Over 75% of global affluent consumers say they are making fewer – but more meaningful – purchases (source). This stat is the result of more eco-conscious consumers and shifting definitions of luxury and wealth.
As with other consumer segments, the call for “experiential value” is influencing the luxury retail market as well, requiring brands to think more creatively than just handing the customer a glass of champagne while she or he shops for a watch.
More Than a Product Purchase
In order to be part of the discerning consumer’s shopping list, brands are making sure the purchase is about more than just possessing the product—that it feels more like an event. Though online purchases are growing, luxury is still more insulated from digital than other retail segments (projected to account for 25% of personal luxury purchases by 2025); meaning enhanced in-person experiences are more important than ever to capitalize on the affluent customer’s desire for personalization and exclusivity.
Luxury shoe brands have taken a cue from sneaker culture, turning “the drop” into high-end, multi-day event-like pop-up shops (source). Some include appearances by designers, musicians, and spokespersons featuring limited edition styles, creating a “you had to be there” kind of moment.
Earth Cred
It’s not just Starbucks, IKEA, and fast fashion brands under consumer demand to add earth-conscience components to their business models. Luxury consumers are also holding their favorite high-end brands to higher standards.
“Luxury consumers expect brands to demonstrate a rigorous approach to ethical sourcing, production and sales. Planet-protecting pledges, transparent trading and educational initiatives that highlight social and environmental issues are tomorrow’s key differentiators.” (Stylus)
As exotic leathers fall out of favor brands like Chanel, Gucci, Burberry are seeking alternative materials, pledging to no longer use animal pelts after 2018. All the while vegan luxury brand Stella McCartney, known for shifting expectations on what luxurious materials should be, went the extra mile with a London Flagship that combined sustainability, luxury, and fashion. The Bond St location includes furniture, wall-coverings, and mannequins made from recycled materials.
The ecofriendly call from luxury consumers has also elevated several fresh brands into the apparel and fashion spotlight leading to the very first Vegan Fashion Week in LA earlier this year. It was so wildly successful that a second edition is taking place in October.
Be The First Mentality
“The most powerful slow-burn change is the rise of non-material luxury,” – Suzy Menkes, Condé Nast
Accessibility and social media have made the world smaller than it’s ever been. Travel is now the new form of acceptance (keeping up with the Joneses – or Kardashians) and people are willing to shell out top dollar for ultra-exclusive, enviable travel experiences.
The Sheldon Chalet, opened in 2018 in Alaska’s Denali National Park, offers a luxury lodge for $4,600 per night, accessible only by helicopter. Their “Experience Grand” tagline seems fitting.
But the reverse is also true. In a hyper-connected, all-seeing, data-driven world non-material luxury can also mean anonymity. Wealthy homebuyers are utilizing discreet property consultants like The Agency to help them acquire property “off-market” – effectively keeping owner, address, and expenditure information private.
Luxury Lessons
It’s not news that stores are under stress. “Young people today need a good reason to visit a store,” warns Nick Brown, of venture capital firm, Imaginary. “The idea of going [to a store] with your friends and having a collective conversation around the product is really important,” he said. “If stores aren’t facilitating that kind of dialogue, you have to expect that the consumer’s either going to shop somewhere else or they are going to shop on your [website].”
So what can other retail segments learn from the shifting luxury environment? Eco-conscious consumerism (think Patagonia’s Don’t Buy This Jacket Campaign) and an increase in social value being placed on non-material purchases means the purchase experience itself, now more than ever, is just as important as what’s being purchase if brands want to attract and retain customers.