The face of luxury is changing. The classic image of the sophisticated Westerner, enjoying the best that life has to offer on the Côte d’Azur, New York’s Fifth Avenue, Rodeo Drive in Beverley Hills, London’s Bond Street and Place Vendôme in Paris has expanded to include newly affluent consumers across Asia and the Middle East, and increasingly in South America and Africa.
According to an influential report released by Deloite, entitled Global Powers of Luxury Goods 2018, total sales of fashion products in Europe and North America will fall below the 50 percent of the worldwide total, while sales in Asia, Latin America, the Middle East and Africa combined will rise above 50 percent, and then continue to increase in subsequent years.
In a globalized economy, wealth tends not to stop at borders. People, money and luxury items cross continents and hemispheres with relative ease. So, therefore, does luxury market.
LUXURY TAKES A ‘MASS-MARKET’ APPROACH
The Internet, of course, has played a decisive role in the process. Historically, luxury brands have tended to maintain a cool, but dignified distance between themselves and their customers. But as the popularity of the social media has grown in leaps and bounds, they are increasingly inclined to adopt what they initially regarded as a “mass market” tool.
British luxury fashion house Burberry, for example, is currently using about 60 percent of its marketing budget on digital platforms, including Facebook, Twitter, Tumblr, Pinterest, Instagram and YouTube, and Gucci more than doubled its Instagram followers between 2016 and March 2018.
A luxury consumer in Johannesburg or Santiago, today, has equal access to advertising materials as does a consumer in Rome or Chicago, although the logistics of delivering the product are not as efficient in the developing world, as is the means of delivering the marketing message.
But the democratizing effect of the Internet is a double-edged sword. Just as it increases, sometimes exponentially, the size of the potential customer pool, it also has the potential of undermining the luxury product’s sense of exclusivity. As a result, reports Deloite, certain luxury brands are taking measures to increase their products’ scarcity, such as reducing the number of entry-level products, distancing off-price outlets from city center stores and emphasizing higher-priced iconic items. High-end watch brands, for example, are reducing the number of authorized dealers.
A PERSONALIZED SHOPPING EXPERIENCE LONG-DISTANCE
But it is not only the Internet that is driving growth and geographic expansion in the luxury markets. Much at that can also be attributed to a massive generational shift, with Millennials and now Generation Z the dominant forces in the marketplace.
According to the Deloite report, these younger consumers are still looking for a personalized shopping experience, and they are also are equally comfortable making purchases on online and offline platforms.
For the brands, this desire for both meaningful and individual attention, coupled with a readiness to conduct business online is creating an interesting challenge. Luxury brands looking for solutions using of Augmented Reality (AR) and Artificial Intelligence (AI) technologies, with which they hope personalize consumer experience, improve product experience and build stronger customer relationships.
They are discovering is that they need to develop an omnichannel approach, which allows them to close gaps in the customer experiences, irrespective of the medium being used or the physical location of the consumer.
And it is not simply a matter of marketing. The new luxury consumers, who may well be located in South America or Africa, are less likely to be in close proximity to a brick and mortar store selling a luxury brand product, but via their cellphones they have equal access to the brand’s online outreach programs.
To optimize the potential offered by such consumer, brands are having to develop the means of securely supplying and delivering their merchandise, to parts of the world that previously were off their radar.
It is a work in process, and those companies that are best able to harness the enthusiasm of the new luxury marketplace will ensure their place among the megabrands of the next decade. One thing is certain, if both the money and demand are there, the solutions will follow.