Luxury is a fast growing market with no signs of slowing down. In 2017, the luxury industry grew by 5% to an estimated €1.2 trillion worldwide. This growth is largely attributed to the demand of an emerging, wealthy and fashionable Chinese middle class.
Luxury covers a range of goods and services, from the well-known luxury fashion brands, to luxury cars, yachts and jets to cruises, food and wine. With a growing market bringing opportunities and challenges in luxury brand management, we look at three trends the luxury fashion sector, in particular, is facing.
The rise of social media has allowed luxury brands to be more inclusive in their reach. Anyone can browse luxury goods online, this avoids the somewhat intimidating exclusivity of visiting luxury retailer stores.
Instagram and Pinterest offer potentially lucrative platforms for luxury brands, especially considering these are imagery-based platforms. A relatively new, but rising, trend for luxury brands is influencer marketing – using social media personalities that have amassed a large following to advertise their brand.
A report has found 73% of luxury brands use influencer marketing as part of their strategy, with 65% deeming it effective. However, with studies finding the more followers an influencer has the less engaged their reach are, luxury brands have opted to focus on mid-tier influencers, this also works to retain the exclusivity of brands.
Social media marketing itself is a new and dynamic tool, it will be interesting to see how luxury brands utilise this potential in their brand strategy.
Corporate Social Responsibility (CSR)
Consumer demand for brands to engage in CSR is becoming increasingly evident, across almost all sectors. Consumers want brands to give something back, minimise their damage and stand up for socially just causes. The luxury market is no different.
LVHM, a luxury goods giant whose range of brands include Dior, Louis Vuitton and Tag Heuer, offers a great example of CSR and sustainable business practice. Their initiatives range from an internal carbon fund, gender equality initiatives and supporting social entrepreneurs in profitable ventures that offer social and environmental benefits.
Last month’s London Fashion Week saw a number of brands engage in CSR through supporting charities or promoting causes. Burberry launched an LGBTQ collection at London Fashion Week, the #TheRainbowCheck collection and donated to three LGBTQ charities.
The expectations on brands aren’t going away, and as Gucci CEO Marco Bizzarri said, “millennials are looking for integrity in their brands”.
By no means is this a new trend in luxury brand management. There has always been a fine line between the prestige and exclusivity of luxury brands and its commercialisation. The battle between maintaining luxury and the revenue potential of broadening the consumer base is unlikely to ever go away.
However, linking to the first trend, a brand’s exclusive feel is obviously threatened where there is mass-market appeal, and social media provides a minefield for luxury brand management.
Price is part of luxury, though technology and ‘affordable brands’ are challenging this. It may seem like an oxymoron, ‘affordable luxury’, but brands such as Michael Kors and Monica Vinader are claiming to offer just that, perhaps tapping into the newer, digital audience.
Likewise, technology is trying to make luxury more accessible. In fashion, The Next Closet is an online marketplace where the collections of yesterday’s shows and seasons are sold at a huge discount, and it works by collaborating with the brands to ensure their authenticity – helping brands with their CSR. In the luxury jet market, apps such as JetSmarter and Fly Victor have opened this once very exclusive market to a newer audience.
Luxury Brand Management
The challenges posed by social media, consumer expectations for CSR as well as the fine line of maintaining luxury are the same challenges which pose the most positive, and lucrative, opportunities.
The market is growing, social media is offering new audiences and brands have the potential for significant environmental and social benefits. This backdrop offers many bountiful opportunities; the only requirement is effective, strategic and creative Luxury Brand Management.