Emma Fisher, guest editor of The Drum Network's luxury issue, looks at the modern day definition.
A significant market evolution is ongoing with consumers shunning traditional luxury goods in search of novel, unique labels and new product categories like experiential luxury and art. While this should not be an alarming watershed for traditional luxury consumers, it’s indicative of the desire for the lifestyle that affords the product or experience, rather than the product itself. The emergence and growth of brands like A Small World, self- billed as ‘the global community with a shared passion for a good life’, cements the demand for experiencing a lifestyle above all else.
This shift in consumer habit has coincided with the emergence of the new collective of luxury consumers. Coined ‘Henrys’ (high earners, not rich yet) they are not a demographic but a mindset of cash rich consumers who are yet to amass a net wealth and are a distinct target market for luxury brands.
Henrys’ increasing desire to consume luxury goods and experiences presents brands with a conundrum. Introducing lower-priced customisable offerings to satisfy Henrys, and potentially creating brand advocates, jeopardises the exclusivity they desire for their brand.
As Henrys want to be wowed, rewarded and immersed in a lifestyle, brands are being pushed creatively to offer motivating, personalised experiences. For consumers, this immersive approach enables better education on the shape of the marketplace, laying the foundations for long-term brand relationships. Rolls-Royce, Grey Goose and Gucci are all proving how an omnichannel approach, embracing experiential, has reinvigorated their prospective customer base.
In China, brands are starting to acknowledge Henrys in their marketing strategies. Mercedes-Benz launched the ‘Mercedes me’ experience centre in Beijing last year, giving young, aspirational consumers access to affordable retail products and fashionable events, thereby opening conversations and building relationships with them, even if they can’t yet afford to buy its cars.
Offering access and interaction drives consumers to favour those brands that offer such experiences. Not only will they likely visit a store and make a purchase, they will potentially become a brand’s most valuable marketing tool. With a significant 57% of luxury goods consumers placing word of mouth as the greatest influence on their purchasing decisions, brands’ investment in experiential travels far beyond the invitees. Inspiring the few leads to the influencing of many, proving a favourable formula for all.
This evolution of social media and the digitisation of luxury is led by a nation of mobile shoppers. E-commerce and m-commerce have also widened access for second and third-tier city dwellers, enabling them to explore independent luxury labels and experiences that wouldn’t necessarily be available in a physical store.
International luxury brands have embraced the digital influencers – the bloggers, the vloggers, the key opinion leaders – relying on them for sharing favourable opinions with their loyal followers. By driving social entrepreneurship, these brands are stepping away from the classic approach to the malleable yet affluent, bling - flashing consumer and embracing the power of social and digital media to inspire a new generation.
Emma Fisher is associate director at HPS Group.
This article was originally published in The Drum Network luxury special. You can get your hands on a copy here. To be featured in the next special focused on the charity sector, please contact email@example.com.