The Evolution of the Luxury Market: How Aggregator Platforms Are Reshaping Consumer Behavior

Any of the major luxury brands in the world can relate to this famous quote. You will hardly see any commercials of Diors or Tods of the world on daily soaps and TVs. Then, how will the convergence of aspirational consumers and the high-net-worth individuals change the landscape? Let's understand in depth.

India's luxury goods market has been on a rapid growth trajectory in recent years. The Grand View Research expects the global luxury sector to surpass USD 580 billion by 2030, with a compound annual growth rate (CAGR) of approximately 6.8%. India’s luxury market is on an accelerated growth trajectory, propelled by a rapidly expanding affluent class, higher disposable incomes, and a shift towards premium products. With India poised to become the world’s 3rd largest economy by 2027, this growth offers significant opportunities for luxury brands aiming to penetrate one of the world’s fastest-growing consumer bases. Experts predict that Indian consumers will spend $32 billion on luxury goods by 2030.

By 2030, projections indicate that the luxury market's consumer base will expand to 500 million, highlighting India's potential as a major hub for luxury consumption. Contributing factors include consistent economic growth, stable monetary policies, and substantial credit expansion, driving an increase in purchasing power. The expanding affluent population represents a key consumer base for luxury brands.

India’s middle class is also on a significant upward trajectory, expected to constitute 61% of the total population by 2047, up from 31% in 2020–21. This group’s preference for premium products indicates a strong potential for luxury and high-quality goods.

The Consumer Mix Redefined

Five main types of luxury shoppers, each with distinct motivations and values when purchasing high-end products, exist. This segmentation reflects how luxury consumer behavior has evolved due to changing demographics, priorities, and personal values.

1. Strivers (24%) – Primarily millennials, Strivers see luxury as a symbol of success. They are often middle to upper-middle class, early in their careers, and use luxury to reflect their aspirations. While they may not yet have elite incomes, Strivers view luxury as part of their future lifestyle.
2. Only the Best (23%) – This group values luxury for its unparalleled quality and service. They are often older, with 26% being over the age of 65. They have established wealth and focus on luxury for its craftsmanship and longevity, with a preference for premium experiences and items.
3. Comfort First (20%)—For this group, luxury is about creating a comfortable and meaningful life. It includes a high percentage of older consumers (42% aged 65 and above) and focuses on practical luxury that enhances personal well-being and comfort, often with high household incomes.
4. Aesthetes (17%)—Aesthetes define luxury as the height of aesthetics and design. The beauty and creativity of luxury goods drive this group, which is predominantly female (62%). Their purchases are based on an appreciation for refined aesthetics, with many in high-income brackets.
5. Trendsetters (16%) – The smallest group, Trendsetters, use luxury to make bold statements and stand out. They tend to be younger (46% under 34) and more diverse, valuing luxury for its ability to elevate personal style and uniqueness.

Currently, millennials are the aspirational customers who view luxury goods as markers of success and are willing to stretch their budgets to obtain products from brands like Louis Vuitton, Christian Dior, and Gucci. The ability of luxury brands to effectively cater to these diverse customer types while maintaining their core values of exclusivity and craftsmanship is critical for sustained growth.

The Evolving Persona and Customer Priorities

The evolving luxury consumer prioritizes self-expression, novelty, and experiences over status, valuing unique, sustainable, and ethically produced goods. They seek brands that align with their identity and values rather than traditional markers of wealth.?

1. Emphasis on Sustainability: Consumer demand for transparency, ethical sourcing, and environmentally friendly production methods is driving the luxury industry to deepen its commitment to sustainability in 2024.Sustainable practices are forcing luxury brands to integrate them into their business models, spanning from product development to supply chain management.The growing consumer insistence on responsibility and accountability in luxury goods aligns with this shift.
2. Digital Evolution: Technologies such as augmented reality (AR), virtual reality (VR), and artificial intelligence (AI) are gaining prominence as the luxury market continues its digital transformation. These innovations offer immersive shopping experiences and personalized customer interactions. High spenders can now enjoy exclusive online spaces, 24/7 chat support, and digital concierge services. This blend of digital and physical experiences, often referred to as "phygital," is revolutionizing how luxury brands engage with their audiences.
3. Evolving Notions of Exclusivity: Exclusivity in the luxury market is being redefined. Traditional elements of heritage and longevity are gaining prominence, as consumers increasingly seek products with enduring value and subtle, "quiet luxury" instead of overt branding. To cater to this demand, luxury brands are offering limited editions, unique collaborations, and personalized services that enhance the sense of individuality. Inclusivity is also becoming part of the exclusivity equation, where luxury consumers value custom, tailored products that reflect personal taste and uniqueness.
4. Conscious Consumption Luxury consumers are shifting toward more mindful, thoughtful consumption. In 2024, buyers prioritize quality and meaningful engagement over sheer quantity. They favor products that are durable and have significant narratives, and they seek out brands that align with ethical standards and champion social causes. Brands that contribute positively to society and culture will resonate more strongly with a consumer base increasingly oriented towards mindful consumption.
5. Experiential Marketing in the Luxury Sector Experiential marketing has become a key strategy for luxury brands, creating immersive and unforgettable experiences that connect emotionally with consumers. Research shows that 85% of consumers are more inclined to purchase after attending a brand event or engaging with an experience. Gucci, Rolex, and Burberry have successfully merged digital innovation with physical experiences, offering AR-enabled virtual try-ons, VR showrooms, and in-store AR experiences. This experiential approach amplifies brand visibility and fosters long-lasting customer loyalty.
6. Personalization—Crafting the Unique Luxury Experience Personalization is now central to luxury, moving beyond mass production to create individualized experiences. Brands like Louis Vuitton’s ‘Mon Monogram’ allow customers to customize their products, adding personal touches such as initials and color preferences. This level of personalization extends to tailored services, bespoke consultations, and exclusive shopping experiences. Whether it’s Tiffany & Co.’s custom jewelry design or Rolls-Royce’s Bespoke program for personalized vehicles, luxury brands are catering to the demand for highly customized experiences.
7. Social Commerce The convergence of e-commerce and social media, known as social commerce, is gaining traction, especially among younger demographics. Platforms like Instagram, TikTok, and WeChat allow consumers to discover and purchase luxury goods directly. WeChat’s Mini Programs enable luxury brands to engage with consumers in exclusive ecosystems, ensuring a consistent brand experience. Live shopping events on social platforms are also becoming popular, allowing luxury brands to create interactive, personalized shopping moments in real time, further driving sales and customer loyalty.
8. Accessibility Through Buy Now, Pay Later (BNPL) Options BNPL services like Klarna and Afterpay are transforming luxury shopping, making high-end products more accessible to younger consumers by offering flexible payment options.
9. Retargeted Marketing—Engaging the Known Customer Luxury brands are effectively using retargeted marketing to re-engage potential customers who previously interacted with their brand but didn’t make a purchase. Successful retargeted marketing strikes a balance between persuasion and discretion, offering additional value while maintaining the brand’s exclusivity. By curating personalized content and limiting the frequency of ads, brands can create a sense of urgency and align their message with the customer’s interests, driving conversions without overwhelming the consumer.

The Rise of Aggregators: LVMH and Dior's Shift Towards Aggregator Platforms

In response to the growing demand for luxury products from aspirational customers, brands like LVMH and Dior have increasingly turned to e-commerce aggregators such as Nykaa. Nykaa’s ‘Luxe’ category, which features premium and luxury brands, serves as a gateway for aspirational consumers to access products that were once exclusively available in high-end boutiques. Partnering with platforms like Nykaa/Ajio allows luxury brands to expand their reach beyond traditional retail outlets, particularly in tier-2 and tier-3 cities, where physical access to these products might be limited.

From a business perspective, this strategy offers several advantages. By partnering with digital aggregators, luxury brands gain access to a large, digitally connected consumer base without the overhead costs of setting up physical stores in every location. E-commerce platforms also offer data-driven insights that allow brands to engage with consumers in a targeted, personalized way, enhancing marketing effectiveness. For instance, Nykaa’s Luxe category has seen substantial growth by attracting aspirational buyers who may not be able to afford the highest-end products but seek to own items from prestigious brands.

The Decline in Luxury Spending Across Markets

Global luxury spending has experienced a decline in recent years, impacted by factors such as economic uncertainties, inflation, and shifting consumer priorities. The COVID-19 pandemic further altered consumer behavior, with many choosing to spend less on luxury goods and more on experiences, wellness, and long-term investments. Major markets such as the U.S., Europe, and China, traditionally strongholds for luxury sales, have observed this trend.

Luxury consumers have become more value-conscious, especially in uncertain economic environments. Rather than splurging on material goods, many are opting for experiences or products that align with their values, such as sustainability and ethical production. This shift is particularly pronounced among younger consumers, including digital natives, who expect brands to go beyond aesthetics and focus on deeper narratives related to environmental and social responsibility.

For brands like LVMH and Dior, this presents a challenge. A customer segment that seeks meaning and purpose in their purchases is now supplementing their traditional consumer base, which prioritized craftsmanship, heritage, and exclusivity. The aspirational consumers targeted through platforms are more likely to purchase entry-level luxury goods as a symbol of status, but they may not engage with the deeper values that older generations of luxury buyers hold dear.

Impact of Changing Persona on Existing Consumer Behavior

For the ultra-rich, luxury is not just about the product—it’s about the exclusive, personalized experience. The shift to selling through aggregators could erode the sense of exclusivity and luxury that these brands have carefully cultivated. Dior’s customers, for example, are accustomed to in-store interactions where personal relationships with sales associates, bespoke services, and intimate settings are integral to the brand experience. If luxury brands become too accessible, the ultra-rich may perceive this as a dilution of the brand's identity, potentially causing them to disengage.

Additionally, there is a growing frustration over the lack of innovation in the luxury sector, as consumers feel brands are recycling old designs without offering fresh, exciting products to justify rising prices.?

The increasing reliance on e-commerce platforms, particularly aggregators, could have a significant impact on traditional in-store visits. Luxury brands have long taken pride in providing a unique in-store experience that is unreplicable online. This experience includes high-touch, personalized service, exclusive showrooms, and private consultations—elements that are critical to maintaining the allure of luxury shopping for the ultra-rich.

However, as luxury brands become more accessible online, the frequency of in-store visits may decline. The ultra-rich, who once relied on these intimate shopping experiences, might feel that the brand has lost its exclusivity. Luxury’s appeal lies in its preservation of time, heritage, and exclusivity—traits that could be compromised when luxury products are easily available to a broader audience online.

Moreover, serving the aspirational audience through platforms could result in brand fatigue for the real affluent customers. If a Dior product is available to middle-class consumers on a mass-market platform, the ultra-rich might feel that the brand no longer offers the same level of distinction. Luxury brands must carefully balance the need to cater to aspirational consumers with the expectation of exclusivity from their ultra-rich clientele, or they risk losing their most loyal and high-spending customers.

Ending Note

Do you think the impact of new trends in luxury and revised definitions of exclusivity with changing consumer personas will converge the ultra-rich crowd towards online aggregator mediums, or will LVMH, Dior, and Tods need to figure out a way of providing the superior experience??

Well, luxury goods are just the start; how about luxury cars? While I would appreciate a discount on the Lamborghini Aventador SVJ, will I ultimately pursue this desire once I have the financial means to do so? For now, all I can say is hopefully time will tell.?

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