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Trends in luxury retail
1. “TRENDS IN LUXURY RETAIL”
RADHIKA GUPTA(32-MBA-14)
VIDIT GUPTA (59-MBA-14)
2. TRENDS IN LUXURY RETAIL
• True luxury brands put excellence and product first,
and let business follow
• Luxury has always been a slow-moving beast, trends-
wise, but in recent years it has had to up the pace to
keep up with an ever-changing customer base.
• Women are also a growing luxury consumer force.
HSBC predicts that women in China will take over
from men as the lead buyers of fine jeweler and
watches in the next few years.
3. • As a result, the luxury industry has had to become
dynamic. It’s had to shun its mistrust of the digital
landscape and become multi-channel, conversational
and, above all, multi-faceted in its approach to
messaging, platforms and retail.
4. 6 Key Luxury Trends That Will Make
Or Break Brands In 2016
• 1. Wearable Tech Makes a Real Impact
Tech’s appeal to the luxury audience is clear –
the world’s wealthiest people are also the most likely to
own the best tech, and everyday items such as phones,
tablets and phablets have become luxury products in
their own right.
5. • 2. The Rise Of The Thoughtful Luxurian
The luxury audience is becoming less interested in attaining
status from labels or from a price tag. So if luxury brands
can’t compete on monetary value, they need to find worth
and substance elsewhere.
Armani has curate tweet talks, whilst Chivas hosted a debate
on luxury at the V&A to interrogate luxury from aesthetic,
conceptual and cultural perspectives. The audiences were
thrilled – because in one hash tag and one evening
respectively, Armani and Chivas became more than just
brands, they transformed into thought-leaders.
6. • 3. The India Explosion
In 2014 the Indian luxury MARKET rose 25% year on
year, and is forecast to grow 86% in constant
value by 2018.
This is helping home-grown brands thrive – indeed
three India companies made the 2015 Deloitte
Top 100 Luxury Brands list, in the form of watch
brand Titan and jewelers Gitanjali Gems and PC
Jeweler. But Western brands are also trying to
crack this market too.
7. • 4. Saying Hello to Henry
HENRY – the gatekeeper to the luxury market and the
future of ultra-affluent consumers.
HENRYs (High-Earners-Not-Yet-Rich)
With their high disposable incomes, highly driven
attitudes and a desire to spend on exclusive products
and the best experiences, this demographic is driving
luxury brands to expand their offerings and boost the
service that they provide.
8. • 5. The Sharing Economy Goes High-End
The sharing economy has taken the business
world by storm. It may have grown out of the
global recession, but it has now firmly
cemented itself into the future of the
economy, with examples like Uber and AIRBNB
being the stars of the show. It’s already begun
to happen, but in 2016 this trend is going luxe.
9. • 6. Getting Over The Digital Hump
It is often assumed that all brands are online, but
one sector is still a step behind. Luxury.
A staggering 40 per cent of high-end brands still do
not sell via the web, according to Bain &
Company.
But the next generation of luxury consumers is
here. They are younger, digital-savvy and have
higher expectations of brands. Not only do they
expect brands to be available online, but they
also expect a seamless experience to go with it.
10. • THE LUXURY OPPORTUNITY
• Decision drivers – how luxury consumers make their
purchasing decisions
• Bespoke markets – luxury consumers differ across markets
• Brand awareness – luxury consumers are shifting
‘awareness channels’ and embracing digital
• Omni-channel – the generational wave approaching luxury
brands
• Social media – how consumers engage with luxury brands
• Luxury gifting – scaling the gifting opportunity
11. 10 KEY TRENDS IN LUXURY RETAIL
• The luxury retail sector, in the course of the next three to five
years, will be driven by 10 key trends geared to satisfying
consumer needs, fueling spending and luring new clients.
• The trends will affect existing customer relationships and the
targeting of loyal brand enthusiasts, affecting content strategy
and tactics, media planning and buying and sales efforts aimed
at emerging customer groups.
12. 1. TRIVERGENCE OF RETAIL
• Retail will move in three different directions to service the
needs of luxury consumers.
• The digital channel will drive research and stocking up on
favorite products, while bricks-and-mortar stores will reach
out to their clients through customized offerings such as
express counters, “top 10 product” style kiosks and assisted
shopping services.
• Lastly, entertainment is key as experience, lifestyle and theatre
drive the physical retail experience, while content will create
pleasure in digital retail.
13. 2. HUNT FOR NEW CUSTOMERS
• Given the ongoing softness in Europe and slowdowns in
Russia and China, looking into new geographical areas such as
Africa is rapidly becoming an alternative.
• While fashion brands including Zegna, MAC and Hugo Boss
have recently opened stores in Lagos, Nigeria, the new luxury
hotspot, online retailers are now shipping to Africa, and are
starting to focus marketing efforts on this region.
14. 3. POWER OF TRAVEL
• Especially in Europe, luxury brands are increasingly relying on
international travel and tourism to fuel sales, primarily from
China, Russia, the Middle East, United States and, now,
Africa.
• Tourists purportedly account for 55 percent of luxury sales in
the United Kingdom, 60 percent in France and 50 percent in
Italy.
15. 4. POLARIZATION OF LUXURY
• While in the past, luxury brands attempted to offer multiple
price-points, brand confusion and erosion of luxury credentials
was often the outcome.
• Now, luxury is being pulled in two opposite directions, and
brands will need to choose sides: accessible or ultra-luxe.
16. 5. EDITORIAL’S RETAIL REINVENTION
• Media wise, magazines, newspapers and television will
become the new digital storefront, reinventing themselves to
allow customers to buy their favorite items, looks or beauty
products straight off the editorial pages.
17. 6. MENAISSANCE
• The menswear market is extremely bullish, growing at 1.5
times versus womenswear.
• While 35-plus male consumers still dominate, the millennial
generation drives retail spending through its modern aesthetic
and digital knowledge. To which, many women’s wear brands
are either launching or revamping their menswear offering.
18. 7. PERSONALIZED STORYTELLING
• The openness of digital platforms dictates that brands need to
get personal to make luxury customers feel special.
• The rapid rise of Instagram, live streaming and behind-the-
scenes footage will leave consumers feeling like they have
already experienced everything.
• Brands are now challenged with creating truly personal, fresh,
and meaningful experiences.
19. 8. BRANDED MEDIA
• Luxury brands will increasingly become media channels,
creating content that is far richer than today’s aspirational
blogs, videos and magazines.
• Retailers will offer multiple channels with high-quality and
entertaining shoppable content updated on an hourly basis.
20. 9. MILLENNIAL REFRESH
• While consumers ages 35-plus still command some 83 percent
of luxury spend, the fresh aesthetic, playful approach and
digital propensities of the millennial generation are driving
retail culture.
• Furthermore, millennials are approaching their entry-point into
the 35-plus luxury heartland.
21. 10. KNOW I KNOW
• Show I know is growing old and the focus will turn away from
the outward display of luxury to an inner satisfaction of how it
makes one feel.
• The creation of personal experiences is essential as luxury
consumers shift the focus to indulging in personal reward.
22. The Indian luxury landscape is
experiencing an evolution which
is redefining the consumer
profile & how luxury players will
need to operate in this domain
during the year 2016.
23. 1. DIGI-LUX: THE NEW MANTRA
• According to new research, two-thirds of India’s web users
access social media daily and spend more time on it than on
emails. A combination of physical stores, digital experiences
and social media engagement is the new mantra.
24. 2. PRE-OWNED LUXURY IS A
DISRUPTIVE FORCE
• Consumer wants to ‘enjoy’ the ‘Luxury’ of owning the
product, the need to move on the ‘latest’ collection with no
clear value proposition besides being the ‘first to own’ it.
• Enter the ‘pre-owned’ luxury seller. Websites like
luxepolis.com, luxurymonk.com, and theluxurycloset.com
offer ‘pre-owned luxury’ at a relatively lesser price
25. 3. RENT A LUXURY PRODUCT
• There are sites wanting to offer ‘rent a luxury’ product /
services. One could look at renting cars to bags to wedding
outfits to jewellery for a special occasion at much lower costs
and yet flaunt as well as enjoy the brand, the product and the
associated benefits.
• Sites like secretwardrobe.in are providing a great platform to
rent outfits of designers like Anita Dongre, Sabyasachi
Mukherjee etc.
26. 4. DEMOCRATISATION OF LUXURY
• Brands across sectors understand that for this emerging Indian
consumer who wants to ‘taste’ luxury, a different approach is
required to expand the base from its existing sophisticated
customer. An approach of lower lines in hybrid mall is the
perhaps the way to attract new clients and larger volumes into
your domain.
• Examples of Armani Jeans ; Brit by Burberry ; Bulgaria
perfumes ; Mont Blanc pop up at Select City walk mall could
be the examples to adopt.
27. 5. COLLABORATE NOT COMPETE
• With the recent example of successful collaboration of an
Indian designer brand, Sabhyasachi Mukherjee with an
international designer brand Christian Louboutin, the trend is
clear – maintain your core strength and do not dilute into every
product category. In the words of Dr. Najma Heptullah Union
Minister for Minority Affairs: "The luxury sector has the
potential to create powerful experiences that can help to
positively influence societies and cultures by nurturing talent
and supporting brand
28. 6. PERSONALISE, CUSTOMISE,
INDIANISE
• Marking brand differentiation and brand loyalty, brands are
promoting personalisation services. Burberry offering
customised scarfs, Gucci offering Made-to-Measure services
are just some of examples. A luxury brand must not only
personalise its offering to every individual customer, but must
also allow possibilities of customisation for easy adaptability.
29. 7. MAKE IN INDIA
• Prime Minister Modi’s aggressive campaign to bring the
Indian manufacturing sector to surface has positioned India as
a potential manufacturing hub in the eyes of the whole world.
According to India Brand Equity Foundation, India’s
manufacturing sector could touch $1 trillion by 2025. With
focus on minimising business start up procedures and red-
tapism, this initiative can provide vital impetus for fostering
Indian luxury brands.
30. 8. REGULATORY INFLUENCES
Government initiatives that could affect the luxury landscape are:
• - FDI in single brand retail: Latest move by the government
in easing the ‘sourcing’ clause on a case-by-case basis in
single brand retail could see a renewed activity in luxury
brands wanting to enter India.
• - GST roll out: Looming tax reforms in form of GST roll out
could substantially ease the tax pains of multinational luxury
brands and help them operate seamlessly across multiple states
and locations.
• - Revision of cash transaction limits: To two lakhs from
earlier 50,000 could help luxury sectors like fashion, footwear,
low end jewellery / watches ; bags and accessories etc.
31. “ Brands will need to create an
omni-channel presence to
maintain personal touch with
customers across all platforms ”
32. CONCLUSION
• We are facing a new model of growth as the existing
luxury market matures. The splintering of the market is
driven by the cultural diversity of the high-net worth
market. Their needs are different and their approaches
to fulfilling those differ too.
• The organisations that will thrive in these changing
times are those best placed to understand the new
needs, as well as subtly changing existing needs, and
adapting effectively to those. The two elements
successful organisations must possess are, true diversity
and organisational agility to react to a changing market.