaviour
In the world of luxury, Farfetch has capitalised on Augmented Reality (AR) to allow its shoppers to try on their clothing virtually before committing to a purchase. The luxury market and fashion in particular is a pioneer in visual search technology and as consumers continually change their searching habits, moving more and more towards visual searches, brands will need to adapt and ensure that their websites contain high-quality images that Google can pull into visual search features, including its new Search Generative Experience (SGE). There is of course a balance to this, adding lots of images to a website can compromise site speed, which is a key ranking factor for Google, therefore brands need to consider compressing image files but also ensure they have a multimedia content strategy to cater for the changing search behaviours of luxury consumers.
Blockchain in luxury
Blockchain technology is bringing a new level of trust and transparency to the luxury market. With every purchase, consumers can now have a digital passport that verifies a product’s authenticity and provenance, fostering a new era of consumer trust and product storytelling.
One example of blockchain’s impact on the luxury goods market is the collaboration between luxury brand LVMH and Microsoft. Together, they launched AURA, a blockchain platform designed to provide consumers with a full history of their luxury purchases, including proof of authenticity, details of the product’s origin and a record of ownership. This transparency is particularly appealing to the ethical consumer, aligning with their need for traceability and honest marketing.
Luxury Retail Trends 2023
The retail industry is always changing, especially in luxury sectors where new trends are emerging. One key trend is using omnichannel strategies, blending online and in-store experiences for a seamless customer journey. For example, in 2020 Burberry collaborated with Chinese tech giant Tencent so that when shoppers came to its Shenzhen store, they could use WeChat to shop the window displays. Personalisation and tailored services are gaining popularity, catering to individual shopper preferences.
Sustainability is also a key trend in luxury retail with brands focusing on ethical practices and eco-friendly products to meet consumer expectations. Some luxury brands are already making efforts in this regard, for example Gucci has announced that they’ll be using FSC certified paper and Stella McCartney is renowned for her transparency with sustainability in luxury fashion.
The impact and growth of purchasing used luxury items
The luxury second-hand market has become more popular in 2023 due to consumers simultaneously caring about the environment and wanting cheaper items. Online resale of luxury goods is growing fast and the key audience here are millennials who are driving the interest in buying luxury pre-owned goods.
Millennial and Gen Z buyers are seeking pieces with history and a story behind how and why the item was made. This meets their expectations of luxury: being part of an exclusive group of people, but also embracing the piece’s individuality as it has had a life before it was purchased by them.
Buying luxury second-hand goods also allows consumers to get better value for money as they can have cheaper versions of luxury goods which are often worth hundreds or thousands. Ultimately, this opens the door for a wider range of people to experience the quality and prestige of luxury products without breaking the bank.
Fast growth of luxury online shopping
Luxury shopping online has seen significant growth, offering unique experiences that were once exclusive to physical stores. Interactive features, virtual personal shopping services and innovative digital showcases now define the luxury shopping experience, transcending traditional boundaries. For luxury brands, online shopping offers global reach and efficiency while being more cost-effective than traditional retail stores.
Source: https://luxe.digital/business/digital-luxury-trends/luxury-future-trends/
According to Luxe Digital, millennials and Gen Z are driving the growth of luxury online shopping. These generations are more comfortable shopping online than previous generations and they are also more likely to research products online before making a purchase.
Luxury brands are recognising the importance of online sales and are investing heavily in their online presence. They are creating user-friendly websites and apps, offering exclusive products and services online and using social media to connect with customers online.
Luxury Travel Trends 2023
According to American Express, food became a central aspect of travel in 2023 with many travellers planning entire trips around unique and authentic dining experiences. This included local food tours, chef-tasting menus, cooking classes and exploring the local restaurant scene.
Supporting local communities and businesses became increasingly important for luxury travellers. They actively sought experiences and accommodation that gave back to the local community and promoted sustainable practices. This included shopping at small businesses, choosing eco-friendly accommodation and participating in volunteering opportunities. This certainly was the case for the audience of our luxury travel brand The Thinking Traveller, where we created an entire content campaign surrounding the idea of supporting small businesses abroad.
Source: https://www.americanexpress.com/en-us/travel/discover/get-inspired/Global-Travel-Trends
Technology that is shaping luxury travel
AI is changing how people plan luxury trips. With the launch of ChatGPT in late 2022, 2023 was the year that we embraced this technology in our day to day lives. The power of it is pretty boundless, and travel is a sector that is quickly getting impacted. Lots of people when planning a trip, use an AI chatbot to devise an itinerary, book flights and even tell them what to pack. According to Travolution, 79% who previously used travel AI said they are likely to use it again so this isn’t going away soon.
For organic marketers working in the luxury travel space, this could seem like a threat. However, there’s a golden opportunity for brands to capture users who are searching via chatbots, a technique termed AI Search Optimisation. Marketers should focus on producing content that answers conversational search queries, demonstrates E-E-A-T and contains snackable AI-friendly insights.
The human touch through luxury travel advisors
Although chatbots and technology make it easier than ever to book or investigate any type of holiday, the luxury consumer still values a personalised and human experience. Luxury travel advisors create custom holiday experiences based on clients’ preferences, they offer tailored advice and unique activities for unforgettable trips. The personal touch in planning builds strong client relationships, ensuring every holiday is crafted to reflect individual aspirations and expectations. Therefore, luxury travel brands shouldn’t get carried away by the latest tools and tech and forget the value of human interaction for their audience.
Emphasis on luxury travel experiences
In today’s luxury market, brands understand that customers want more than just products. They seek remarkable experiences that align with their values. Luxury brands now offer immersive experiences like tailored travel and exclusive events, shifting focus from owning to experiencing. These practices build strong customer bonds and position brands as lifestyle experts in a competitive market.
A study by American Express reveals that an overwhelming 81% of respondents favour an authentic local shopping and dining experience, particularly when abroad. Additionally, according to Save My Cent, 60% of customers purchasing luxury goods or services expect excellent service from before they buy to after they make a purchase. This shows their expectations for a good experience not only when travelling abroad but when shopping as well.
What Luxury Trends to Look Out for in 2024?
The luxury industry is embracing digital transformation by blending tradition with cutting-edge tech for immersive shopping experiences. In general, AI and tech developments will transform the e-commerce sector, but the level as to which luxury brands will embrace this technology is up for debate. Tools that can automate and expedite ad creative production is much more appealing to brands with smaller marketing budgets who sell products at a lower value. The luxury consumer is discerning and can quickly see through an inauthentic, impersonalised experience.
What we could see is luxury brands using digital and tech to enhance the customer experience, for example using AR to allow customers to try on pieces before they buy, using digital platforms to create exclusive communities for their audience etc.
Looking ahead at the future of luxury markets, McKinsey forecasts a steady 2-4% growth in the luxury sector in 2024. This positive outlook is driven by rising consumer demand and the industry’s quick shift towards digital transformation. In Europe, the luxury retail market is projected to reach 305 billion euros in 2024, blending traditional resilience with tech innovations for better consumer experiences, promising a bright future for luxury brands and retailers.
Sustainability remains crucial in consumer behaviour. Brands face increasing demands for transparency and ethical practices, driving them towards more sustainable operations. The emphasis on sustainability reflects a broader societal move towards environmental consciousness, influencing consumer decisions.
For luxury brands, having a strong online presence is more important than ever. Brands understand the need to connect with customers online to create a brand experience that fits their values and lifestyle, not just for selling products. An interesting way to boost this online interaction is through immersive virtual events which is a potential luxury trend in 2024 to look for. These events offer customers engaging experiences at home, like virtual fashion shows and exclusive online galleries. These digital efforts offer convenience and help luxury brands reach a wider audience globally. The move towards virtual experiences shows how the industry is adapting and embracing digital technologies to engage consumers better.
It’s important to stay on top of these trends to have a better understanding of the demands of consumers in the luxury industry. At Passion, we’re experienced with working with luxury brands to grow their digital presence either organically or via paid channels.
If you have any questions about growing your digital presence, get in touch and we’ll be more than happy to answer your queries.