Over the years the word luxury has become so overused that it can now be applied to everything from hotels to toilet paper
During the baby boomer generation, must-have designer logos typified the height of luxury. Their unattainability for the masses was seen as the ultimate luxury status symbol. However, over the years the word luxury has become so overused that it can now be applied to everything from hotels to toilet paper. With predictions that the number of luxury consumers will rise to between 380 million and 500 million by 2020, luxury is fast becoming mass-produced.
Recent figures show that Europe’s luxury goods stocks were among the worst performers after China devalued its Yuan currency last week. As an important export market for European luxury goods, some brands will no doubt be feeling the pain caused by this.
Luxury-seekers want individuality
In 2014 China surged into second place for the country with the most millionaires (only surpassed by the US) and now has 213 billionaires (vs 117 in UK). Such rapid economic development has created a population with a newly found wealth and a race to search for ways of displaying it. China has primarily looked to the West for inspiration and while a raft of European luxury brands have enjoyed huge growth in recent times, some are becoming saturated or, worse still, considered ordinary. Wealthy consumers are starting to look for even more exclusive, undiscovered and unique products and brands. This mirrors the growing trend in Europe where luxury-seekers are more fixated on individuality, with taste-makers increasingly opting for independent or unique brands, clamouring to be the first to bring them into their networks.
Cash-strapped Millennials are thriving in today’s ‘sharing economy’ and companies like Airbnb and Uber are flourishing
At the same time, cash-strapped Millennials are thriving in today’s ‘sharing economy’ and companies like Airbnb and Uber are flourishing. The key point to note about these companies is that they allow people to ‘share’ rather than buy products. Meanwhile, in fashion, Rent the Runway (an online designer clothes rental service) is using the sharing economy to introduce a new element to luxury: accessibility. If luxury products no longer hold the same exclusive attributes, they become far less desirable. Now, some brands are starting to push back and redefine what is seen as luxury.
Experience over product
By adjusting the focus from products to experiences, brands are allowing luxury to continue to embody preciousness. And in terms of sales, it’s working. A 2014 Eventbrite nationwide study found that 78% of Millennials would choose to spend money on a desirable experience or event, over buying a desirable product.
One reason for this is the growing cost of living in the luxury capitals of the world and the challenges this brings. Millennials in particular are facing lower income and higher living costs than any other generation, but this doesn’t mean lower expectations. Instead it means a shift of priority from the more material statements of success and luxury like owning a property or having the newest car; to acquiring experiences. These are regular bitesize moments of luxury that help define life and portray taste, often in an infinitely more rewarding and enriching way than a new handbag or wristwatch ever could.
Brands need to broaden their interests and offering from being manufacturers of luxury goods to facilitators of luxury moments
Brands need to broaden their interests and offering from being manufacturers of luxury goods to facilitators of luxury moments. And it’s not just about standalone experiences and events. In-store experiences need to have a bigger focus on curation and inspiration. Crucially, these need to be at a pace that moves as quickly as Millennials, who represent the future of the luxury consumer. In order to stand out in today’s new luxury landscape; brands must focus on delivering incredible customer experiences and create a value beyond the product itself.
Mixing retail and magazine formats
US store, Story, which opened in New York in April, represents exactly where the future of new-luxury is going. Every month or two it overhauls the store layout and introduces a new theme, trend or issue and combines product, content and experience to curate an entirely new shop. Story has the point of view of a magazine, everything changes every four to eight weeks like a gallery, and it sells things like a store. The result is effectively a physical piece of content. Its ephemeral nature only adds to the heightened sense of luxury. Brands, albeit mainly without a physical store of their own, have also partnered with Story and there have been successful collaborations with Conde Nast, Toms and American Express, to name a few.
Alexander Wang has also achieved a great mix of luxury in terms of product and aesthetic but with enough grit and pace to make it feel a little more accessible. Its social and digital efforts are fantastic, and its incredible, ever-changing flagship stores are real destinations. Alexander Wang successfully bridges the gap between accessibility and exclusivity while retaining cutting-edge fashion credentials.
Of course, brands must still have a solid product offering
Of course, brands must still have a solid product offering. Both incredibly wealthy and less-affluent consumers will always want to own their own little bits of luxury and no doubt the leading European brands that have recently suffered in China will continue to provide for them.
However, they need to move beyond product to be seen as luxury in today’s changing market. Brands must give their customers the opportunity to have a unique experience that embodies what they stand for. This is no easy task, as these consumers are also some of the savviest in terms of ‘being marketed to’. Even the slickest of productions will fall at the first hurdle if they don’t have the right level of authenticity or natural association with their customers’ lives. But do it well, and those experiences will not only enrich people’s lives but, crucially, provide an environment where the product itself becomes a cherished keepsake of that moment of luxury.