According to a recent study, by 2025, it is predicted that the global luxury market will be worth more than $1.5 trillion. Today the Millennial generation, those born between 1978 and 1992, constitute only 32 per cent of total spending. But by 2025, they are expected to constitute up to 50 per cent of the total market. This will radically transform the luxury market as Millennials and Gen Z driving this train has dissimilar expectations from the luxury market from previous generations. Ex MD Sotheby’s and art and luxury connoisseur Gaurav Bhatia impart knowledge on how the luxury industry will be forwarded by Millennials and Gen Z.
Future of Luxury Goods
Amidst the COVID-19 pandemic, it is expected that luxury goods will succeed in weathering the crisis and emerging even stronger in the future. The global luxury industry has rebounded faster than expected, with fundamentals looking stronger than ever. The industry is one of the most resilient and fastest to bounce back after a crisis. Despite most predictions, the global luxury market is on track to return to its historic growth trajectory.
A closer look at the different segments of luxury sector shows the personal luxury goods category leading the way with a growth rate of 29 per cent over the prior year. Versus 14 per cent for the luxury industry as a whole. Regardless, growth will vary by category in 2022 because the world is recovering at different speeds across each segment. As luxury continues to evolve in 2022, it will become even broader and more contextually relevant.
On this path, Millennials make 42% of their luxury purchases entirely online, according to Deloitte. There is also evidence from McKinsey that today’s luxury consumer shops across multiple channels. In addition, many people look for advice from friends offline or through social media, read reviews on blogs, and finally purchase from the retailer directly or in-store.
Talking about the strategies for taking a luxury retail experience online, Gaurav Bhatia, Ex MD Sotheby’s says, “Taking a direct-to-consumer approach is one of the best ways retailers can provide a luxurious experience and retain customers in the digital age.”
The term “direct to consumer” identifies exactly what it means – you sell your products directly to your customers, so you control the experience. Using this approach, brands can continue to share their heritage, reinforce their customer loyalty. And provide value through the experience they’ve always excelled at – using a different digital platform.
Creating luxury brands takes time and consistency. To make an online presence for luxury brands, there are some ways that Gaurav Bhatia Sotheby’s Ex-MD suggests. “In the future, your website will be the main source of sales. If you advertise online, this is where you will be sending them, so make sure it is ready to convert. You should also try to get in front of your ideal customers where they regularly shop. This could be online or in-store,” he says.
In 2022, as in-person events and boutique experiences remain limited. Brands will need to leverage digital experiences to engage their customers. For luxury brands willing to embrace the digital sphere. And meet their consumers where they are, online, this presents an opportunity.