Luxury 3.0: Communities over Crowds

Let’s say it like it is: community has become a crucial component of luxury.?It’s not something marketers can control, but it is absolutely something they have to understand.

New research by my firm, BCG, in collaboration with Highsnobiety, shows that today’s new luxury consumers are more tightly interwoven with brands than could have been imagined a decade ago.

I’m not talking about continuously sourcing shoppers’ feedback or occasional crowdsourcing of new design ideas or once-in-a-while sponsorship of an influencer’s podcast. I mean complete, immersive engagement with all kinds of communities of consumers and potential consumers—all the time.

Consumers expect their brand communities to give them opportunities to participate, be heard, and even meet up in real life. For them, engaging in a two-way dialogue with brands—the wider brand community that surrounds them—is not a bonus. It’s a prerequisite.

Today, your brand is just part of an ecosystem of brand communities. That’s a fact of the phenomenon we call “Luxury 3.0.” (I addressed the “knowledge” aspect of Luxury 3.0 in a previous LinkedIn column.) In Luxury 3.0, the brands that will win tomorrow are those that invite their audiences in to contribute and play active roles. Online communities are no longer just adjacent to the luxury experience: they are its powerful multipliers. Luxury shoppers are already deeply immersed in those communities—often diving in several times a day.

That’s especially so for those we call the “cultural pioneers.” In the sneaker and streetwear categories, those early adopters and thought leaders are, well, streets ahead in engaging with multiple communities on social media.

Ever since online music sharing communities like Napster upended the entire music industry, it’s been clear that online communities have the power to impact businesses in very real ways. In the fashion world, forums such as Superfuture and StyleZeigiest played big roles in creating online fashion communities in the 2000s and 2010s.

Fast-forward to 2021 and online communities have become forces for disruption. On one end of the spectrum are accountability-driven accounts such as Diet Prada and Slow Factory; on the other end, meme accounts like Dank Art Director Memes and I Deserve Couture which both celebrate and critique the industry. In between, you have fan groups like New Bottega, Old Celine, and Prada Archive, which also fit into this broader ecosystem of online accounts that make up the overall brand community.

Our research found that more than 90% of younger generations of luxury consumers are highly engaged and active in online communities. Those communities are fragmented across different platforms—for example, resale groups on Facebook, Discord servers for popular fashion vloggers, and official brand accounts on Instagram.

The conventional model of brand communities is evolving into a new framework that we call the metacommunity. Metacommunities are fluid, dynamic and fragmented. Instead of speaking to a single archetype or demographic, they are an overlapping ecosystem of many different sub-groups of fans, consumers, detractors, and commentators. Strong metacommunities cut across multiple phases of the consumer experience, serving as sources of inspiration pre-purchase, as well as a place for shoppers to share their new buys post-purchase.

Long gone are the days of brand strategy where the core customer is a single consumer archetype. Brands that fail to see that their “community” is no longer a singular group but a metacommunity of many different consumer segments and cohorts will struggle to effectively engage and generate cultural credibility.

The research confirmed the clear split between what different generations want from their brand communities. Older luxury consumers tend to prefer more transactional benefits, such as loyalty programs and advance access to drops. Younger consumers are still interested in material benefits, but they also gravitate more towards intangible, value-driven benefits such as championing philanthropic causes. The advance guard—our cultural pioneers—value knowledge, such as learning new things and expand their thinking through discussions and getting exclusive information.

Interestingly, our research shows that today’s luxury consumers are increasingly involved in other cultural topics and verticals. Brands that use fashion to engage with cultural interests beyond their core products are seen as more credible. Our survey results highlighting the brands with the most credible communities echo this: Nike scores well by engaging with sports communities, and Prada rates highly by intersecting with the art world.?Those brands and others like them are seen as authentic players that are making contributions in those cultural spaces.

Tomorrow’s winning brands will have invited their audiences to contribute and play active roles in the brand’s evolution. In Luxury 3.0, online communities (which often transcend into IRL) are no longer independent of the luxury experience; they are perhaps its most powerful multipliers. Today’s brands need communities – and the most successful brand managers know how to accommodate multiple communities at the same time.?