In as little time as the next decade, the luxury marketplace will definitely be different from what it currently is. The causes and effects of the changes that have been evaluated so far are proof of the changing environment.
The current luxury environment requires a shift away from the product-focus strategy to the adoption of the consumer-focus strategy. This means making consumer needs the central point of brand strategy development. It also means that the future will be difficult for brands that are relaxed about innovation and understanding consumer needs. The future will also be less about tradition and sameness; and more about substance, originality and relevance, through continuous innovation. Consumers will expect to be taken through a seamless experience of everything that encompasses a luxury brand and not just its products and services. There will also be a level of brand attachment that will go beyond the current lifestyle scope, to a cultural phenomenon that will separate itself from commerce and lavishness. Therefore less will mean more and consumer emotion will replace product quantity and cost. Consumers will also continue to seek abstract forms of freedom and expression in fashion and will reject brands that seem apparently wealth and profit-driven and lacking in substance. This means that only the brands that show deeper meanings and foster simplicity in creativity will thrive.
Chris Sanderson, Creative Director of The Future Laboratory sums it up in his statement in an interview granted to Luxury Briefing:
Nu-luxury invests much of its values and worth in brand intangibles - the magic of its offers, the experience of its brands, the uniqueness of its narrative and the emotional and psychological impact all these have on our senses. (Luxury Briefing, October 2005)
In the near future, the consumer society will place more value on ethical and moral issues including environmental protection concerns. They will respect the luxury brands that 'give back' to the society and support ethical production. This outlook will also be directly transferred to the feelings that consumers will have regarding their expenditure towards luxury purchases. Consumers will seek an honest justification for the lavish purchases of luxury goods. The recognition of moral and ethical values will affect all high net-worth consumers including those that still need to assess their affordability of luxury goods. This means that in addition to a brand's offerings, consumers will need a concrete and morally right 'background story' to endorse a brand.
In addition to the consumer outlook towards luxury goods, the way consumers will shop in the future will be different. Internet and communications technology will enhance online shopping, trading and borrowing of luxury goods. Mobile shopping, which is already a high growth retail business in Japan, will also see significant growth in other parts of the world, notably the US. This will result in an increased pace of retail and commerce, leading consumers to expect and demand more from luxury brands.
Personal service and attention to consumer needs will become a key success factor for brands that pay attention to consumers. Also consumers will want to see real value and essence in the luxury brands that they endorse and will desire products that have enduring value. Consumers will not have the patience to decode unclear brand messages and will move on to the next choice if confused. This will make them seek the brands that hold true meaning in terms of luxury and prestige. The brands that will feel the impact most are those that are 'stuck in the middle' without appropriate positioning as neither luxury nor premium brands. Luxury, premium and mass fashion brands need to work harder to maintain their competitive position.
The list below provides a quick overview of what to expect from the fashion market in the near future:
1 Second-hand luxury goods will become more fashionable and more purchased.
2 Specialist stores with rare products will become more successful.
3 Online retailing and trading between luxury brands and consumers and among consumers themselves will thrive.
4 Consumers will recognize and patronize indigenous designers especially in Britain, China and Japan.
5 Consumers will demand more of personal shopping and a total immersion experience with luxury brands.
6 Customized and bespoke goods will become the order of the day.
7 Uniquely handcrafted products will continue to remain popular among consumers.
8 Environmental awareness will drive consumers to seek knowledge of the materials used for their products and to support brands with visible ethical practices.
9 The fusion of luxury fashion with art, travel and lifestyle will be more attractive to consumers.
10 Luxury brands that ignore the intangible needs of consumers will lose loyalty.
11 The Chinese market will have a great positive impact on the sales of goods from Western luxury brands in the short term, but in the long term
China will promote and support native creative talent both acquired locally and abroad like Barney Cheng and Jimmy Lam. The country's size and vigorous nature are ingredients for the success of local talent.
12 Mobile shopping will grow in different parts of the world.
13 Innovative brands will advance marketing and Customer Relations techniques through technology such as Neuromarketing.
The strategic challenge luxury brands face in the light of these factors is that it is time to get rid of the old strategy where the product was king that drove the company forward. New luxury is less about the brand's tangible attributes such as the product design and packaging and store location. Instead, the New Luxe embodies intangible brand associations like the complete magic of each consumer's experience and the unique impact of the brand on the consumer's emotions and subconscious.
Finally, luxury brands also ought to recognize that mass fashion brands have created an escalated portfolio of offerings that sometimes represent a more justifiable value to consumers than those of luxury brands. Mass brands have also fine-tuned their strategies, which sometimes surpass the standards that were previously set by luxury brands. In order to maintain their luxury status however, luxury brands must sustain a distance from mass fashion brands to avoid becoming commonplace. At the same time, luxury brands should visibly embrace the mass fashion brands as both partners and collaborators because mass products now complement luxury products creating a co-existence between the two product categories.
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