In this article, we’ll be discussing:
Despite facing financial uncertainty, the luxury sector has shown resilience in 2023, achieving growth and record valuations. Now, new challenges and hurdles lie ahead.
In a world of digitally native consumers, exclusivity has become less exclusive and, rather, more inclusive. Social media has been an influencing factor in this by allowing an insight into the inner workings of the luxury world. As a result, younger demographics view luxury as more approachable and accessible despite the price spikes orchestrated by economic headwinds. Younger millennials and Gen Z & Alpha seek experiences beyond purely transactional; they seek deeper connections and close-knit communities that the luxury market can offer.
Brands have already explored how they can forge more intimate and fruitful connections with their most valued customers, but the future of luxury goes beyond that. Brands are now stepping into the role of cultural leaders, setting trends and driving aspirations on a global scale. Yet, to meet the varied needs of its diversified audience, the wider sector is also expanding its range of offerings, blending traditional craftsmanship with digital innovations.
From the introduction of knowledge communities to the rise of private retail sanctuaries, here are five key trends that we believe will set the scene for the future of luxury.
In recent years, luxury brands have had the challenge of building a client base that not only includes their ‘typical’ long-standing customers but also the rising affluent to drive their business and growth. To do this and ultimately drive business and growth, luxury brands have had to become more relatable. For some, this has meant electing brand ambassadors or releasing more affordable digital items, but they have also recognised the value of very important clients (VICs), especially during times of economic volatility.
Historically, we have seen luxury brands introduce diffusion lines, sunglasses collections and perfume ranges to allow aspirational customers a slice of the brand but at a lower price point. Now, brands are doubling down on exclusivity to offer more bespoke in-store experiences for those more prestigious clients who enter Gated Retail.
Gated Retail may be through appointment-only experiences, offering intimacy, privacy, and the highest-level service to a select group of valued customers. For those luxury e-commerce platforms that don’t have physical spaces, they are now looking to invest in events, white glove services and other perks to attract clients with deeper pockets. These private, invitation or appointment-only stores can encourage spending and boost loyalty and client sentiment among high-net-worth clients who are less likely to feel the pinch of inflation.
[Image Credit: Gucci]
A sense of belonging is making its way to the forefront of a consumer’s buying mindset, and belonging to a community is becoming a status symbol in its own right. Spaces such as Kristen Shirley’s La Patiala act as a physical luxury encyclopaedia, referencing intricate codes of the elite, which demonstrates the ultimate luxury isn’t just about having but about knowing and understanding.
In a cost-of-living crisis and possible recession on the cards, flaunting wealth may come across as out of touch, so brands are offering members clubs to their clients. These spaces will present as discrete environments for intimate indulgence and sophistication where members can reconnect with their network of socialites following a pandemic-induced slowdown.
Elusive but not elitist, these contemporary iterations of café’s are playgrounds for the wealthy, combining beautiful amenities, extensive services and, of course, the opportunity to socialise with like-minded peers. Unlike some clubs of the past, these new clubs aren’t just about being rich together and enjoying the finer things in life. Affluents are looking to connect on a deeper level and be part of tight communities that share not just status but smaller passions and lifestyles, too.
[Image Credit: Snohetta]
Following on the theme of ‘clean’; clean beauty, clean food, clean water, and clean medicine, we are witnessing a new frontier – clean jewellery. Driven heavily by Gen Z’s, a demographic with sustainability at its core, clean jewellery focuses’ not just on the clarity of the carats but also on the consciousness behind each piece. It’s an invitation for brands to reinvent, realign and reconcile with a generation that wears their values as proudly as their jewels.
Brands are responding to this trend through sustainable processes such as sourcing materials from conflict-free areas and circular materials, among others. Consumers are seeking jewellery brands that allow them to express not only the other sides of their identity but also their sustainable values. Boucheron is one of these brands exploring cleaner carats in their recent reinvention of the jewellery box as a no waste, collectable item, and Prada with their recycled finer jewellery collection.
[Image Credit: Prada]
Fine dining, an experience often associated with stuffy décor and outdated rituals, has received a revival – but not one that you might think. Gen Z’s are actually turning back the clock and spotlighting sidelining markets. Luxury tableware, think porcelain plates, silver cutlery and crystal cut glasses and tabletop heirlooms, are now being declared as cool and coveted once again.
This trend isn’t just about aesthetics, it responds to the rise of the home-grown chefs and self-made dinner party hosts using their food and dining as a statement of intent, identity, and culture. This shift from convenience-based dining allows for more authentic and curated experiences.
Thinking broadly, this trend is also an appreciation for the tactile and tangible and a yearning to cultivate meaningful moments in daily life. Lavish and elevated is the new hosting norm. Hosts are going above and beyond to make these memorable events, creating physical invitations, elaborate table settings and dish designs. With Gen Z starting to purchase luxury items on average three to five years earlier than the millennials, the passe crystals and silvers are back on the table.
[Image Credit: Home Designing]
Desperate calls to reform the fossil fuel industry and ongoing materials shortages are promoting the luxury automotive sector to search for new revenue streams. Luxury car brands have previously branched out into collaborations with clothing brands, but some brands have identified a novel avenue in property. Residential projects enable these brands to reinforce their commitment to innovation, craftsmanship and superior comfort. Bentley is a great example of this, promising to build the tallest beachfront structure in Maimi by 2026. The development encapsulates the essence of Bentley’s opulence, innovation, and attention to detail.
For the luxury industry at large, the emergence of automotive accommodation signals a possibility to go beyond hotels and restaurants to enter the residential market. While many luxury brands such as Prada and Loewe have introduced homeware lines, few have gone as far as to build branded residences.
[Image Credit: Bentley]