Last October, Interbrand released its Best Global Brands 2018 ranking, unveiling that luxury brands were growing at a faster rate than all other sectors. Thanks to higher anticipation and responsiveness to shifting cultural trends, luxury brands “have managed to immerse themselves into street culture and provide levels of access that, while retaining their authenticity and a level of exclusivity, have made their brands more desirable to more customers.”
And we couldn’t agree more.
As the global research agency for luxury companies ranging from leather goods to high horology and jewelry to champagne and spirits, we know firsthand that luxury brands are on the forefront of societal change. Within the context of shifting cultural trends and growing consumer expectations, we at EI are uniquely positioned to help luxury brands understand the context they are operating in, identify and qualify their audiences (are they advocates or detractors? What are the latest socio-demographic shifts within segments?), tailor and optimize content, and ultimately measure the impact of brandactions.
To share some of our intel, we’ve compiled the top 5 insights shaping the luxury industry today:
1. Luxury consumers are seeking meaningful purchases. And the best luxury companies are responding.
As luxury brands gain more visibility on the international stage, their consumers are increasingly seeking more meaningful purchases, therefore raising the stakes for luxury companies in today’s operating environment. In fact, several studies show that Millennials, and even more, Gen Z’ers, expect brands to have an authentic and meaningful strategy that reflects a brand’s value, and 49% seek out brands that align with causes. Already, several luxury brands are taking a stand on societal issues that reinforce their values, purpose, and contribution to society at large. For example, Kering’s, the international luxury group behind brands such as Gucci, Yves Saint Laurent, and Balenciaga, partnered with Michelle Obama during the French edition of her “Becoming” book tour, aligning itself with a specific standpoint in the midst of a “hot” and even political discussion. In Kering’s case, the partnership was based purely on association with a figure of women’s empowerment and gender equality in a post-Weinstein era. Another example of brands taking a stand is Stella McCartney’s recent sustainable engagement and the launch of a Sustainable Fashion Charter to fight climate change. While being an environmental issue, the campaign clearly signaled to consumers what Stella McCartney stands for, beyond just material goods.
2. The luxury—get this—wellness economy, is booming.
The activewear market is growing faster than any other category in fashion, and luxury brands are no strangers to this trend. In fact, the majority of luxury companies embraced the movement with, for example, Louis Vuitton’s famous Louis Vuitton x Supreme collaboration or Balenciaga’s sneakers. While streetwear and sportswear used to be part of “popular” culture, athleisure (athletic x leisure) fashion has become a lifestyle trend notably supported by celebrities who desire to make it a fashion statement worthy of an Instagram moment. Associated with the increasing visibility of luxury brands’ men collections — led notably by Virgil Abloh at Louis Vuitton – the athleisure trend is exponentially growing to become a true art of luxury living.
3. Racial controversies won’t be tolerated—or forgotten—anymore.
Several social media-driven scandals erupted in the luxury world strongly damaging brands’ reputations, putting the issues of race and exclusivity front and center in the industry. Last November, Dolce & Gabbana published promotional videos for their Shanghai show, quickly creating controversy. On social media, activists called the campaign “offensive” and “stereotypical” and were quickly joined in conversation by larger audiences, eventually forcing D&G to cancel their event. The controversy gained an unprecedented international visibility, paving the way for a new era of scrutiny towards other brands and campaigns that have come under fire for similar issues.
4. Luxury brands are strategically focused east, to the Middle East to be precise.
Last year, Deloitte reported that “the Middle East has one of the largest young populations in the world and Millennials in the Middle East are richer than the average and their willingness to buy is stronger. Addressing the new Arab luxury audience represents an opportunity to create brand loyalty, fuel luxury spending, and foster market growth.” Already, several studies highlighted the UAE’s leading position as the “largest luxury market in the MEA” notably boosted by the luxury tourism industry. With its first-ever watch auction in Dubai, the international auction house Sotheby’s showed that the Middle East can indeed be the new hit market for luxury brands. The creation of a one-of-a-kind UAE timepiece by the Swiss maison Jaquet Droz, presented at The Dubai Mall on January, further underscored local opportunities for luxury brands and their need to adapt products to local buyers.
5. Luxury brands: less about products, more about the story behind them.
Storytelling has always been an important part of a luxury brand’s communication, but with consumers increasingly more informed and seeking more than just a product, companies have to find new ways to angle their communication and incorporate products at the center of their history. Take Cartier for example. Cartier used a great mix of technology and virtual reality story-telling to bring visitors of their Shanghai exhibition to 1901 Paris to tell the story of how their first wristwatch came to be through an immersive experience. Likewise, the recent #10YearChallenge has been utilized by luxury brands such as Bally to “tell consumers that what they loved about their brand 10 years ago is exactly the same today,” thus enhancing the history and values of the brand through a timeliness product.
To conclude, and as uncovered in our 2018 Edelman Earned Brand Barometer, today more than ever, consumers are putting their faith in brands to stand for something. Whether it is through the search of meaningful purchases, the need to connect with brands through a story, or the controversies stemming from brands’ misinterpretation of culture, luxury consumers’ behavior and expectations are radically shifting, and the luxury brands that win tomorrow will be the ones who capitalize on these trends today.
Download the Global Trends Report HERE.
Pauline Bombal is the Head of EI France, based in our Paris office.