The New Decade Brings New Change: Luxury Industry Trends in 2020
In the wake of a new decade and particularly now, amidst the COVID-19 pandemic, the luxury industry is poised for transformation. Luxuries are by nature postponable purchases and, at a time of global uncertainty, luxury brands are adapting and evolving to stay abreast of consumer demand.
In the words of Claudia D’Arpizio, Management Consultant for Bain & Company: “Brands will need to pivot to a new model to respond to customers’ needs when it comes to buying, consuming and communicating.”
Leading this change is the growing millennial audience and their focus on conscious consumerism. Currently estimated to account for 32% of all purchases in the luxury sector, millennials are anticipated to account for 50% of luxury market purchases in as little as 5 years, according to research data by Matter of Form.
The influx of millennial audiences and the growing trend of disruptive brands centered on changing existing narratives has awakened a need for a new discourse in the luxury sector. Once able to rest on laurels of elegance, exclusivity, and quality of the product, luxury brands now also need a strong purpose, a captivating story, and an engaging, personalized approach to remain relevant in today’s world.
Millennial consumers seek individuality and meaning; making a conscious effort to support causes that align with their own beliefs. It is no longer a matter of showcasing brand labels for the sake of exclusivity, but rather to illustrate support for something one believes in.
In order to compete with new luxury startups and disruptive brands built on purpose, the heritage luxury industry is presented with a new challenge: to redefine its place in the market and reach new audiences.
To do so, insiders predict a focus on relevancy, sustainability, and partnerships in 2020.
Relevancy goes hand in hand with meaning and, as a result, the legacy luxury market is refining its messaging to substantiate its value in the marketplace. “Stories must go beyond brand history and relate to consumers’ needs and passions today,” says Hedda Schupak, Editor at The Centurion. Alongside relevancy is the increasing importance of sustainability. Millennials, in particular, are conscious of our earth and are making deliberate purchasing decisions to support those brands that support our future. This intentional consumerism extends beyond philanthropic messaging to a genuine concern for our planet and its people and calls for a strong stance that guides the overarching principles of design, communications, and service.
The third trend of partnerships will enable heritage brands to leverage promising audiences and reach a sector that has not yet been accessible. Polo Ralph Lauren’s recent partnership with London-based streetwear brand, Palace, is one such example and Louis Vuitton’s partnership with Supreme is another.
Luxury brands are also looking into social media influencers to gain exposure to younger audiences. As Brian Trunzo, senior consultant at Mindset recently shared with Business Insider: “There’s an emerging brand of luxury, built around the Gen Z and Millennial mindset, whereby luxury is no longer tethered just to price and perception.”
As a direct result of the trend towards relevancy, sustainability, and partnerships, the luxury industry is tasked with bridging the gap between exclusivity and authenticity. Heritage luxury brands are revisiting their roots and redesigning their narrative to create a legacy that consumers can stand behind. Brand stories are leading the transformation, igniting a purpose-driven approach that is both globally conscious and uniquely personalized.
As a market researcher, Pamela N. Danziger, aptly phrased in Forbes: “The old conspicuous consumption model that previous generations embraced has been replaced by a conscientious one.”
Consumers today yearn to be a part of something bigger than themselves while, at the same time, seek to be respected as individuals. It is not merely the product or service itself that drives consumer behavior, but the entire ecosystem that creates it—the manufacturers and suppliers luxury brands choose to do business with, the organizations luxury brands support, and the difference luxury brands make in our world.
In the midst of this transformation, “the opportunity is to return to the key pillars of luxury—quality, craftsmanship, design, attention to detail, uniqueness, and authenticity,” Danziger concluded. This is a decade in which the end product or service matters as much as the purpose, practice, and principles taken to foster the luxury experience.