The prestige promise - redesigning consumer luxury in 2017 - Amazon S3
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
brought to you by the prestige promise r edesigning consumer luxur y in 2017
5. Section One
Introduction — What is the Prestige Promise?
7. Section Two
The Luxury Evolution
11. Section Three
The Three Defining Characteristics of Prestige Consumers
Capacity to Purchase
Status Drivers
A N E W S C OR P P R E S T I G E P A P E R
Generational Influences
ta b l e o f c o n t e n t s
17. Section Four
Economic Overview
The International Outlook
The Australian Opportunity
23. Section Five
Trends Driving the Prestige Promise
Prestige Intelligence
The Transparent Purpose
Hyper Experiences
The Transcendent Self
Disruptive Collaboration
True Individualism
Rarity Reclaimed
My Legacy Label
43. Section Six
Key Takeouts
Endnotes
3introduction
5S ec t i o n o ne
— what is the prestige promise?
“Luxury is the ease After going through a more diluted period, luxury is
of a T-shirt in a now evolving from a state of having to a state of being.
very expensive dress.” But it is also staunchly reclaiming some of its traditions
in a thoroughly modern nod to new consumers divided
— K arl Lag erfeld
by a growing disconnect between idealism and realism.
sec t i o n 1 . in t r o d u c t i o n — w h a t is t h e p r es t i g e p r o m ise ?
As Coco Chanel famously said: "Luxury must be
The poignant words of one of the masters of innovative comfortable, otherwise it is not luxury.”
luxury, Karl Lagerfeld, are symbolic of the journey
of the luxury market towards 2020. Luxury now The Prestige Promise reveals insights into how the
commands a sense of self that is entwined with aspiration luxury industry must re-identify itself to holistically
but underpinned by a more implicit sense of status. and honestly resonate with the new luxury consumers.
Luxury brands grow by catering to different groups of
A N E W S C OR P P R E S T I G E P A P E R
Luxury right now is navigating a world increasingly people3 and because luxury is now about the prestige
concerned with overt displays of conspicuous personal experience, luxury products must deliver on
consumption and political and economic instability. that experience and the desired associated status to
It is being challenged by the economic slowdown in drive future growth.
traditional high-growth markets and by rapidly
evolving groups of luxury consumers.
But it’s not all doom and gloom. Luxury is cleverly “Luxury commands widespread
capitalising on developments in new technologies, respect from consumers
sustainability and a renewed commitment to for quality and achievement.
craftsmanship. And it is also benefiting from a growing Evolving beyond the high-end
international middle class, new emerging markets
aspirational, luxury is purpose-
and a greater appreciation of the experiences that
luxury consumers around the world are demanding.
led and inspires passion.
Ultimately, luxury today is
Australia is still experiencing some growth, driven the elevation of products and
in part by China’s 415 million Millennials who “are services into the upper echelons
rapidly emerging as the country’s prime consumers.”1 of design, technology, heritage,
And despite fluctuations in our own domestic consumer
quality and service. And all at
sentiment, Australia’s luxury goods market continued
to deliver growth in 2016 thanks to high disposable
once, implicit and rare.”
incomes, increased accessibility to brands and the — Nick S mith , Presti g e and Lifest yle
spending by Chinese tourists.2 Directo r , News Co rp
4Burberry (1856)
enjoyed a global
reputation for specif ic
7 S ec t i o n t w o
the luxury evolution
exper tise in raincoat s.
“Luxury is an elusive upon their traditional realm. For questioned “…whether luxury is
idea. It is indicative of example, Mont Blanc into watches still based solely on acquisition of
and jewellery; Bulgari into fragrance objects with innate material value,
this elusiveness that its and hotels.9 “Fragrance was the first or has society evolved to demand that
effective meaning has not vehicle for the ‘democratisation of luxury have some social responsibility,
remained constant.” luxury’,” says Dale N. Dewey, CEO be it championing traditional skills in
of Luxury Solutions. “While millions danger of disappearing, or encouraging
Christo pher J. Berry4
could never afford a Chanel gown or innovation, or even making the world
even a Chanel handbag, they could a better place for all?”14 And just two
afford a bottle of Chanel No. 5.” years on, luxury remains increasingly
The Story of Luxury difficult to define.
sec t i o n 2 . t h e l u x u r y e v o l u t i o n
Luxury has always represented Luxury goods were initially
A N E W S C OR P P R E S T I G E P A P E R
“… a standard of quality, a mark “produced in small quantities — Luxury Today
of authenticity and [been] shielded often made to order — for an “Luxury — the word and the idea —
by a veil of exclusivity”5 but it has extremely limited and truly elite is in a state of transition.”15 Classic
also long been debated, because clientele,”10 but during the past few “luxury” items are still popular with
luxury isn’t simply a product that decades, major brands have grown certain consumers, but 60 per cent
“… indicates our tastes in fashion, significantly to become truly global of affluent consumers believe the
The trends that have emerged are now combining to result
into a personal, individualised experience of true luxury where
a person’s status is determined by self-actualisation.
it also defines our political, and are now retailers in their own definition of luxury has changed
social, and economic standing rights for their own products.11 in the past five years and that it
and our self-worth.”6 And, despite a smattering of bespoke now holds a different meaning to
craftspeople, most luxury goods each individual.16
Luxury Yesterday are now mass produced and sold12
The term “luxury goods” was used and it's the decline of these custom- During the past decade, consumers
by analysts on Wall Street to describe made products that marks one of the have become more demanding of the
companies such as LVMH, Richemont biggest changes in luxury.13 luxury market, with political instability,
and Gucci going public7, but prior to economic instability, technological
this, companies such as these enjoyed During the past 50 to 100 years, the advances and rapid social change
a global reputation for specific concept of luxury has been consistent, resulting in an expedited evolution
expertise. For example, Chanel but at the turn of this century, its of the luxury market. The periods
(1910) for couture fashion, Burberry evolution hit full speed, and the in this evolution do not represent
(1856) for raincoats, Baccarat (1764) idea now reinvents itself every few mutually exclusive events. In fact, the
for crystal and Mont Blanc (1906) years. The 2015 What Is Luxury? trends that have emerged are now
for writing instruments8. But all exhibition presented by London’s combining to result in a far more
major luxury brands have expanded Victoria and Albert Museum, personal and highly individualised
6experience of true luxury where and the Culture of Excellence, said: of challenges … the ones that are carefully consider its words to with its application to experiences. qualities still most associated with
a person’s status is determined “Conversations around what luxury succeeding are those who have stayed communicate effectively with Consumers still want authentic luxury: “highest quality”, “design”,
by self-actualisation. means will range from the external true to their story, pricing the modern luxury consumer. experiences; they just don’t want it “reputation” and “uniqueness”.
to the internal, from statements of and positioning.”18 to be marketed to them in an overt So herein lies the opportunity
It is now the more intrinsic values, status to a deeper sense of discovery The term “authenticity” is one of way. They’ve become sceptical for the luxury market — make
such as time, value, experience and and learning, from the superficial The Language of Luxury the most contentious. Consumers in of claims specifically made by claims that are truly authentic and
personalisation that are driving and superfluous, to truly unique The art of language is as important general are tiring of the “authenticity” multinational companies who they tailor experiences that are unique;
luxury purchases today. Consumers products and experiences that will to luxury as the art of craftsmanship. and “artisanal” movements as view as unable to provide a truly however, remember that the value
explore more, researching a product be treasured for a lifetime.”17 It’s a category that has long the terms have “pervaded the authentic product. Subtlety is critical. of authenticity is now much more
both online, instore and through commanded the use of influential marketing landscape.”19 intrinsic in the luxury offering.
social groups, before making a What has become evident during words such couture and authenticity, As such, we are seeing an evolving
purchase. As Rebecca Robins, this time, however, is that while but in this new world of luxury, However, it is important to language in the luxury industry,
co-author of Meta-luxury: Brands ”luxury brands are facing a number the category must even more distinguish the saturation of the term but underpinning its legacy are the
section 2 . t h e l u x u r y e v o l u tion
A NE WS CORP PRESTIG E PAPER
The evolution of luxury during the past decade
Trading up
2005 rising
2007 The period of aspirational luxury
2008
Unique
Stealth wealth & logo shame
2009
Excellent reputation Excellent design
Subject to moral criticism during
economic hardship, conspicuous
consumption becomes less conspicuous
2010
The intangible, artisanal & authentic Rare Highest quality
Designer branded
Long-lasting
2012
Sophisticated
Ultra affluents fuel luxury mini-boom in the Splurge
post-recession period. Energised by a movement trend
toward experiences and authenticity
Heritage
2013
Personalisation & hyper-personalisation Pretentious One-of-a-kind
2016
Indulgence
Privileged Refined
The beginning of the individualised
product experience
Status
True luxury on demand
2017
2020
Expensive
Exclusive
Status achieved through self actualisation
as a luxury experience. Ethically based
conspicous consumption, where the highest falling 20% 40% 60%
quality, design and experience meet the most
unique and creative technology
Source | New Insights on Luxury & Luxury Consumers, IPSOS Media CT Luxury Insights Summit, April 29, 2015 Source | New Insights on Luxury & Luxury Consumers, IPSOS Media CT Luxury Insights Summit, April 29, 2015
8 9the three defining characteristics
11 S ec t i o n t h r ee
of prestige consumers
It is the combination of the below characteristics that help define consumers in the prestige market:
sec t i o n 3 . t h E t h r ee d efinin g c h a r ac t e r is t ics o f p r es t i g e c o ns u m e r s
Capacity to Status Generational
purchase drivers influences
International affluents Seeking status through Millennials
and ultra-affluents one or more of the below: — the luxury reinventors
• Experience sharing Generation X
• Storytelling — the luxury celebrators
• Brand association
Baby Boomers and beyond
• Rare identified networks
A N E W S C OR P P R E S T I G E P A P E R
— the luxury substantials
• Intrinsic appreciation of
brand/experience attributes
Each of these status drivers
will differ based on the
product category and also the
individual’s personal passions.
Capacity to purchase while during the same period, incomes of the top 20
Australia has traditionally been regarded as a middle-class per cent of households (highest quintile) have increased
nation, although this is becoming less so. In the 20 years by 74 per cent from $149,552 to $260,104.20 While many
since the mid 1990s, the average gross household income Australians may not be cash rich, they are considered
has increased 60 per cent from $66,196 to $107,276 today relatively asset rich.
inco me — aver ag e austr alian h ouseh o ld inco me by qu intile
Lowest Second Third Fourth Highest All households
2011-12 Mean annual HHI (gross) $21,476 $46,800 $79,196 $122,304 $234,624 $100,800
2013-14 Mean annual HHI (gross) $22,620 $47,944 $80,704 $124,956 $260,104 $107,276
% increase +5% +2% +2% +2% +11% +6%
wealth — aver ag e austr alian h ouseh o ld ne t wo rth by qu intile
Lowest Second Third Fourth Highest All households
2011-12 Mean net worth $32,700 $200,500 $459,600 $804,900 $2,324,900 $764,500
2013-14 Mean net worth $35,500 $206,100 $462,500 $830,600 $2,514,400 $809,900
% increase +9% +3% +1% +3% +8% +6%
Source for data tables | ABS cited Australia’s household income and wealth distribution, The McCrindle Blog. June 21, 2016.
Retrieved from http://mccrindle.com.au/the-mccrindle-blog/australias-household-income-and-wealth-distribution
10Compared with 10 years ago, Australia is one of the top 10 fastest growing countries for Ultra High Net Worth Generational influences
Individuals (UHNWI; wealth of $30m or more) and is forecast to sit in the top 10 countries for the next decade.21
Millennials — the 35+ consumers and feel markedly Antonio Achille, managing director
luxury reinventors more optimistic about their personal and partner at BCG.
FORECASTED P O PUL ATIO N GROW TH FOR UHNWI IN S ELECTED COUNTRIES By 2026, Millennials will be the financial outlook.”25
main consumers of luxury.22 Ultimately Millennials see themselves
section 3. there defining characteristics of prestige consumers
2016—2026 Millennials account for approximately as more individual than any other
Vietnam +170% “Their idea of 33.6 per cent of the luxury retail generation and therefore the product
revenue in Australia.26 or experience needs to contribute to
India +150% status is not shaped their own unique sense of self.
China +140% by luxurious “Millennials prefer experiences to
Kenya +80% things. Fashion brands are blurring Younger Millennials are still working
Australia +70%
and exclusive the lines between luxury items and toward their window of affluence
Russian Federation +60%
possessions, but experiences. Luxury shopping is an whereas data suggests that older
experience; that’s the whole point. Millennials (aged 27-35) now spend
UAE +60% by a commitment Digital platforms are creating new, twice as much on luxury goods as
A NE WS CORP PRESTIG E PAPER
Hong Kong +40% to freedom of interactive experiences every minute.” younger millennials (18-26)28, with
Singapore +40% as stated by luxury marketing expert an increasing appreciation of long-
South Africa +30%
expression, new Pamela Danziger.27 lasting quality products and a shift
United Kingdom +30% experiences and away from the disposable mindset of
While “success” may be redefined for their younger Millennial years.
United States +30% technology that this market, Millennials are still driven
Brazil +20% matches their busy by the aspiration to be successful on But it is important for luxury brands
Monaco +20% their own terms, more so than any not to wait for this generation, as
Saudi Arabia
lifestyles. Luxury other generation. And this is where many of its ideals and behaviours are
+20%
Switzerland +20% alone just will brands are experiencing a dichotomy being filtered and adapted by some
in thought in terms of Millennials’ of the older market segments.
not cut it.” 23
relationship with the luxury market.
Status is still driving their luxury Gen X — the
purchases, but the expression of this luxury celebrators
While many have suggested that status has changed. Rather than
Status Drivers
Status can be achieved through varied and multiple ways such as the Millennial market will be the through the placement of a brand
While there is a
end of the luxury market as it is name on a product, it is instead via significant amount
currently known, many more are experiences they can share and have
Experience sharing The status experienced though sharing unique experiences. now recognising that the Millennial validated within their social networks. of literature on both
The status experienced through the ability to share stories
market is providing an exciting the Millennial and
opportunity for a new boom era They see luxury in different terms
Storytelling about brands/experiences. in luxury, with forecasts suggesting to any previous generation: Baby Boomer luxury
The traditional status achieved through purchasing or experiencing
Millennials will drive the next enhancing their life experiences; segments, Generation
luxury-growth spike in the middle being able to be shared; being
Brand association a branded product.
of the next decade.24 Millennials produced, marketed and sold X is the demographic
Increasingly important to today’s consumer, status is derived from
an inconspicuous understanding within luxury subgroups of brands
are the luxury reinventors. in an ethical way. These are
global consumers, highly digitally
that is currently
Rare identified networks and experiences unique to this subgroup. According to Helen Brand, luxury savvy, optimistic, sensitive to reaching the peak
A genuine appreciation of the luxury experience, with no need
goods analyst at UBS “The US
Millennial consumer tells us that
sustainability — and sceptical.
They are not attracted by the
of their careers, their
Brand appreciation/experience attributes for recognition or sharing. Purely for the individual self.
they spend more on luxury than simple façade of the brand, says incomes and their
Source | The Wealth Report: The global perspective on prime property and Investment, 2017. Knight Frank.
12 13window of affluence. deal, but also greatly appreciate far less interested in goods than they g ener ati o nal seg ments — p o pul ati o n size and at titudes ag reed to
quality, craftsmanship and the were before, and less interested with
This is the segment traditional ideals of luxury. They consumption in general ... As they Millenials Gen X Baby Boomers & Beyond
that celebrates luxury are generally loyal once a product get older they’re more concerned – the luxury reinventors – the luxury celebrators – the luxury substantials
meets their expectations and will with ‘What experiences do I need in (AB’s age 18-34) (AB’s age 35-49) (AB’s age 50+)
in a new way, holding
section 3. there defining characteristics of prestige consumers
share this on social media. Gen Xers what’s left of my life, what legacy do
onto traditional truly are the bridging demographic I leave in the world, what do I leave Population size 2.5 million 2.6 million 2.5 million
for luxury products and services my children, what contributions
values associated during the next 10 years. have I made?’.”34
with luxury brands Free time is more important than money 59% 63% 59%
According to luxury travel network As the generation to redefine so
while embracing Virtuoso, while Baby Boomers many social norms, they expect to be
Success is important to me 74% 65% 56%
everything modern spend more overall on luxury travel, represented as ageless in the market
it is Gen Xers who are spending and take offence if misrepresented or
that luxury in the more each day they are away30. excluded on account of their age. Food is one of my passions in life 41% 42% 39%
A NE WS CORP PRESTIG E PAPER
new age can provide. Gen Xers represent approximately
Luxury is important to me when
41.9 per cent of the luxury retailing Boomers appreciate craftsmanship
segment in Australia.31 and beauty. They are attracted to choosing furniture for my home 26% 30% 29%
Gen Xers are in their affluent years the values and integrity associated I often research online
today and have both the capacity Baby Boomers and with the luxury market and value but end up buying in store 58% 59% 56%
and the desire for new luxury Beyond — the luxury the stories behind the brands. They
products and experiences. With substantials place significant value on the personal I am comfortable paying for
Millennials driving the purchasing relationships they have with a brand things on the internet 81% 80% 73%
“conscience”, Gen Xers are likely to
Baby Boomers and while slightly less active on
also be seeking luxury products that represent 24.5 social media than other generations,
hold true to some Millennial ideals. remain highly influenced by trusted
per cent of the word of mouth. They have adopted the B r and sto ry
This is a generation who remains luxury retailing the purchasing of products and
engaged with traditional print-based experiences online, with 73 per cent It’s about access over ownership. Luxury symbolises success Value luxury experiences over products.
marketing, yet is more addicted segment in Australia 32
comfortable paying for things on the 77% prefer a pared down lifestyle & achievement. More open to If given money to treat themselves to one
to social media than Millennials.29 and account for internet.35 As such, Boomers remain with fewer possessions trying emerging label brands thing, 69% would opt for a trip to an
exotic location or an activity they’ve always
They research purchases online, a vital demographic to luxury brands,
have significant touch-points in more than half of but require a combination of both wanted to try vs 11% on a fashion item
their purchase cycle (which includes
their children from younger
Australia’s wealth online and offline approaches.
insight insight insight
generations who question the and are therefore a Millennials Gen X Baby Boomers & Beyond
ideals of the Millennials).
key market for the The luxury reinventors The luxury celebrators The luxury substantials
This is an incredibly sceptical luxury industry. 33
Brand story Brand story Brand story
demographic who has grown up with
traditional methods of advertising,
Brand stories that deliver extraordinary Brand stories that showcase
yet cannot be influenced by hype or Boomers have made their money,
experiences or inspire to help them the uniqueness of the brand Experiences that integrate the
trends. They value ethics, integrity, established their luxury lifestyles continue on the road to success and tap into the exclusivity and brand’s story and delivering an experience
and uniqueness, while holding and are driven by a search for and aid in reaching their goals status this audience seeks that respects their identity and values
precious the ideals of tradition and new experiences to celebrate their
heritage. They will look for the best freedom. “Baby Boomers are today
Source for generational segments | EMMATM, conducted by Ipsos MediaCT, 12 months ending April 2017
Source for the brand story | Millennials and the New Luxury. MSL Group PBJS, October 28, 2015. Retrieved from http://www.slideshare.net/PBJS/millennials-the-new-luxury;
Luxury Goods Research Presentation. The Economist Group. June 2015. Retrieved from http://marketingsolutions.economist.com/sites/default/files/Luxury%20presentation_site%20(5).pdf
14 1517
economic overview
S ec t i o n f o u r
The international outlook international luxury market.41 India, Mexico and the
— growth is evident but slowed Middle East also offer further growth potential.42
According to the Bain & Company Luxury Goods
Worldwide Study of 2016, the luxury goods market The 15 fastest growing emerging markets will provide 90
reported a four per cent growth and is worth €1.08 trillion per cent of the growth in consumption of luxury goods in
in retail sales. The international market saw a shift from the next 10 years (led by China).43 Much of the growth
the consumption of goods towards the consumption in emerging markets is concentrated in a limited number
of experiences such as travel and gastronomy, with of megacities. Approximately two thirds of the global
hospitality, fine wines and spirits, and fine food being economic growth by 2025 will be concentrated in the
among the best performing categories. Luxury cars also world’s top 600 cities. Projections suggest that there will
remained a top performing category.36 be 60 megacities by 2025 where GDP will account for
sec t i o n 4 . ec o n o m ic o v e r v iew
25 per cent of global GDP exceeding $250 billion.44
A N E W S C OR P P R E S T I G E P A P E R
Internationally for the first time since 2001, growth
in local consumption of luxury has outpaced tourist According to McKinsey, the luxury women’s ready-to-
consumption, and brands that recognise unique cultural wear market in emerging countries will grow from a less
difference within a globalised travel market can capitalise than 10 per cent share approximately 10 years ago to
on both these markets. 32 per cent in 2025. And in other categories such
as luxury spirits and high-end cosmetics, the share
According to Deloitte, there are four key elements of of emerging markets will nearly double in the next
growth for the global luxury market: increasing wealth; decade.45 McKinsey also states that these markets will
increase in international travel; the importance of the have grown three times faster than mature markets.
Millennial consumer; and digital developments.37 The top 20 cities based on their forecasted market size
in 2025 for some of the key prestige categories are:
1. Increasing wealth and the growing middle class
By 2020 there will be 3.2 billion middle-class consumers fas h i o n
globally and this increases to 4.9 billion in 2030.38 There
Paris. Tokyo. Milan. London. New York. Moscow. Osaka.
has been an increase of 155 per cent in the number of
Los Angeles. Rome. Seoul. Singapore. Dallas. Chicago.
millionaires internationally since 200039 and an increase Madrid. Nagoya. Miami. Sydney. Mexico City.
of 41 per cent in the number of Ultra High Net Worth Washington, DC. Saint Petersburg
Individuals (those with $30 million or more in net assets)
during the past decade, with this figure likely to increase spi r i t s
an additional 43 per cent during the next decade. There
are currently 2024 billionaires around the world (an New York. Los Angeles. Chicago. Washington, DC. Houston.
increase of 45 per cent on the previous decade). 40 Dallas. London. Mexico City. Shanghai. Beijing. Moscow.
Philadelphia. San Francisco. Miami. Boston. Atlanta. Seattle.
Phoenix. Tokyo. San Diego
Across all luxury categories, growth is shifting
toward emerging markets. While China, India,
b ea u t y
Russia and Brazil have provided the luxury market
with growth during past years, new markets such as Hong Kong. Tokyo. London. New York. Moscow. Shanghai.
helmut lang perfume
Peru, Columbia, Ethiopa, Zambia, Kenya, Tanzania, Beijing. Paris. Los Angeles. Taipei. Singapore. Osaka.
Bangladesh, the Philippines, Sri Lanka and Indonesia Seoul. Chicago. Shenzhen. Madrid. Dallas. Milan.
brand campaign.
will increasingly contribute to the growth of the Dubai. Rhein-Ruhr, Germany
Source | The glittering power of cities for luxury growth. McKinsey & Company, September 2014. Retrieved from
http://www.mckinsey.com/industries/retail/our-insights/the-glittering-power-of-cities-for-luxury-growth
162. International travel branded content. As such, in 2016, 4. Digital developments Six key elements contributing Chinese Nationals could increase as they are continually exposed
China’s spending habits accounted to strong growth in the from AUD$8.3 billion up to AUD to the extravagance of celebrity
“Spend by people travelling accounts for about 31 per cent of the world’s E-Commerce is now the third largest Australian market. $13 billion by 2020.58 lifestyles through film, media and
for 40 per cent of the personal luxury luxury goods.48 “luxury market” globally behind the social-networking platforms.59
market.”46 Given the accessibility US and Japan, with eight per cent 1. The increase in real household 3. International travel from Australia “This trend has been reflected in
and prevalence of international Chinese tourists spend more on market share.53 discretionary income, with and Australia’s growing appreciation the rise of emerging labels and
travel, the same experience luxury products when travelling Australian consumers willing to pay of international luxury brands. experimental brands that target
worldwide will no longer meet the internationally than what they spend Mobile devices now account for the for superior, high-quality products. the younger cohort, with a host
expectations of the international locally as luxury products trade at majority of traffic (57 per cent) to 4. The increasing presence of of international designers and
luxury consumer. There is increasing a premium at home. And while luxury sites with luxury shoppers 2. International travel to Australia international luxury brands labels reaching Australian shores
demand from luxury consumers to luxury companies are addressing this more likely to be on a smartphone or and the decreasing Australian and experimental labels in the through luxury boutiques or
create different and unique localised differential, (for example, Chanel tablet than the average internet user.54 dollar. Specifically, Chinese Australian market, particularly smaller flagship stores.”60
experiences from around the globe recently addressed the Chinese- shoppers will continue to be in Sydney, Melbourne and
which ultimately can provide new European price difference, stating According to researchers at strong consumers of luxury goods Brisbane. The global influx of 6. Multichannel strategies
section 4. economic overview
opportunities in the prestige market. that its worldwide prices will not McKinsey “…expect luxury’s share in Australia with tourism from luxury companies is expected to increasingly being adopted by
A NE WS CORP PRESTIG E PAPER
fluctuate more than 10 per cent of online sales to double from six Asia contributing as much as 30 continue for the next five years. luxury brands. Internet retailing
“In order to cater for tastes and above its global Euro benchmark)49, to 12 per cent by 2020 ...” and by per cent of the luxury market. The remains the fastest growing
satisfy demand from emerging the Chinese tourism dollar still leads. 2025, “…the online share of total China outbound market continues 5. International trends reaching channel for luxury brands with
markets, Moët Hennessy launched luxury sales to be 18 per cent”55. to be the fastest growing market Millennial consumers in many brands committing strong
a pair of fizzy wines made in India, 3.The international in the world and for Australia, real time, driving consumer investment to their Omni-
Chandon Brut and Chandon Brut Millennial consumer The Australian the largest inbound market based demands in the luxury sector. channel strategies as 85 per cent
Rosé. Hennessy will also launch opportunity on both expenditure and number “… younger consumers are of Millennials and 75 per cent
its first Chinese-grown wine in “Demographic The Australian of arrivals.57 Tourism Australia becoming increasingly conscious of Baby Boomers are ready for
2014. Meanwhile, both markets are has estimated expenditure from of fashion and luxury, especially Omni-channel interactions.61
disruption is the economy is forecast
improving homegrown brands – in
biggest challenge that
India, the well-known Sula and to grow 2.8 per cent The international factors The Australian landscape
Fratelli vineyards also offer resort luxury brands will
stays; the Chinese are now the
face over the in 2017 and 2.9 • 25 years GDP growth
world’s biggest consumers of red
wine (IWSR survey by Vinexpo) next 10 years.”50 per cent in 2018, 56
Increasing wealth and growing • Increase in real household discretionary income.
middle class • Global influx of international brands and experimental labels
and are employing the skills of wine Pamel a N . Danzi g er , Unit y being a more stable
experts from Europe to improve • Increasing inbound tourism market
their vintages.”47
Marke ting — speaker , auth o r ,
marke t researcher
environment than • Decreasing Australian dollar
many economies • Increase in volume and value of Chinese consumer
Chinese travellers are still
top consumers. Chinese According to the United Nations, around the world. • Emerging-markets opportunity
travellers remain the fastest growing 200,000 million Millennial tourists And despite some low consumer • International luxury brands offering uniquely Australian experience.
nationality segment for the luxury generated $180 billion in annual sentiment during 2016 and variations • Increasing Australian international travel leading to an increasing
market and despite a slowdown in tourism revenue, an increase of in the performance of the retail International travel appreciation of international luxury market
the Chinese economy, remain a key nearly 30 per cent since 2007.51 sector, the luxury sector in Australia
• Global citizenship of Australian Millenials
growth area for international travel. And Chinese Millennials are not increased by five per cent during
indebted with student loans and 2016, on account of the contributing • Debt-free Chinese Millennial tourism market
Most Chinese travellers who buy are less likely to have housing factors to the country’s wealth, and Millennial consumer • Millennials driving the experience economy
luxury goods are aged 45 or under costs or mortgages. By 2020, the population of High Net Worth • Real time consumer demand for international luxury
and use social media, mobile and there will be 300 million Chinese Individuals, including the ability products and experiences
other digital options to learn about Millennials (compared with 80 of Australia to attract HNWI from
Digital developments • Multichannel strategies for Australian luxury industry
brands and to interact with luxury million in the US).52 other countries, particularly China.
18 19Prestige category forecasts Fo recast g row th o f luxury re tail Travel are forecast to be added in 2017-2018. The last time
Retailing categ o ries in austr alia : 2016 -2021 Today, the luxury-travel consumer is increasingly seeking Australia saw this level of growth in hotel accommodation
Many of the above overriding factors mean the unique destinations often defined as those that are was prior to the 2000 Sydney Olympics (where an extra
luxury market retailing revenue is forecast to grow Growth forecast 2016 – 2021 changing or rapidly disappearing. Destinations such as 7500 hotel rooms were added between 1998 and 2000).
by 7.5 per cent across 2016-2017 with revenue of Cuba, the Arctic and the Great Barrier Reef and those Furthermore, accommodation stock in Australia is forecast
$1.8 billion62, despite there being weak consumer Designer apparel and footwear (ready-to-wear) 16.2% offering active holidays such as South African safaris, to grow by 30 per cent between 2016 and 2021.66
sentiment in the market. Moving toward 2021-2022, Vietnam and the Galapagos Islands are forecast to
Fine wines/Champagne and spirits 16.2%
the industry is expected to outpace GDP growth grow. According to the Virtuoso Luxe Report, cruises, Real estate
with an annual rate of 8.4 per cent compared with Luxury eyewear 8.9% exclusive experiences, customised local experiences and Australian luxury real estate (the top five per cent of city
2.5 per cent GDP growth. multigenerational travel are increasingly preferred.64 housing markets), grew by 11 per cent to June 2016, the
Luxury jewellery 10.8% strongest regional growth internationally.67
While international growth is being fuelled by the According to Cruise Lines International Association
Luxury leathergoods 23.3%
growth in luxury e-commerce, a large percentage of (CLIA), the number of Australians taking an ocean Automotive
the market desires an exclusive shopping experience Luxury portable consumer electronics 3.5% cruise worldwide last year reached a record 1.06 million Sales of new luxury cars in Australia grew by 11 per
section 4. economic overview
and brands that can harness both their online capacity passengers (an increase of almost 15 per cent on the cent year-on-year in 2016 compared with an industry
A NE WS CORP PRESTIG E PAPER
and their unique personalised experiences will Luxury timepieces 14.6% previous year). Reflecting the growth of this industry, growth of two per cent.68 Luxury vehicles now account
continue to prosper. The opportunity for boutique Sydney alone hosted 336 cruise-ship visits in 2016-2017, for 9.5 per cent of all new vehicle sales69 and according
Luxury writing instruments and stationery -9.1%
establishments with a wide range of brands driven by an increase of 10 per cent year-on-year.65 to the Commsec Luxury Vehicle Index, record sales
celebrity culture and the Millennial market will see the Super premium beauty and personal care 10.8% were recorded by Audi, BMW, Ferrari, Jaguar,
luxury segment remain strong in the Australian market. The appeal of Australia as a travel destination is also Lamborghini and McLaren in 2016.70 Interestingly, the
helping fuel the local hotel boom. In 2016, the number of luxury category to draw the most number of comments
Food and wine accommodation stocks available in Australia passed the on social networks is not ready-to-wear apparel or fashion
Internationally, investment-grade wine was the 100,000 room mark and more than 9000 extra rooms accessories, but cars, according to a McKinsey study.71
top investment choice according to the Knight Frank
Luxury Investment Index.63 In Australia, fine wines/
Champagne and spirits increased five per cent in 2016.
Source | Luxury Goods in Australia. Euromonitor, November, 2016
20 2123 S ec t i o n fi v e
prestige trends
“T he essence of luxury someone is. As such, “the emerging forms of luxury consumption”76
will thrive as a meeting luxury consumer is less interested in that is “curated with a human-
amassing status products than in test- centric dimension where brands
of minds and a fusion driving special, singular experiences are validated by people, not the
of opposites. It’s the and cultivating a balanced lifestyle other way around.”77
meeting of the care and that includes plenty of time for
craftsmanship of the family and friends.”73 As the luxury consumer is a
source material with mobile one — technologically
technological vision. But it And with consumer tastes and and physically — the maintaining
behaviours constantly changing, of an honest connection means
will be driven by the need luxury brands “must adapt with luxury brands must increasingly
to be ‘me’. It’s applying culture and evolve in unique ways “think local and learn to connect
A N E W S C OR P P R E S T I G E P A P E R
sec t i o n 5 . p r es t i g e t r en d s
the next generation of that move people emotionally”74, on deeper cultural levels, to ensure
technology and remodelling because those consumers are continued custom and loyalty.”78
with groundbreaking expecting more and more —
production value.” “a high price tag now must come As Toby Bottorf, vice president of
with careful thought and deep Continuum and part of the Audi
— Nick S mith , purpose. Luxury brands today must on Demand creation team says:
Presti g e and Lifest yle
show they care about tomorrow “What the new, more demanding
Directo r , News Co rp
more than their bottom line.”75 luxury consumer is looking for
is more authentic experiences.
Trends driving the With the global economic and And digital tools have enormous
luxury market beyond political landscape changing more potential to deliver these three
While luxury is still about status, in rapidly than ever, “the longer- crucial qualities of experience:
this new world, luxury consumers term strategic challenge for luxury essential simplicity, storytelling
“want to ‘be’ rather than ‘have’,”72 brands will remain the epic shift value and magical convenience.”79
because it is less about what towards more varied, complex,
someone owns and more about who individualised and meaningful
HermÈs handbag detail
22TREND — prestige intelligence
“Modern luxury is deeply, Prestige intelligence — where With “burgeoning demand for all
inherently and organically technology becomes the luxury. things connected”87 and a prediction
No longer is the luxury market that by 2020 half of all web searches
intertwined with digital lagging in technological advancement; will use voice or image search,88
technology ... It is shifting it is leading it. In fact, the “silver luxury will move from lagging
from timeless to timely, bullet”81 for luxury retailers is now to leading. For example, we can
from status symbol “redefining the business they are expect to see luxury travel goods
to cultural code, from in”82 in order to take advantage of incorporate inspired functionality
product to service, from increasing connectivity and the rise such as fingerprint locking, built-in
in the number of connected affluent global-tracking, Bluetooth speakers,
opulent to meaningful.”
80
consumers.83 Quite simply, luxury has self-weighing scales, SIM cards and
firmly stamped its logo onto tech. Wi-Fi hotspots – “as luxury goods
A N E W S C OR P P R E S T I G E P A P E R
Ana Andjelic, seni o r vice
section 5. prestige trends
president and g lo bal str ategy and high-end travel go hand in
directo r , Havas Lux H ub
We’ve seen Samsung partner hand, this is an obvious match
with de GRISOGONO and made in heaven.” 89
Apple with Hermès, and products
“from handbags with built-in
battery chargers to designer dresses Credit:iStock.
with live Twitter feeds.”84 Burberry
is considered “a master of social-
media marketing and storytelling” 85 See now, buy now robot butler, Charley, is a “Relay” model room-service
leading by example with their Augmented and virtual reality robot servicing patrons of the luxury Crescent Heights
partnerships with Snapchat, Google, Innovation and integration utilising Augmented Reality Ten Thousand building in Los Angeles. Charley works
DreamWorks Animation, Instagram (AR) and Virtual Reality (VR) technologies will drive through a mix of artificial intelligence, planning and
and Apple TV.86 the “see now, buy now” approach through trial and perception algorithms, and human intelligence (it
experience.91 Tommy Hilfiger’s Fifth Avenue, NYC includes a call centre).96
flagship store had VR headsets for shoppers to view
and shop from the label’s fashion show92 while London’s Invisibility adorned
Covent Garden partnered with AR app Blippar to Going beyond wearable tech
provide consumers free access to an interactive discount The fusion of fashion and technology will lead to the
map, table reservations and scavenger hunts across the evolution in production where hand and machine work
area.93 Chinese e-commerce giant Alibaba has created intrinsically together to approach “wearable technology
Buy+, a VR mall for stores such as Macy’s, Target and from a creative aspect rather than purely functional”97.
Costco where shoppers are able to make purchases by For example, the desire for privacy and control playing
Luxury simply nodding their head.94 out in the physical world is revealed in the ISHU scarf,
which features light-reflecting anti-flash technology to
wearables Robotics X people make the wearer invisible in a flash photograph. It’s
saw a Artificial intelligence services
Connected households with intuitive devices that
already a favourite of celebrities such as Cameron Diaz.
60.2% monitor basic needs and replenish without thought is
a true time-saving luxury and will drive brand loyalty
growth in but remove the potential for immediate personalisation.95
2015/2016
90
California-based robotics company Savioke’s smart
24 25TREND — THE TRANSPARENT PURPOSE
“An unsustainable piece embrace social responsibility,
of clothing or jewel is, sustainable production and also
ethical innovation.
in the end, anything but
flawless. As we all wake There is a very clear move towards
up to that reality, the “broadening the definition of Two in three
luxury companies have no quality to include environmentally
choice but to act.”
103
and socially positive methods of are willing to
Andrew Winsto n ,
production as well as focusing on pay more for
innovative design, craftsmanship
auth o r and so cial and
environmental consultant
and fine materials.” 105 And this is sustainable
becoming even more central to the
goods
108
A NE WS CORP PRESTIG E PAPER
section 5. prestige trends
requirements of the luxury consumer,
The Transparent with “brand trust” topping the list of
Purpose — why luxury
brands must live and
sustainability factors that influence
purchasing for global consumers.106
68% are
breathe responsibility, prepared
Credit: Bvlgari.com sustainability, ethics It’s more than just experiencing
and empathy. luxury without damaging society to pay more
“The value of an object is no or hurting the environment; the for products
3D epicureans Bulgari partnered with WISeKey to create its longer just in quality and cost of transparent purpose is about honesty,
3D printing delivering intricate creations Vault app for payment and smartphone security materials, nor even in workmanship, giving back and making the world a and services
Foodini by Natural Machines is an Internet of Things
appliance that specialises in printing a very wide range
unlocked via TouchID and face recognition with
personal information stored in a high-security
provenance and exclusivity. Today,
it needs to be part of a sustainable
better place. And this honesty must
be intrinsic to every part of
from companies
of foods into elaborate designs. Ingredients are placed Swiss Alps bunker.101 ecosystem; this means caring about the organisation’s identity. committed
in reusable stainless-steel capsules to allow recipes and the planet, community and future
designs to be uploaded from anywhere. This enables Connected tech generations.”104 The globalisation But luxury brands cannot rest
to a positive
the creation of dishes that are just not possible to make Travel brands will use connectivity and technology of luxury has an impact socially, on their current corporate social social and
by hand and as such, is predicted to revolutionise the to cater for luxury customers, such as using Linen environmentally and in terms of responsibility and sustainability
world of cuisine.98 Technology Tracking – a chip that uses radio frequency biodiversity. Combined with an missions, because with consumer environmental
impact
109
ID technology to track the whereabouts of hotel-room increasing consumer demand for tastes and behaviours constantly
Secure luxury towels via sensors so housekeeping can gauge how often transparency, the backlash against changing, they “must adapt with
Luxury data protection a guest would like their room serviced without asking “authenticity” and a growing culture and evolve in unique ways
Total personal data security — where the demand them. New apps can track if you’re running late for your disconnect between idealism and that move people emotionally”107
and the solution are created by tech — is emerging flight and communicate with all levels of your itinerary – reality, and luxury brands now have because these same people are
as a powerful form of luxury. According to a 2016 from changing flights to updating your hotel concierge. a greater need to transparently expecting more and more.
Knight Frank Wealth Report, 39 per cent of Ultra But there will also be a shift towards helping create a
High Net Worth Individuals globally say “online sense of exclusivity by curating something on a specific
privacy and security is an issue of concern for them and personal level, such as Onirikos, a boutique Italian
when it comes to the creation and preservation of destination management company and concierge who
their wealth”99. Blockchain technology security “design ‘non-Googleable options’, from dinner in Venice
will help combat counterfeit goods100 while brand on the roof terrace of Peggy Guggenheim’s to a private
apps will drive customer security. For example, visit to an excavation under the Vatican.”102
26 27A NE WS CORP PRESTIG E PAPER
section 5. prestige trends
Credit: Instagram @ madelinesmodelling_
Kering’s material effect and quality, then you tackle the very fundamentals of Individuality celebrated Sustainable epicureans
Sustainability in action sustainability.” 110 In fact, sustainability reinforces some Embracing diversity The driving forces behind the new fine dining
In 2012, French luxury group Kering published a four- of the core values of luxury, including craftsmanship “I am 27 years old, live in New York City, I am in a Nora Pouillon pioneered organic cuisine in 1979 in
year plan with specific targets for carbon emissions, and noble materials and “a high price tag now must wheelchair and I am fucking beautiful,” says Julian the United States with her fine-dining eatery, Restaurant
use of water, ethical sourcing and eliminating use come with careful thought and deep purpose. Luxury Mercado.113 Increasingly, images and messages are Nora, to champion local and organic produce in
of PVC. One initiative to manufacture responsibly- brands today must show they care about tomorrow celebrating individualism and diversity as part of an Washington, D.C. For almost 40 years she’s been a
sourced raw materials amassed up to 2000 alternative more than their bottom line.”111 increased awareness and empathy inherent in the social leader in the sustainability movement and today she’s
materials, with Gucci pioneering regenerated cashmere awareness of Millennials and younger generations. also on the boards of five environmental organisations
using fibres from offcuts to create new lower-impact Diamond promises Another example is Australia’s Madeline Stuart, and a partner in a sustainable fish business.114
cashmere without water or chemicals. The group also Ethics and biodiversity entwined who became the first professional model with Down Sustainability will continue to define the luxury food
developed a new method for leather tanning using no The De Beers Group responsibly source their syndrome and who has twice walked the runway at realm, from Blue Hill’s Dan Barber’s stance on food
harmful metals, resulting in reduced water and energy Forevermark diamonds from mines in Africa where New York Fashion Week. waste to Noma’s René Redzepi’s use of indigenous
consumption. What this demonstrates is that “luxury almost 180,000 hectares of land surrounding them are ingredients both in his flagship Denmark restaurant and
and sustainability can be combined: if one considers the set aside for conservation. They also support local female his pop-ups in Sydney and Tulum, and in his new Noma,
definition of luxury as related to know-how, heritage, entrepreneurs and contribute to the provision of good- opening later this year, where “the kitchen will not just
rarity, transmission, respect for materials, human rights quality healthcare and education.112 adapt to the seasons but be defined by them.”115
28 29TREND — HYPER EXPERIENCES Money can buy what money can’t buy Luxury on demand
The ultimate travel experiences The experience economy
“In 2016, Iceland’s Secret Solstice Festival included the Another example of the shift from the product economy
Hyper Experiences the growth in luxury goods in 2016, their moment externally.124 “These world’s first concert inside the dormant magma chamber to the experience economy is the Audi On Demand
— where personal with the best performing categories captures are also opportunities of a volcano. While “more reasonably-priced tickets” sat service, which allows customers to rent a chosen car from
brand immersion and luxury cars, luxury hospitality, fine to create something that has the at about the US$200-300 mark, a “cool US$1 million” their fleet. It is then delivered to their door, complete
“sensploration” takes wine and spirits, and fine food.118 appearance of permanence out of ticket upped the ante on luxury festival experiences with with personal concierge. Catering company Hunter
luxury to the next level something transient; a small sense round-trip flights for six in a private jet from anywhere VIII Hunter launched the Drop Off, an app allowing
“Luxury 3.0, where sensploration, Modern luxury is also about of ‘ownership’ in something that is on earth, a luxury six-room villa for the week with Londoners to order a dinner party to their door. In less
experiences and savoir faire rule time and what people get out of impossible to own.”125 in-villa dining by a top Icelandic chef, and 24-hour than 24 hours, users can create their ultimate dinner
supreme … where consumers will that time,119 presenting a clear chauffeurs.128 But it was the suite of private experiences party including food, wine, flowers and table settings
revert back to such old-school opportunity to maximise the Ultimately, “a simple, essential for the entourage of six on this ticket that elevated this plus downloadable playlists and video tutorials on
concepts as locally sourced food and experience during interaction120 experience does not try to be to a hyper-luxurious travel experience. An aerial tour food presentation.
beverages, traditional craftsmanship, with “transient, intangible, service- everything to everybody. It has of Iceland, a whale and dolphin watching tour, Midnight
bespoke tailoring and more.”116 dominated experiential luxury.”121 a point of view and focus. The Sun glacier walk and snowmobile experience (with Vision of beauty
A N E W S C OR P P R E S T I G E P A P E R
section 5. prestige trends
In fact, “much of experiential luxury mechanics that enable the service helicopter transfers, no less), private visit to the Blue Brand immersion
“From a societal point of view, we is one-off and unrepeatable. This are invisible. Choice is smartly Lagoon, and access to all festival VIP soirees among Chanel “decided to declare its vision of beauty at the
are witnessing the pendulum swing makes the moment of experience restricted. Offerings are just right, other included luxuries. And not to forget the Secret Ritz Paris”132, building on the landmark hotel’s long
from the concept of ownership to ever more important; particularly for often to the individual.”126 Solstice Midnight Sun Boat Party, glacier concert and association with Coco Chanel, who took a suite in 1937
experience” 117 and as such, luxury those trading up into it”122 and can an intimate concert at their Reykjavík villa.129 and stayed for 34 years. This temple of beauty immerses
is now central to the experience be supported in part by mobile data, customers in Chanel’s world of luxury inside one of the
that a product can deliver. As which can help “deliver the most Hyper experiences like this are the new height of luxury, city’s most luxurious hotels for a unique and authentic
such, those products must meet hyper-personalised experience.”123 coming as they do with high bragging rights. It also Chanel experience.133
the expectations of a customer’s delivers on the “uniqueness” criteria, offering more than
desired lifestyle experiences. In fact, Sharing on social media has just another festival. Studies by travel company Amadeus
growth of luxury experiences was revolutionised luxury experiences reveal that “the more accustomed a traveller, or a
five percentage points more than with those consumers able to “own” regional market of travellers, is to luxury, the higher they
will need to travel up the pyramid for their expectations
to be met and for their idea of luxury to be fulfilled
… and the new era of luxury travel requires brands
to constantly monitor their expectations, and adapt
accordingly. In other words, new luxury is real time.”130
Time to inspire
Intellectual experiences
Rolex partnered with TED on a tablet app by creating
a functionality called Inspire Me, where users could
discover talks within a given topic and timeframe. The
average viewing time was an impressive 24 minutes,
revealing the luxury of on-demand.131
79%would
choose a luxury
experience over a
luxury item 127
30 31You can also read
