TOP 5 Luxury Trends To Look Out For in 2018

The luxury market is evolving and the expectations of luxury consumers are changing fast as well. 2018 growth will rocket sky high as affluence and connectivity changed every aspect of what we knew as LUXURY.

“With the increasing number of digital developments and comprehensive changes in the way consumers browse, shop and pay, it is going to be even more essential for luxury brands  to adapt in order to meet buyers’ expectations. It is also crucial that nothing is lost in terms of quality of the online luxury shopping experience,” says Mariett Ramm, CEO of BaronessWorldLuxury.

Globalization

Despite fluctuating H economies over the coming year, U.S, Japan, South Korea, France and the UK will be expected to be the biggest growth markets in the luxury sector. China will continue to experience a slow-down, and luxury brands are taking control of a market that was once dominated by a surging counterfeit and grey market by establishing direct connections with customers in China.

Research also indicates that Russia’s market is finally recovering after two difficult years. This is due to the increase in domestic demand and rising tourist sales, which will be boosted by a ‘tax-free’ scheme scheduled to be enforced around February. Additionally, Hong Kong, which proved to be the weakest link in leading global market space during 2016-2017 adversely impacting the performance of some key brands, will also start to recover in 2018.

As the market matures, there are four key luxury market trends that will dominate the evolving luxury e-commerce globally as outlined below:

 1.Masterful about Brand Positioning

Rising affluence and the amazing lifestyles made possible by connectivity have shifted the frontiers of luxury. However, to trace that shift, we need to understand one fundamental truth: luxury has ALWAYS been about STATUS at heart. The status shift focus is on being ethical, creative, connected, tasteful, eco-friendly, and creating new opportunities for luxury brands to deliver on new aspects of luxury landscape. Considering economic and political circumstances, individualised and complex strategies will support those who want to stay ahead of the curve on a long-term basis.

  Tiffany is hosting a branded tea at sea. Image courtesy of Dream Cruises

According to Luxury Daily, Genting’s Dream Cruises is building a luxury travel retail concept aboard its new World Dream ship that focuses on experience and entertainment. Its latest ship features luxury shopping in stores such as Tiffany & Co., which is the first store of the brand on water in Asia; and Dior’s first watches and jewellery boutique at sea worldwide. Tiffany & Co. has also created an exclusive high tea set for World Dream. The jeweller’s first tea experience at sea includes a menu with British fare and Tiffany-branded treats.

2. Appealing to Self-Actualised Millennials

Morality, creativity, spontaneity, problem solving, lack of prejudice and acceptance of facts formulate the top hierarchy of self-actualisation. This complex fulfilment is perceived as the pinnacle of human experience. There is one demographic that embraces and reflects this authenticity more than others. This is the Millennial Generation. 

Without a doubt, this demographic has been focused on, studied, and measured more than any other.  Millennials, aged between 25-34 years, with an average household income of between ￡100k and ￡250k, form over 25% of the global population and workforce. An average millennial spends approximately 20 hours on his smartphone per week. On average, 30% of Millennials make at least one online purchase per week, and over 80% of them use YouTube.  

Ms Nathalie Remy, partner in McKinsey & Company, stated that the millennial market is worth $17 trillion in private wealth, a figure that will multiply by 1.4 by 2020. She was speaking at The New York Times’ International Luxury Conference on the 14th November. Furthermore, millennials have massive spending power, with a global value of about $2.45 trillion, which will triple by 2025.

Millennials usually subscribe firmly to the ‘work hard play hard’ ethos and as such, they place extensive value on experiences and lifestyle enhancing products. Millennials are also mobile, social and want to stay connected. They expect brands to consistently deliver high-quality experience on any device, from browsing right through to checkout, with lots of visual and emotional engagement.

Whilst Millennials spend somewhat less on luxury products when compared to the super-affluent demographic, this market is around seven times larger, making it considerably of higher value. Currently, millennials are responsible for 20 percent of the market in luxury goods.

By 2025, millennial consumers will triple in spending and the demographic will control 40 percent of the luxury goods market. Their hunger for innovative products, services and experiences combined with supercharged self-actualization, will lead to true luxury indulgence needs.

                         The Chanel L'Eau No. 5 campaign features French actress/model Lily-Rose Depp. Image credit: Chanel 

Millennials also serve as community accelerators and influencers through social media. For example, Chanel has posted 867 official posts in its social media accounts, but #Chanel has been shared by consumers more than 50 million times.

Millennials are a very targeted young audience and can help brands modernise their perception through positive likes, mentions and comments.

3. Digital Transformation 

Technology is infiltrating the luxury retail sector in a myriad of different ways, both as a product in its own right and as an indispensable tool.  After all, luxury customers crave a far superior experience to standing in uncomfortable queues or being restricted by the limitations of the shop’s physical stock room.

Statistics in 2017 showed that, as many as 40% of luxury brands do not sell online. Getting over this reluctance and getting online is going to be critical for success in 2018. The luxury consumer target demographic has shifted sideways, bringing with it a younger clientele, who expect a seamless digital experience as well as an in-store one. Brands who are worried about retaining some exclusivity can still build an online presence by limiting their online ranges and offering their most coveted and expensive pieces in-store only. 

Technology and consumer demand has also evolved in such a way that, items we consider essential, such as tablets, smartphones and watches, are developing luxury price tags. Retailers can also further enhance in-store experience by giving shoppers access to additional colours or customization options online via tablets, known as ‘endless aisles.’

 4. Chatbots and luxury

Luxury retailers and brands will also be leveraging chatbots for selling online high-end products.

A survey from Retale has revealed that, more than 70% of consumers are interested in connecting with a branded chatbot. Shoppers are interested in experiences that make their lives easier or offer some sort of value in return. Chatbots are the perfect mediums to pull this off.

As Dan Cripe, chief technology officer at Retale said, “driving sales for high-priced items can be uniquely challenging.” However, with chatbots, luxury retailers can now access consumers in a more personalised and conversational way at a key moment; during the purchase-making process, which then leads to converting sales.

Retale’s survey also showed that 60 percent of customers interacted with a chatbot via messaging apps and online. About 70 percent of the group believed their experiences were positive. However, almost 40 percent of the group said that their experiences were ‘very positive.’ 

5. Personalised Storytelling

Retailers can now view customers’ purchase history across multiple channels from a single point, which will help them build a comprehensive picture of loyal customers. In fact, it has become so powerful that statistics about individual customers, their shopping habits and even their opinion on products that they have shared on social media are now available. 

With the lack of brand loyalty in the industry today, each and every product purchased is a culmination of a unique shopping journey from start to finish. Online social storytelling is a huge part of the process of regaining users and marketers' attention with robust new capabilities.

Although luxury brand marketers primarily spend their time on Instagram, Twitter is working to amplify its storytelling capabilities and will potentially receive more attention.

For example, Twitter is strengthening its capabilities of becoming a more interactive storytelling platform, which increases its competitive abilities over other social media giants such as Instagram and Snapchat. Generally, fashion and luxury brands have predominantly focused on Instagram to connect with users due to its capability for high-quality visual and video content.

“The purpose of all the changes on Twitter: threading, video, doing away with the 140-character limit, is to make storytelling easier and more compelling,” said Javier Frank, director of technology and commerce at Isobar US, New York. “Luxury brands, which historically looked at Instagram as their main social outlet, now have a new tool for longer-format storytelling to engage their clients.

Successful platforms often look to users’ behaviour and how they interpret experiences on the platform. Twitter did so with its other recent endeavour in which it created formal message threading.

Due to the restrictive character count, Twitter users would often create a thread of numerous tweets to tell a larger story. While the content was often compelling, breaking up the larger story into easier-to-digest nuggets made it complicated. 

 Many social media platform applications have currently fully embraced the video-view strategy. The added view count on videos can help content creators see how well their content is being received.