If inspiration is a currency, can we check the receipts? Personal luxury is a highly influential retail segment, but its high profile can lead to misconceptions. Paul Sinkinson (main photo), managing director Australia of Analytic Partners, digs into what luxury marketers need to know about their changing industry and consumer base…
Luxury has been synonymous with aspiration for as long as it has existed. Just picture Audrey Hepburn in the opening scenes of Breakfast at Tiffany’s. Her chic look helped shape fashion for decades. Heck, even people who have never seen the movie recognise the look.
Of course, the problem with aspiration is that it’s often far removed from reality. There’s a need to separate perception from reality.
A new report from Analytic Partners does just this. We used our ROI Genome, a marketing intelligence tool built from 20 years of experience across over450bn of marketing spend, and the latest research to discover the personal luxury industry’s key trends. The report paints a clear picture of personal luxury, and reveals the resilience that has kept the industry functioning through recent recessions and a global pandemic.
This resilience, borne out of necessity, helped set the industry on a new path. But many marketers and agencies are still playing catch-up on what a personal luxury brand really means to the modern consumer.
Diamonds new best friends
One of the key appeals of the personal luxury industry has been the experience offered along with the product – the service, the store and the style incorporated into the purchasing journey. This appeal led to tourists often seeking out luxury stores while on holiday. But tourist-driven consumption is no longer a consumer base that marketers can invest into as deeply, for obvious reasons.
The evolution of online distribution and ongoing uncertainties around travel mean marketers need to take a fresh look at their local clientele. Brands must also reinforce their presence in key cities and break into potential new markets, such as China, which is expected to reach 25% of worldwide personal luxury goods sales by 20251.
When it comes to engaging with these local consumers, a robust omnichannel marketing strategy is key. Most brands boosted their digital capabilities during the pandemic, and inspiration touchpoints should now include digital channels as well as TV, merchandise and out-of-home advertising.
But it’s important not to neglect bricks and mortar sales in the rush to shore up digital advertising. In fact, findings from the Analytic Partners’ ROI Genome demonstrates that a combined increase of both digital and brick and mortar presence can result in up to 32% higher returns2, suggesting that a balance between the two is essential.
And as supply chain issues continue to ripple across the globe, the convenience of shopping within your own area can’t be overstated. Investing in marketing, and specifically brand messaging, allows brands to build their inspirational equity but also entice consumers back to the store as they re-open.
For example, our ROI Genome also found that messaging with a focus on the values of a brand outperforms product, promotion or functionality messaging 80% of the time3.
So it’s no longer good enough to be aspirational, consumers are demanding brands be inspirational as well through the social values and narrative your brand creates.
From silks to streetwear
If you review any of the world’s highest paid fashion influencers, chances are you’ll see them in sneakers as often as you’ll see them in heels.
Of course, these aren’t just average sneakers. Certain designer sneakers will leave you more than a few hundred dollars lighter in your hip pocket. But it proves the very idea of what counts as a luxury product has changed, and in large part, because of what younger consumers are interested in.
Generations Y and Z will account for over two thirds of global purchases by 20254, so understanding what these consumers want from luxury products and how to target them is essential. The evolution in fashion is already being noticed, where hoodies and sandals are now seen in some of the world’s biggest runway shows.
Advertisers have a unique chance to position themselves in front of up-and-coming luxury consumers through their value propositions. Younger consumers are especially interested in businesses that have committed to diversity, inclusion, and sustainability, as well as rare and unique experiences. For the latter, this may translate to a lower frequency of purchases, but a willingness to spend more for a single purchase.
And for a generation accustomed to managing a dozen highly-curated social media feeds a hyper-personalised shopping experience is a must. Position your brand as a friend, an influencer, and build an online experience that replicates this.
We’ve also seen that influencers tend to be more efficient than celebrity PR, but less efficient than traditional PR. Given the relatively short duration of influence, brands need to manage their portfolio of influencers the way an asset manager manages their financial portfolio- with clear KPIs and an understanding of the cost of the reach and how much of it is incremental reach, as this is the most common destroyer of influencer of ROI.
It can be difficult to try and perceive your own industry from the outside, but for the personal luxury sector, it’s imperative to understand the intersection of reputation and reality. Otherwise, your brand may lose touch with what your consumer really desires.
