Can luxury brands meet the needs of the new consumer?
The expectations of consumers are rapidly evolving. Lea Rayssac-Baures, strategy director at OMD EMEA, explains why tech is pushing luxury brands to innovate to stay attuned to their customers’ needs.
OMD advises luxury brands to embrace the new opportunities currently available.
The Luxury fashion industry has been in flux over the past few years, with the arrival of new designers such as Virgil Abloh at Louis Vuitton, Kris Van Assche at Berluti and Riccardo Tisci at Burberry. The shift in creative direction across some of the top global luxury brands reflects the evolution of the composition of consumer groups happening in the luxury market. According to the Business of Fashion, Millennials & Gen Z are expected to account for 45% of total luxury goods sales by 2025, and will represent a 130% growth opportunity.
These younger consumers have brought new requirements to the luxury market, forcing brands to adapt their traditional luxury values to cater to evolving expectations. The need for uniqueness & 'identity statement' has driven a growth in collaborations which now represent a crucial entry point for the category as 60% of Gen Z & Millennials say collaborations increase their willingness to buy a product. Luxury brands have also adapted their pricing strategy to capitalise on the youth consumers behaviours, by releasing more readily-accessible products, such as the Gucci 'Instagram-ready' £90 socks, or £170 phone cases.
Traditional values have historically led the luxury industry as it catered primarily for older, more traditional consumers. However, the recent consumer evolution requires brands to re-think their approach and apply the right balance of traditional and new values of luxury to their ecosystem.
The essence of a brand
While brands apply a balance between traditional & new luxury values to collections, the luxury industry often uses a blanket approach to communications. The fear of losing consistency or impacting their image and heritage is one of the most significant barriers to the evolution of communications in this market. Yet, the developments in technology and digital media now provide the tools for luxury brands to deliver coherent brand stories and experiences while applying the nuances that are needed to be relevant to different consumer groups.
The development of personalisation and targeting capability means that brands can adapt their messaging and the products advertised to different consumer clusters. Whereas this is a well-known and straightforward approach, it is essential to deliver the personalised experiences luxury consumers expect & seek. However, luxury fashion requires tailored tactics as personalisation applied for fast fashion, may have the opposite impact on luxury consumers. Tactics employed shouldn't be intrusive or look desperate; they must seamlessly integrate within the luxury ecosystem. Luxury brands might prefer dynamic website landing pages, as they can deliver tailored experiences to specific consumer groups without being obvious. They can dynamically adapt the homepage with relevant clothes collections according to the consumer preference and group, bringing the exclusive in-store feel to eCommerce.
Technology & digital media won't replace the importance of physical retail. It is likely to prevail in Luxury fashion as the need for touching and feeling the products and the consistent services delivered in-store are experiences that remain ingrained for all luxury consumers. However, technology can act as a differentiator by extending and complementing these offline experiences in a way that is relevant to traditional & young consumers. The conventional means of advertising that prevail in luxury fashion such as print can be expanded on through AR, to create engaging experiences, further bringing the product and the brand world to life.
Not all luxury brands will want to innovate in the field of gaming or interactivity. Some brands will want to keep their communication and distribution close to traditional luxury values. Chanel, for example, only sells beauty products & sunglasses online, maintaining the sales of its luxury collections exclusively in stores.
However, delivering exclusive and relevant experiences to consumers is core to any luxury brands. The changing landscape, which has forced brands to re-think their product approach, already has consequences on the luxury industry's communications. Besides, the recent events have deeply impacted consumers behaviours, and while we're still to see if these behaviours will remain, we know that digital is only going to play an increasingly important role in people's lives.
Luxury brands should not shy away from the opportunities these shifts present. The key is for brands to embrace the benefits that technology and digital media represent to consistently deliver their brand worlds in ways that are relevant to different consumers groups.
Lea Rayssac-Baures, strategy director at OMD EMEA.
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