Lessons in luxury trends for 2023
Global Bay’s director, Jon Basker, recently learned many lessons in luxury trends for 2023 which luxury businesses of all sizes can benefit from.
In May 2023, he attended The Walpole Luxury Business Summit in London, as well as the FT’s Luxury Business Summit. Both events are major dates in the luxury calendar. The leaders and disruptors of luxury come together to reveal and discuss the trends of the luxury industry, and share what luxury companies should be doing in the year to come.
In this blog, Jon details the key takeaways from both events and what learnings there are for luxury businesses at all levels.
What is the definition of luxury in 2023?
The Walpole Luxury Business Summit began with an introduction from Charlotte Keesing, Summit Director at The Walpole. She highlighted that HNWIs are rejecting opulence in favour of craftsmanship. They value uniqueness, personalisation, handmade, bespoke production.
Furthermore, Marco Fedrigo outlined in his presentation of the annual Bain report, “to win in the future of luxury you must be driven by purpose.” This is a trend which all luxury brands are embracing, and which is being demanded by their customers more and more.
This sentiment of personalised, purpose-driven craftsmanship echoed throughout the summit, with many speakers from luxury brands sharing what luxury means to them and their businesses:
Story.
Heritage.
Time.
Excellence.
The Unexpected.
The luxury market should be taken seriously
Amongst the financial business community there has previously been a feeling that the luxury market represents frivolity and shouldn’t be taken seriously.
However, as Charlotte Keesing outlined in her opening statement at the Walpole Luxury Business Summit, quite the opposite is true. This is perfectly demonstrated by the fact that French luxury conglomerate LVMH reached a market capitalisation of $500 billion in April 2023– the first European company to ever do so. As Charlotte pointed out, “If that’s not serious, then I don’t know what is.”
The Bain report also shares exciting statistics on the massive boom market for luxury at the moment – Personal Luxury Goods alone was worth €353 billion in 2022, and is predicted to almost double to €540 – €580 billion by 2030. Over the next year they expect the personal luxury goods market to grow by between 3 – 8%.
With two-thirds of global luxury sales revenues flowing through Europe, now is the time for existing luxury businesses and luxury newcomers to capitalise on this boom.
There is no luxury without sustainability
Across both luxury summits there was a clear theme on the importance of ethics, sustainability and “doing the right thing” for luxury brands and business as a whole. The message was clear: no matter how much money you have, we all still need a thriving planet to live on.
At the Walpole Luxury Business Summit, Mary Portas talked a lot about the concept of a “kindness economy” which she specialises in helping big brands to achieve. A concept which resonates with us at Global Bay, the Kindness Economy encourages business to make money from doing the right thing: being kind to people and the planet. She is on a mission to bring respect, love and care to the heart of the economy.
Indeed, Mary Portas reflected on the changing nature of luxury – from consumers previously seeking shiny status symbols, to now seeking status sentience. Driving a Tesla, having “Don’t Give A Crap” toilet paper in your bathroom, wearing clothes that are ethically sourced or traceable, are all examples of luxury being used by consumers to show they are doing the right thing – and investing in the brands that allow them to do that.
Luxury is a young person’s game
The desire to create deeper connections and authenticity between brands and their customers is being driven by Generation Z consumers. In fact, Gen Z and Gen Y (Millennials) accounted for all of 2022’s growth in the luxury sector. Nothing illustrates this more clearly than the fact– shared by Adrian Hallmark, CEO of Bentley Motors– that the average age of a Bentley owner is now 36.
It’s expected that consumers from Gen Z and the even younger Gen Alpha will make up a third of the whole luxury sector by 2030. Interestingly, each generation starts buying luxury items earlier– three to five years earlier– than the last.
For example, stats show that Gen Z currently become luxury consumers around age 15, vs Millenials who started aged 18-20. This trend is expected to continue with Generation Alpha starting even earlier – expect 12 year old luxury consumers becoming active soon.
As a result, it is vital that marketing campaigns, budgets and creative are positioned to make the most of these generational shifts, something that our Global Bay team of digital marketing experts excel at.
Build a strong luxury community in the UK and it will resonate around the world
The UK has a strong global reputation for crafting luxury goods and now luxury brands are looking to build strong luxury communities in the UK through offering luxury experiences to their customers too.
William Oliver, Chief Brand Officer at Dunhill, shared that after years of expansion abroad, fashion brand Dunhill have been doubling down on their UK brand activity: taking their customer experience to the next level. They operate a private members club in Mayfair, merging the experience of retail with the exclusivity and relaxation one would expect from a members club. Their retail stores include restaurants, barbers and tailors.
Dunhill is the perfect example of creating a powerful, exclusive experience and luxury feeling around their brand which does not rely solely on the products they sell. By focusing on the wider experience of their whole brand, they are creating an extremely loyal community. And although it is very localised to their Mayfair HQ, they are seeing this effort in community building in the UK resonating around the world and increasing their bottom line.
Look to China for innovation in the luxury market
Ever since a Global Bay business trip to China 6 years ago, we have been intrigued and inspired by China’s incredible use of technology in everyday life compared to the rest of the world – and the Walpole’s Asia talk confirmed that this trend is growing ever more by the day.
China’s use of technology has been accelerated by the pandemic and become even more embedded in everyday life, with all encompassing apps like WeChat leading the way. As a result, there is an ever increasing acceptance and, indeed, expectation of digital technology and “ultra-digital” being utilised to deliver hyper local in-person luxury and retail experiences.
For example, Chinese Gen Z hotel bookers expect to simply open WeChat to access Bonvoy, the Marriott’s loyalty program, to book a hotel. Once in the hotel, they use the same app to order room service, pre-order services, and even check out.
In the West, this use of private data to personalise the customer experience faces GDPR challenges, but would be an absolute game changer to the customer service experience– in China it is the norm.
Therefore, the challenge for luxury brands in the West is: how to deliver exceptional personalised luxury experiences for which customers are willing to trade their data privacy?
Luxury brands should be striving for hyper-personalised experiences
Did you know there are 46 billion ways to customise a Bentley?
That makes the likelihood of owning exactly the same car as someone else buying from Bentley very small – and that is exactly what luxury consumers are looking for.
Across the luxury industry, personalisation permeates every element of a company’s activities, and is a trend that every company operating in luxury needs to consider in 2023.
As we’ve seen in this blog, from Dunhill’s private members clubs to China’s use of digital tools to serve the hyper-local consumer, luxury brands are ensuring every element of their interaction with a customer is as personalised as it possibly can be.
In 2023, the opportunities to utilise digital innovation to support this endeavour is vast – from hyper-personalised recommendation systems to utilising AI in a business – the options are endless.
Interested in exploring how to utilise these lessons in your business?
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