Luxury, like everything in life, is not immune to changes and evolution.
The Growth for the global luxury industry.
The new luxury.
If the pandemic crossed the sector, disrupting it from top to bottom and accelerating trends that had hitherto been slow to establish, the present, today, the post-pandemic, is the time to establish the trends that are called to stay and to say goodbye to passing fantasies.
The consumer fleeing traditional points of sale and crowds like a bat out of hell, to upcycling, creative reuse of merchandise and materials to create new, higher-quality products, greater ecological value and greater economic value, going through the need to invent new sensations of exclusivity, new sensory experiences, that the online market will never be able to provide.
The new luxury does not talk about prices, it talks about experiences. The new forms of luxury consist of living unique and unforgettable experiences.
But, above all, it is striking how ostentation is no longer in fashion. The client is learning to value quality products, especially those made by artisans or national designers. We have to learn to consume less and better; and, above all, we have to learn to reuse, to give a new life to our quality pieces and objects”. But he warns: Retail is not dead. I think we all love window-shopping and shopping. Clearly, we are witnessing the birth of a new business with increasingly attractive stores and incredible customer service.
Luxury fashion sales are expected to grow between 5% and 10% globally in 2023, versus negative 2% and positive 3% for the rest of the industry.
The big fashion houses began raising prices in 2015 to unify them in all countries
The increase in the price of any product is something common in an inflation scenario like the current one, but the extraordinary thing about luxury is that, unlike other sectors, the more the prices of its items rise, the more customers want to buy them. The price is an indicator of prestige and raising it, normally, generates an elasticity that goes against the market. However, in luxury it is positive. You raise the price and it turns out that your product becomes more prestigious and, therefore, the demand grows”, he explains.
Another growth driver in the luxury market is online sales.
The luxury online shopping market has become much more diverse and has gained momentum over the past few years.
The digital evolution will not stop: online is expected to continue on it growing path going forward, representing up to 30% of total luxury purchase by 2025, also thanks to a virtuous omnichannel circle (direct e-commerce, indirect online distribution and physical stores).
There are technological innovations, incorporated as a result of the pandemic, such as click & collect (buy online and pick up in store) or the new virtual assistants for businesses, which are here to stay. Large companies have adjusted the number of establishments due to the growth of online sales, which is leading to a total transformation of traditional spaces. We are talking about showroom-type spaces, with personalized experiences for your clients. The ultra-personalization of the service and the immediate response are two of the other great trends in luxury. Without forgetting the unstoppable second-hand luxury market, where brands like Balenciaga have just entered”.
Raise the price and it turns out that the products becomes more prestigious.
The uncertain economic outlook means that fashion companies will reevaluate the areas in which they operate, and may stop prioritizing certain countries or regions, while turning towards others that offer greater potential.
Almost two-thirds of industry growth will come from other markets than Europe and the US between 2021 and 2025.
Luxury has become an even more desired asset after the pandemic. Increasingly, luxury will be a scarce commodity due to the lack of materials, climate change and fuel prices.
Sustainable, yes or not?
Companies will need to align their growth strategies with ESG goals. Sustainable companies through social, environmental and good governance commitments to remain competitive. The challenge of creating a circular economy throughout its value chain and being able to respond to a new luxury customer who demands a greater commitment from their brands to sustainable development. The new generations are fundamental in the change, since they are demanding it.