As we’ve seen in the past year, the world is changing - and so is the luxury consumer. This is due to a number of factors; new sensibilities, new technology and changing circumstances.
The revolution that digital set in motion has only been sped up by the Covid-19 pandemic. This is obviously unprecedented and has forced brands to re-evaluate the core aspects of their luxury marketing strategy in order to reach a new wave of consumers.
Historically, brands had been resistant to the call of digital; they feared losing control of their brand image while the internet ran counter to their values, signalling instead mass appeal, accessibility and availability. Subsequently, it took a brand Prada until 2007 to create a website.
Who is today’s luxury consumer?
A key aspect of the revolution is due to the new wave of luxury consumers, who are increasingly digital natives (younger-Millennials and Generation Z), not knowing much of life before the internet.
Previous luxury consumer demographics with spending power (Generations X and Y) are now increasingly facing the harsh reality of mortgages, parenthood, children at universities, ageing parents. In other words, all those life changing things that arguably take up a lot of attention and spare cash.
Younger millennials and Generation Z have a very different set of values and are now starting to enter the workforce meaning that they increasingly have the spending power brands will want to secure. As a result, luxury consumer behaviour is changing.
GlobalWebIndex’s luxury consumer insights research has outlined three key types of consumers, brands should be seeking. Those that treat themselves regularly, those who do so occasionally and those that regularly gift for others.
Obviously those who treat themselves regularly would be the optimum consumer to target and their research finds that the 25-34 age group makes up 35%, and 35-44, 33% of this type of audience. While it’s the 16 -24 year old audience that makes up the lion’s share for gifts and occasional treaters.
What do luxury consumers want?
While some characteristics remain the same - these people are empowered, highly demanding, convenience-driven, time-poor, informed and knowledgeable - some values have shifted. This generation wants better from their brands from equality to the environment.
For regular treaters, branded luxury buying is still important, but they also highly value experiences and travel, which reflects a desire for uniqueness - naturally fuelled by social media.
The idea of “luxury” therefore is evolving; moving away from its most traditional sense of glitz, overt, out-of-reach and “high-touch”.
All three types of this new target audience are looking for ‘affordable’ luxury and are researching and comparison prices before they buy. Brands have to work harder therefore.
How must brands react?
There are new demands on luxury brands therefore. While a very traditional set of brand values and authenticity are still key - these new consumers are still looking for their purchases to say something and reflect well on them, but they also have a number of new expectations.
Occasional treaters still rate high-quality (78% say they most expect this from a brand) and great customer service (60% rate this) but those that buy for themselves regularly are looking for stories and narratives behind the brand (29%); a strong online presence (28%) and immersive advertising or experiences (21%).
The underlying watchwords for all luxury consumers are authenticity and experience.
As a result, brands are starting to shape their marketing around four key areas: storytelling, creativity in digital marketing (to sync with on- and offline experiences) and personalised communications all underpinned by robust data insight.
Luxury consumers and the pandemic
These new approaches have only been fast-tracked by the pandemic, which has seen luxury brands forced into another wave of revolution or innovation (depending on which side of the fence you sit).
On the surface, the pandemic has brought about something of a boost to the industry: faced with the ongoing fears and uncertainties raised by the crisis, high net worth individuals are increasingly turning towards luxury products - and luxury experiences - that they can depend upon and invest in.
But with all brands shifting their attention to the digital space, it’s led to a number of problems; higher cost of advertising, lower conversion rates and lots and lots of luxury content.
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