Blogging From The American Express Publishing Luxury Summit: 5 Key Luxury Trends
What does the future of luxury look like? There's no one easy answer but the morning panels at Tuesday's sessions of the American Express Publishing Luxury Summit were dedicated to the fine art of prognostication. That's no easy task in a luxury world that's been consistently defined as uncertain. Trendwatchers say that while luxury is rising again any hint of major global turmoil could throw us all back off our feed again.
The rise of China: When it comes to predicting global growth the acronym has been BRIC (Brazil, Russia, India and China). That should be spelled with a really big C, says the fashionably attired Lisa Sun of McKinsey & Company who discussed the growing Chinese luxury market. The Chinese market is a growing but increasingly hard-to-define group. Chinese consumers are still new to luxury, generally young, ambitious and interested in Western brands. They are getting more concerned about social responsibility although generally at a slower rate than Western shoppers. They are on what might be defined as the early curve of the luxury education. What is also interesting is that a major part of China's luxury market isn't just clustered in the major cities. McKinsey & Company's data reveals that a full 43 percent of the Chinese luxury market comes from outside the tier one and tier two cities. Further along on the arc of luxury acquisition is the Japanese market where buyers are both older and more experienced in the luxury market and less fascinated with Western brands. Could the next big luxury brand come out of China? It is a definite possibility, the Chinese shoppers are a key part of defining the new luxury.
The "smart" shopper: I mentioned the discounts versus deals phenomenon a bit in my previous report from this summit. Today's affluent shoppers don't really want their merchandise discounted exactly but what they want to feel is that they got the best deal possible. There's a certain ego-stroking phenomenon involved here. A few years ago bragging about what you spent was appealing, these days people like to brag about what they save. No one wants to appear to be spending frivolously or inappropriately which is where the buzzwords of quality and authenticity from Monday's panels came back into play. The smart shopper is also well-connected and uses the internet and sale sites as part of their strategy. Social media isn't going anywhere but how to monetize it for social shopping remains a bit of a mystery. For the most part consumers don't want ads in their social media. For brands to enter this space they have to participate as people which leads to the next key point below.
Personalization: Remember the "it bag?" The aspiring luxury consumer seems to have been mostly wiped out by the recession and they took the idea of logo-chasing and it bags along with them. McKinsey & Company reported that 55 percent of the luxury decline was driven by the aspirational consumers. The trend has shifted from "luxury for all" to "luxury for me." Dr. Jim Taylor, Vice Chairman, Harrison Group, who delivered his annual presentation on his affluence and wealth survey said that luxury brands need to step up their game when it comes to personalized sales, He exhorted the audience to realize that "selling luxury should be a labor of love" like selling art. He also pointed out the that the bigger the cost of acquiring a product, the bigger the effort should be put into retention and followthrough. He challenged luxury retailers to welcome their returning and ready-to-spend customers back like old friends returning from two years in Africa. The product has to be high-quality but the the experience of buying it has to be equally luxurious and intimate because as Baba Shiv, Professor of Marketing, Stanford Graduate School of Business, reminded us, the anticipation of pleasure is a great part of the pleasure itself.
The small stuff: Consumers are looking for more little indulgences. One of my personal thoughts about the new luxury is that it often comes down to consumable luxury (food, wine, beauty products, etc. things that are used and need to be replenished). Some of the trendspotting highlighted the success of fine chocolates and beauty products during the recession. Part of this is because in a time when we are all concerned about wealth and about conserving, we may save our money and make our big decisions with our families, but small luxuries can be easily bought on our own, no doublechecking or residual guilt. In our globally connected on the go world, the little luxury, light, inexpensive, portable and providing a much-needed jolt of pleasure during the day, is as important as the big-ticket items.