At its very essence, luxury means extreme value for clients. However, in today’s world it’s how that value is created that has changed.
Craftmanship, comfort and service were once the dominant values in creating luxury. However, mass brands now compete on these factors. The implication is that luxury brands have had to evolve from simply a representation of status to the full manifestation of their own values, to empower and express an individual’s identity. It means that for luxury brands to succeed, they must be centred around the customer to inspire and create desirability that result in positive experiences.
Luxury Consumer Trends
Today’s customers are increasingly pursuing change either for themselves or for the greater good, and they expect luxury brands to do better. For example, simply being an exclusive high-end Gym is no longer enough. The current trend for total health, both mind and body has resulted in high-end gyms evolving to become centres for wellbeing.
New trends will manifest, yet some Luxury brands continue to misread established trends. For example, Mercedes-Benz, recently, saw dramatically less demand for their all-new electric S-Class (EQS) in China. Among reasons, is seemingly a design that does not resonate with Chinese customers, a user-interface and software that does not excite young digital natives who are used to more advanced and more responsive functionalities, and insufficient rear legroom for clients who are used to being chauffeured.
Understanding culture sensitivities is key to success for all brands, especially those in the Luxury space. With comfort a key component of luxury, it’s no surprise to see luxury brands waking up to the potential of the sleep economy, and we’ve seen an introduction of a wealth of new products and services. Staying with Mercedes in China. For the Chinese, sleep is not simply a trend it’s a national pastime. Imagine if the EQS was shown silently arriving to their destination by chauffeur, with the customer shown snoozing on route in reclined leather clad seats, arriving refreshed and energized as proof of the experience that a EQS buyer can expect.
Luxury & Exclusivity
Another trend in Luxury is exclusivity. However, what’s the cultural effect of that exclusivity? For example, your coffee may be expensive since it’s been processed by an Asian Palm Civet Cat, or it could be from the slopes of a volcano. In today’s environmentally conscious world, if the product is not ethically sourced, questions should rightly be asked.
Luxury brands have always drawn some of their cachet from exclusivity. Some luxury brands are ratcheting up that cachet with experiences that literally limit the number of people who can enjoy them. Anyone who has attended the Melbourne Cup will know that the Lexus marque is limited only to the lucky few.
In the search for differentiation in Luxury, Fine-dining restaurants are not only elevating the menu, but they are also framing the location of the restaurant as part of wider experience. We’ve seen more restaurants pop up in less accessible parts of the world where only the elite can afford to access. In October 2022, Ritz-Carlton launched a luxury yacht cruise named Evrima costing a minimum of around $6,000 per week, hosted by its five-star hotel chain. The cruise treats guests to Michelin-star chefs, four pools, a champagne bar, a humidor room, a nightclub, and a spa on their voyage from Barcelona (Spain) to Nice (France).
Luxury & Technology
The more recent trend of working from home, as impacted the need for luxury in the office space to make the office more inviting, seeing companies add facilities akin to luxury hotels.
Arguably the largest trend affect luxury is technology, fuelled by the trend to work remotely. No longer is the bricks and mortar store the only way to serve up the luxury experience, with 30% of all luxury sales to take place online by 2030 (Bain & Co). These online buyers will have a very different cultural perspective. For example, there are number of people who are extremely wealthy based on the rise of Crypto currency. Unsurprisingly, they expect to be able to pay for Luxury goods with Crypto. Back in May 2022 Gucci announced that it would accept crypto payments for goods from their North American stores.
Ultimately, whatever trends come along, it’s the Luxury brands who continue to be value driven will see consumers continue to spend more.
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