CONSUMERS

The Top Three Global Trends Shaping Luxury Consumption Today

This is the featured image caption
Credit: This is the featured image credit

Experiences, transparency, and authenticity are the key global trends shaping consumption of luxury goods today, according to Euromonitor analysts Elton Morimitsu and Guilherme Machado, who explain how this new approach is driven by millennials shifting their positioning towards brands’ values rather than products.

Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.

PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.

In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”

The Fondation Cartier pour l’Art Contemparain building in Paris

Experiences, transparency, and authenticity are the key global trends shaping consumption of luxury goods today, according to Euromonitor analysts Elton Morimitsu and Guilherme Machado, who explain how this new approach is driven by millennials shifting their positioning towards brands’ values rather than products.

It is a truth universally acknowledged that the sales of luxury goods have always been based on the heritage aspect that several brands carry, with consumers valuing the history behind each brand and how they evolved during the years.

Luxury sales are still influenced by this feature but even those who consume luxury goods are changing their positioning towards purchases of such items.

Today, the values of a brand are just as important as the tradition upheld by luxury brands. Millennials have helped influence this new approach, with consumers now assessing brands according to their positioning on subjects such as environmental care or inclusive efforts promoting cultural diversity.

Moreover, the shift towards experiences over ownership of products has also been challenging luxury brands on how to proper target consumers and keep them consuming its products and services.

With this in mind, we analyse the trends that affect consumer behaviour across several different industries, looking at the impacts of some of those trends under the luxury goods industry.

Experiences

Millennials are leading this change, with 48 percent of this generation citing experiences as being more important than things. Under luxury goods, such behaviour has already started being noticeable, with many consumers already opting to spend more on experience rather than products.

From 2013 to 2018, experiential luxury posted an average growth rate globally that was more than twice of that of personal luxury, (4 percent and 1.4 percent respectively in current prices), according to data from Euromonitor. Little wonder that established brands and companies are starting to invest in ventures to take advantage of such trends. For instance, LVMH is following its customers into the world of experience rather than goods, with its acquisition of hotel and leisure company Belmond, increasing its presence in the hospitality industry where experiences remain key.

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Luxury car companies are also shifting investments towards providing personal experiences to its consumers instead of focusing on traditional marketing strategies. A number of brands are promoting small adventures to its customers, such as private rallies on exotic locations, so consumers can experience their latest products releases.

Companies are expected to continue increasing their offerings on services and experiences to attract consumers who avoid spending money on physical products and keep them under their pool of clients. The emotional bond resulting from the exclusive products, events and services proposed by some luxury brands represent a “money can't buy” experience that is very unlikely to be provided by ordinary brands.

Ethical Living

Consumers are increasingly demanding corporations to become more sustainable and transparent when doing business. Under luxury goods, this trend has already affected many of the companies’ offerings to final customers.

The recent announcement by Prada to stop using fur in its collections reflects this change, with the Italian brand joining other important names in the move such as Burberry and Gucci.

Prada's sustainable line of bags made with Econyl regenerated yarn. Source: Courtesy.

Despite adopting more ethical practices in its business, the luxury goods industry still faces challenges when pursuing for more sustainable materials. The main one may be related to leather. Leather goods sales in 2018 were of $55 billion (€49 billion) globally, representing one of the largest and most iconic segments in the industry. Luxury companies are struggling to find a high-quality material as good as leather. Leather offers versatility, durability and an apparent status that a synthetic material is yet to project.

As consumers become more demanding towards ethical practices, the seek for substitute materials should increase as well, posting challenges for companies to introduce raw materials as good as the existing ones that are primarily sourced from animals. With the current challenges being faced by the fashion industry regarding the reports of unhealthy and underpaid workforce, luxury brands can stand out positively due to their highly qualified specialists working along the whole supply chain and within small factories, that produce few artisanal products that represent relatively low environmental impacts.

Authenticity

Authenticity is an implicit quality when talking about luxury goods. Sales of luxury goods are mostly based on the exclusivity of the brands, since few consumers can actually purchase items under this positioning.

However, even within a restricted group of consumers, brands are challenged to maintain such aspect without sacrificing sales. Some consumers decide not to purchase items from brands that may be considered too accessible or others go after products that are known for being even more exclusive, explaining the success of launching capsule collections or lines made of exquisite materials.

Part of the search for authenticity is also explored through services, with brands providing options of personalisation that result in unique items receiving customised paintings or applications.

As authenticity continues to be valued by several consumers, brands are set to continue offering innovative solutions to enhance such aspect even within an industry where exclusivity is already an inherent characteristic.

In a global market where brands certainly find different definitions of what can be considered authentic, depending on each region’s peculiarities, it is becoming increasingly common that luxury brands divide their creative direction at least between Asian and Western markets, challenging their brand equities in order to adapt portfolios and exceed consumers’ expectations.

Elton Morimitsu & Guilherme Machado
Elton Morimitsu & Guilherme Machado

Senior Research Analyst and Research Analyst

Elton Morimitsu and Guilherme Machado are research analysts at Euromonitor International, based in São Paulo. A senior analyst, Elton is responsible for conducting research and producing in-depth content on for beauty and fashion industries. Guilherme is a research analyst responsible for producing in-depth content for fashion industries.

CONSUMERS

The Top Three Global Trends Shaping Luxury Consumption Today

This is the featured image caption
Credit : This is the featured image credit

Experiences, transparency, and authenticity are the key global trends shaping consumption of luxury goods today, according to Euromonitor analysts Elton Morimitsu and Guilherme Machado, who explain how this new approach is driven by millennials shifting their positioning towards brands’ values rather than products.

Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.

PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.

In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”

The Fondation Cartier pour l’Art Contemparain building in Paris

Experiences, transparency, and authenticity are the key global trends shaping consumption of luxury goods today, according to Euromonitor analysts Elton Morimitsu and Guilherme Machado, who explain how this new approach is driven by millennials shifting their positioning towards brands’ values rather than products.

It is a truth universally acknowledged that the sales of luxury goods have always been based on the heritage aspect that several brands carry, with consumers valuing the history behind each brand and how they evolved during the years.

Luxury sales are still influenced by this feature but even those who consume luxury goods are changing their positioning towards purchases of such items.

Today, the values of a brand are just as important as the tradition upheld by luxury brands. Millennials have helped influence this new approach, with consumers now assessing brands according to their positioning on subjects such as environmental care or inclusive efforts promoting cultural diversity.

Moreover, the shift towards experiences over ownership of products has also been challenging luxury brands on how to proper target consumers and keep them consuming its products and services.

With this in mind, we analyse the trends that affect consumer behaviour across several different industries, looking at the impacts of some of those trends under the luxury goods industry.

Experiences

Millennials are leading this change, with 48 percent of this generation citing experiences as being more important than things. Under luxury goods, such behaviour has already started being noticeable, with many consumers already opting to spend more on experience rather than products.

From 2013 to 2018, experiential luxury posted an average growth rate globally that was more than twice of that of personal luxury, (4 percent and 1.4 percent respectively in current prices), according to data from Euromonitor. Little wonder that established brands and companies are starting to invest in ventures to take advantage of such trends. For instance, LVMH is following its customers into the world of experience rather than goods, with its acquisition of hotel and leisure company Belmond, increasing its presence in the hospitality industry where experiences remain key.

Join Luxury Society to have more articles like this delivered directly to your inbox

Luxury car companies are also shifting investments towards providing personal experiences to its consumers instead of focusing on traditional marketing strategies. A number of brands are promoting small adventures to its customers, such as private rallies on exotic locations, so consumers can experience their latest products releases.

Companies are expected to continue increasing their offerings on services and experiences to attract consumers who avoid spending money on physical products and keep them under their pool of clients. The emotional bond resulting from the exclusive products, events and services proposed by some luxury brands represent a “money can't buy” experience that is very unlikely to be provided by ordinary brands.

Ethical Living

Consumers are increasingly demanding corporations to become more sustainable and transparent when doing business. Under luxury goods, this trend has already affected many of the companies’ offerings to final customers.

The recent announcement by Prada to stop using fur in its collections reflects this change, with the Italian brand joining other important names in the move such as Burberry and Gucci.

Prada's sustainable line of bags made with Econyl regenerated yarn. Source: Courtesy.

Despite adopting more ethical practices in its business, the luxury goods industry still faces challenges when pursuing for more sustainable materials. The main one may be related to leather. Leather goods sales in 2018 were of $55 billion (€49 billion) globally, representing one of the largest and most iconic segments in the industry. Luxury companies are struggling to find a high-quality material as good as leather. Leather offers versatility, durability and an apparent status that a synthetic material is yet to project.

As consumers become more demanding towards ethical practices, the seek for substitute materials should increase as well, posting challenges for companies to introduce raw materials as good as the existing ones that are primarily sourced from animals. With the current challenges being faced by the fashion industry regarding the reports of unhealthy and underpaid workforce, luxury brands can stand out positively due to their highly qualified specialists working along the whole supply chain and within small factories, that produce few artisanal products that represent relatively low environmental impacts.

Authenticity

Authenticity is an implicit quality when talking about luxury goods. Sales of luxury goods are mostly based on the exclusivity of the brands, since few consumers can actually purchase items under this positioning.

However, even within a restricted group of consumers, brands are challenged to maintain such aspect without sacrificing sales. Some consumers decide not to purchase items from brands that may be considered too accessible or others go after products that are known for being even more exclusive, explaining the success of launching capsule collections or lines made of exquisite materials.

Part of the search for authenticity is also explored through services, with brands providing options of personalisation that result in unique items receiving customised paintings or applications.

As authenticity continues to be valued by several consumers, brands are set to continue offering innovative solutions to enhance such aspect even within an industry where exclusivity is already an inherent characteristic.

In a global market where brands certainly find different definitions of what can be considered authentic, depending on each region’s peculiarities, it is becoming increasingly common that luxury brands divide their creative direction at least between Asian and Western markets, challenging their brand equities in order to adapt portfolios and exceed consumers’ expectations.

Elton Morimitsu & Guilherme Machado
Elton Morimitsu & Guilherme Machado

Senior Research Analyst and Research Analyst

Elton Morimitsu and Guilherme Machado are research analysts at Euromonitor International, based in São Paulo. A senior analyst, Elton is responsible for conducting research and producing in-depth content on for beauty and fashion industries. Guilherme is a research analyst responsible for producing in-depth content for fashion industries.

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