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Trends in luxury retail

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Trends in luxury retail

  2. 2. TRENDS IN LUXURY RETAIL • True luxury brands put excellence and product first, and let business follow • Luxury has always been a slow-moving beast, trends- wise, but in recent years it has had to up the pace to keep up with an ever-changing customer base. • Women are also a growing luxury consumer force. HSBC predicts that women in China will take over from men as the lead buyers of fine jeweler and watches in the next few years.
  3. 3. • As a result, the luxury industry has had to become dynamic. It’s had to shun its mistrust of the digital landscape and become multi-channel, conversational and, above all, multi-faceted in its approach to messaging, platforms and retail.
  4. 4. 6 Key Luxury Trends That Will Make Or Break Brands In 2016 • 1. Wearable Tech Makes a Real Impact Tech’s appeal to the luxury audience is clear – the world’s wealthiest people are also the most likely to own the best tech, and everyday items such as phones, tablets and phablets have become luxury products in their own right.
  5. 5. • 2. The Rise Of The Thoughtful Luxurian The luxury audience is becoming less interested in attaining status from labels or from a price tag. So if luxury brands can’t compete on monetary value, they need to find worth and substance elsewhere. Armani has curate tweet talks, whilst Chivas hosted a debate on luxury at the V&A to interrogate luxury from aesthetic, conceptual and cultural perspectives. The audiences were thrilled – because in one hash tag and one evening respectively, Armani and Chivas became more than just brands, they transformed into thought-leaders.
  6. 6. • 3. The India Explosion In 2014 the Indian luxury MARKET rose 25% year on year, and is forecast to grow 86% in constant value by 2018. This is helping home-grown brands thrive – indeed three India companies made the 2015 Deloitte Top 100 Luxury Brands list, in the form of watch brand Titan and jewelers Gitanjali Gems and PC Jeweler. But Western brands are also trying to crack this market too.
  7. 7. • 4. Saying Hello to Henry HENRY – the gatekeeper to the luxury market and the future of ultra-affluent consumers. HENRYs (High-Earners-Not-Yet-Rich) With their high disposable incomes, highly driven attitudes and a desire to spend on exclusive products and the best experiences, this demographic is driving luxury brands to expand their offerings and boost the service that they provide.
  8. 8. • 5. The Sharing Economy Goes High-End The sharing economy has taken the business world by storm. It may have grown out of the global recession, but it has now firmly cemented itself into the future of the economy, with examples like Uber and AIRBNB being the stars of the show. It’s already begun to happen, but in 2016 this trend is going luxe.
  9. 9. • 6. Getting Over The Digital Hump It is often assumed that all brands are online, but one sector is still a step behind. Luxury. A staggering 40 per cent of high-end brands still do not sell via the web, according to Bain & Company. But the next generation of luxury consumers is here. They are younger, digital-savvy and have higher expectations of brands. Not only do they expect brands to be available online, but they also expect a seamless experience to go with it.
  10. 10. • THE LUXURY OPPORTUNITY • Decision drivers – how luxury consumers make their purchasing decisions • Bespoke markets – luxury consumers differ across markets • Brand awareness – luxury consumers are shifting ‘awareness channels’ and embracing digital • Omni-channel – the generational wave approaching luxury brands • Social media – how consumers engage with luxury brands • Luxury gifting – scaling the gifting opportunity
  11. 11. 10 KEY TRENDS IN LUXURY RETAIL • The luxury retail sector, in the course of the next three to five years, will be driven by 10 key trends geared to satisfying consumer needs, fueling spending and luring new clients. • The trends will affect existing customer relationships and the targeting of loyal brand enthusiasts, affecting content strategy and tactics, media planning and buying and sales efforts aimed at emerging customer groups.
  12. 12. 1. TRIVERGENCE OF RETAIL • Retail will move in three different directions to service the needs of luxury consumers. • The digital channel will drive research and stocking up on favorite products, while bricks-and-mortar stores will reach out to their clients through customized offerings such as express counters, “top 10 product” style kiosks and assisted shopping services. • Lastly, entertainment is key as experience, lifestyle and theatre drive the physical retail experience, while content will create pleasure in digital retail.
  13. 13. 2. HUNT FOR NEW CUSTOMERS • Given the ongoing softness in Europe and slowdowns in Russia and China, looking into new geographical areas such as Africa is rapidly becoming an alternative. • While fashion brands including Zegna, MAC and Hugo Boss have recently opened stores in Lagos, Nigeria, the new luxury hotspot, online retailers are now shipping to Africa, and are starting to focus marketing efforts on this region.
  14. 14. 3. POWER OF TRAVEL • Especially in Europe, luxury brands are increasingly relying on international travel and tourism to fuel sales, primarily from China, Russia, the Middle East, United States and, now, Africa. • Tourists purportedly account for 55 percent of luxury sales in the United Kingdom, 60 percent in France and 50 percent in Italy.
  15. 15. 4. POLARIZATION OF LUXURY • While in the past, luxury brands attempted to offer multiple price-points, brand confusion and erosion of luxury credentials was often the outcome. • Now, luxury is being pulled in two opposite directions, and brands will need to choose sides: accessible or ultra-luxe.
  16. 16. 5. EDITORIAL’S RETAIL REINVENTION • Media wise, magazines, newspapers and television will become the new digital storefront, reinventing themselves to allow customers to buy their favorite items, looks or beauty products straight off the editorial pages.
  17. 17. 6. MENAISSANCE • The menswear market is extremely bullish, growing at 1.5 times versus womenswear. • While 35-plus male consumers still dominate, the millennial generation drives retail spending through its modern aesthetic and digital knowledge. To which, many women’s wear brands are either launching or revamping their menswear offering.
  18. 18. 7. PERSONALIZED STORYTELLING • The openness of digital platforms dictates that brands need to get personal to make luxury customers feel special. • The rapid rise of Instagram, live streaming and behind-the- scenes footage will leave consumers feeling like they have already experienced everything. • Brands are now challenged with creating truly personal, fresh, and meaningful experiences.
  19. 19. 8. BRANDED MEDIA • Luxury brands will increasingly become media channels, creating content that is far richer than today’s aspirational blogs, videos and magazines. • Retailers will offer multiple channels with high-quality and entertaining shoppable content updated on an hourly basis.
  20. 20. 9. MILLENNIAL REFRESH • While consumers ages 35-plus still command some 83 percent of luxury spend, the fresh aesthetic, playful approach and digital propensities of the millennial generation are driving retail culture. • Furthermore, millennials are approaching their entry-point into the 35-plus luxury heartland.
  21. 21. 10. KNOW I KNOW • Show I know is growing old and the focus will turn away from the outward display of luxury to an inner satisfaction of how it makes one feel. • The creation of personal experiences is essential as luxury consumers shift the focus to indulging in personal reward.
  22. 22. The Indian luxury landscape is experiencing an evolution which is redefining the consumer profile & how luxury players will need to operate in this domain during the year 2016.
  23. 23. 1. DIGI-LUX: THE NEW MANTRA • According to new research, two-thirds of India’s web users access social media daily and spend more time on it than on emails. A combination of physical stores, digital experiences and social media engagement is the new mantra.
  24. 24. 2. PRE-OWNED LUXURY IS A DISRUPTIVE FORCE • Consumer wants to ‘enjoy’ the ‘Luxury’ of owning the product, the need to move on the ‘latest’ collection with no clear value proposition besides being the ‘first to own’ it. • Enter the ‘pre-owned’ luxury seller. Websites like luxepolis.com, luxurymonk.com, and theluxurycloset.com offer ‘pre-owned luxury’ at a relatively lesser price
  25. 25. 3. RENT A LUXURY PRODUCT • There are sites wanting to offer ‘rent a luxury’ product / services. One could look at renting cars to bags to wedding outfits to jewellery for a special occasion at much lower costs and yet flaunt as well as enjoy the brand, the product and the associated benefits. • Sites like secretwardrobe.in are providing a great platform to rent outfits of designers like Anita Dongre, Sabyasachi Mukherjee etc.
  26. 26. 4. DEMOCRATISATION OF LUXURY • Brands across sectors understand that for this emerging Indian consumer who wants to ‘taste’ luxury, a different approach is required to expand the base from its existing sophisticated customer. An approach of lower lines in hybrid mall is the perhaps the way to attract new clients and larger volumes into your domain. • Examples of Armani Jeans ; Brit by Burberry ; Bulgaria perfumes ; Mont Blanc pop up at Select City walk mall could be the examples to adopt.
  27. 27. 5. COLLABORATE NOT COMPETE • With the recent example of successful collaboration of an Indian designer brand, Sabhyasachi Mukherjee with an international designer brand Christian Louboutin, the trend is clear – maintain your core strength and do not dilute into every product category. In the words of Dr. Najma Heptullah Union Minister for Minority Affairs: "The luxury sector has the potential to create powerful experiences that can help to positively influence societies and cultures by nurturing talent and supporting brand
  28. 28. 6. PERSONALISE, CUSTOMISE, INDIANISE • Marking brand differentiation and brand loyalty, brands are promoting personalisation services. Burberry offering customised scarfs, Gucci offering Made-to-Measure services are just some of examples. A luxury brand must not only personalise its offering to every individual customer, but must also allow possibilities of customisation for easy adaptability.
  29. 29. 7. MAKE IN INDIA • Prime Minister Modi’s aggressive campaign to bring the Indian manufacturing sector to surface has positioned India as a potential manufacturing hub in the eyes of the whole world. According to India Brand Equity Foundation, India’s manufacturing sector could touch $1 trillion by 2025. With focus on minimising business start up procedures and red- tapism, this initiative can provide vital impetus for fostering Indian luxury brands.
  30. 30. 8. REGULATORY INFLUENCES Government initiatives that could affect the luxury landscape are: • - FDI in single brand retail: Latest move by the government in easing the ‘sourcing’ clause on a case-by-case basis in single brand retail could see a renewed activity in luxury brands wanting to enter India. • - GST roll out: Looming tax reforms in form of GST roll out could substantially ease the tax pains of multinational luxury brands and help them operate seamlessly across multiple states and locations. • - Revision of cash transaction limits: To two lakhs from earlier 50,000 could help luxury sectors like fashion, footwear, low end jewellery / watches ; bags and accessories etc.
  31. 31. “ Brands will need to create an omni-channel presence to maintain personal touch with customers across all platforms ”
  32. 32. CONCLUSION • We are facing a new model of growth as the existing luxury market matures. The splintering of the market is driven by the cultural diversity of the high-net worth market. Their needs are different and their approaches to fulfilling those differ too. • The organisations that will thrive in these changing times are those best placed to understand the new needs, as well as subtly changing existing needs, and adapting effectively to those. The two elements successful organisations must possess are, true diversity and organisational agility to react to a changing market.