Key Trends in the Luxury Sector
We are living in a world where trends are changing faster than ever before. In this, luxury companies have tried to keep up with the changes in the global market. Historically, these brands have been associated with excessive consumerism, guilty pleasure, elitism, and high costs. However, since the last decade, we can observe a change in this perception. Why is this so?
First, luxury companies across the globe have started to keep an eye on the customers of the future, namely Millennials and Gen Z. The younger segments of the global population are highly motivated by life experiences. According to data, "by 2025, Millenials will represent 40% of the global luxury market". The number is not small. Luxury brands are adapting to the preferences of younger consumers in terms of product offering and engagement strategies and distribution channels.
Secondly, luxury companies have started focusing their attention on a new consumer class that is going to be relevant in the future: the High-Earners-Not-Rich-Yet (HENRY’s), a term first coined in 2003 by Fortune Magazine. This category of the population has income between $250,000 and $500,000 and has currently significant discretionary income and a strong chance of being wealthy in the future. According to Deloitte’s report “Global Powers of Luxury Goods 2019”, luxury brands have started to sustain their longstanding relationship with the HENRYs. This category of consumers have a few common traits: they are digitally savvy, they love online shopping and are big spenders. Slowly, luxury brands have started to focus on values shared by this aspirational demographic.
Third, luxury brands, although late, have started embracing digital platforms and technologies. This refers to engaging in social media platforms, the use of which has enabled the brands to offer a more personalized product and service experience to their customer base. The use of Artificial Intelligence and Big data is helping the brands in redesigning customer engagement techniques.
Finally, luxury brands have started targeting emerging markets, such as China, UAE, and India. In India, especially, in tier 2 and 3 cities, we see the rise of a new consumer base with newfound access to money and information, who are becoming consumers of luxury goods at a rapid pace. In China, the consumer’s appetite for luxury products remains unrivalled. However, luxury brands do not often want to penetrate these markets, but we do see a change in this perception. Emerging markets can hold the key to growth, but they can be difficult to understand.
First, luxury companies across the globe have started to keep an eye on the customers of the future, namely Millennials and Gen Z. The younger segments of the global population are highly motivated by life experiences. According to data, "by 2025, Millenials will represent 40% of the global luxury market". The number is not small. Luxury brands are adapting to the preferences of younger consumers in terms of product offering and engagement strategies and distribution channels.
Secondly, luxury companies have started focusing their attention on a new consumer class that is going to be relevant in the future: the High-Earners-Not-Rich-Yet (HENRY’s), a term first coined in 2003 by Fortune Magazine. This category of the population has income between $250,000 and $500,000 and has currently significant discretionary income and a strong chance of being wealthy in the future. According to Deloitte’s report “Global Powers of Luxury Goods 2019”, luxury brands have started to sustain their longstanding relationship with the HENRYs. This category of consumers have a few common traits: they are digitally savvy, they love online shopping and are big spenders. Slowly, luxury brands have started to focus on values shared by this aspirational demographic.
Third, luxury brands, although late, have started embracing digital platforms and technologies. This refers to engaging in social media platforms, the use of which has enabled the brands to offer a more personalized product and service experience to their customer base. The use of Artificial Intelligence and Big data is helping the brands in redesigning customer engagement techniques.
Finally, luxury brands have started targeting emerging markets, such as China, UAE, and India. In India, especially, in tier 2 and 3 cities, we see the rise of a new consumer base with newfound access to money and information, who are becoming consumers of luxury goods at a rapid pace. In China, the consumer’s appetite for luxury products remains unrivalled. However, luxury brands do not often want to penetrate these markets, but we do see a change in this perception. Emerging markets can hold the key to growth, but they can be difficult to understand.
| Source: Reuters |
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