Author: Dr. Sheetal Jain

Indian luxury market is primarily driven by young aspirational consumers. Higher discretionary income, digitization and brand love inspire these consumers to indulge in luxury. Millennials dig deep into brand narratives and purpose over materialism. They may not emphasize only on the ownership and exhibition of material items but also on the sophistication and experiences. They want to engage with brands that reflect their personal values.

Though luxury in India is at a nascent stage, notion of luxury is undergoing a transformation. The important question that surrounds today is: As Indian luxury market is evolving, are the consumers transitioning from status signaling to self-transcendence? Is this an emerging phenomenon in the post pandemic world where consumers’ priorities are shifting, from flashiness to subtlety, from self-centrism to altruism, from conspicuousness to consciousness, from material-orientation to value enrichment and from being ostentatious to being responsible.

Here are the 4 key reasons behind this transformation:

• Mindful consumption– Growing number of young Indian consumers are now making more informed decisions. They show concern for society and environment while making product choices. For instance, they choose to eat locally produced food, wear ethical clothing, drive electric car and stay in green resort. Their awareness of what is better, more eco- friendly and humane, allows them to make right selections. Recent report by Capgemini Research Institute found that around 60% of Indian consumers in the age group of 18-24 have shifted to lesser-known brands which were sustainable. Also, 65% of the consumers confirmed that they will indulge in ‘mindful consumption’ in the new normal. Marketers must understand that consumers are willing to pay premium for better, healthy and ethical versions of ‘ordinary’ products.

Note: Brands must redesign their complete value chain to ensure it is ecologically and morally sound.

• Taste refinement– Massification of luxury goods and emergence of new forms of luxury such as rental luxuries have made these goods much more accessible, leading to fading of the signaling capability of conventional luxury goods.  These goods no more exhibit wealth as today even masses can conveniently own second-hand luxury goods or experience high-end labels on rent. Therefore, growing number of sophisticated consumers in India now prefer to buy subtle brands over loud logos which reflect their true selves. They are seeking for exclusivity and savoir faire rather than popular brands. Brands like Bottega Veneta are targeting these select consumers who want to disassociate themselves from larger groups and resonate with people in their own closed group known as ‘insiders’. Loud logos that exhibit an individual’s wealth and opulence might seem distasteful in a post-pandemic scenario.

 Note: As luxury is becoming ‘way of life’ for wealthy Indians, marketers should focus more on silent symbols than visible emblems.

• Experience-orientation– Millennials prefer to spend money on experiences that arouse positive emotions and provide sense of happiness. They seek pleasure in holiday trip with friends and family or rejuvenating themselves with a visit to a SPA as alternative to materialistic acquisitions. There is growing craze for genuine indigenous travel experiences from culinary sojourns to local sightseeing and culture trips. As per recent research by Deloitte around 50% of those surveyed in India want to spend more on experiences than on physical possessions.  After prolonged pandemic related restrictions rich are now wanting to live in the moment and indulge in luxury and experience-oriented spending.

Note: Brands must understand that new age consumers value living a purposeful life and aim to explore meaningful experiences that build on their ‘authentic-self’.

• Investment in real wealth– Luxury now has become a way to self-enrichment. Affluent consumers today put more emphasis on quality of life than ostentatious symbols. They want to indulge in guilt-free pleasures. They spend large monies on invisible experiential goods like education, health and well-being while reducing spent on tangible flamboyant goods. Particularly, with pandemic consumers have realized the fact that ‘less is more’. Recent report by CARE Ratings confirmed that with the increase in income levels and awareness, people in India are spending more money on quality education and health care.

Note: Luxury brands which showcase social status and cultural aspirations, need to reconsider their consumers’ evolving tastes and preferences.

(This article has been previously published in Luxury Daily.)

After a woeful year due to pandemic, the luxury industry has started to regain strength. As per recent Bain & Company report, 2019 levels would most likely be attained in this year. Covid-19 has forced luxury brands to pivot into the digital space at a startling speed. Many brands have recognized the need to transform and revolutionize more than ever before. They are exploring unique digital methods to virtually engage consumers to offset their declining sales. 

Now-a days, the most asked question is: Are emerging trends like gamification, NFTs and pre-loved fashion in luxury industry is future of fad?

Gamification: During the pandemic gamification has emerged as a widely used marketing tactic to provide immersive experience to consumers.  Increasing number of brands have realized the need to integrate gamification in their overall digital marketing strategy. Many luxury brands including Dior, Burberry, Balenciaga and Chanel have been leveraging the power of gaming platforms to acquire, engage and attract young consumers. Recent trends in China have already confirmed the successful partnership between beauty, e-commerce and gaming. In 2019, MAC’s limited-edition lipstick which was commercialized for Tencent-owned game Honor of Kings was completely sold out within 24 hours.

High-end fashion label, Balenciaga have revealed their latest Autumn/ Winter 2021 collection through an interactive online video game titled Afterworld: The Age of Tomorrow. It allowed players to dress the characters from head-to-toe with their new collection. Louis Vuitton has designed skins for Riot Games’ League of Legends. Last year, Burberry became the first luxury fashion brand to collaborate with live-streaming platform Twitch to showcase its Spring 2021 show. Lately, the Gucci Garden Experience on Roblox, an online gaming platform, blurred the difference between the virtual and real world. Gucci has been amongst the pioneer luxury brands to spot the opportunities of the metaverse – the emerging virtual universe where users can live a parallel life to their real-world existence.

Video games are allowing consumers to obtain digital outfits for their avatars, giving them access to luxury brands which they might not otherwise afford to buy in the real world. According to Newzoo’s recent report, the global games market is projected to generate revenues of $200 billion by the end of 2023. GenZ and millennial shoppers are reinventing social community in digital space through sharing experiences via online games. Young consumers also known as ‘digital natives’, find traditional media as tedious, since it emphasizes more on transactional aspect rather than experiential. On the other hand, new age unconventional platforms like gaming, generate youthfulness and fun and build special bond with the users. Today, young consumers are spending same amount of time, if not more, on gaming as on movies and music. Therefore, it makes complete sense for the brands to venture into this space.

Note: Gamification is a great way for luxury brands to reach to a larger audience, boost brand awareness and engagement, create competitive advantage, build reputation, acquire user data and eventually build strong customer base.

Non- Fungible Tokens (NFTs): NFT means unique digital asset like artwork, videos, audio and music which is tracked through blockchain and cannot be interchanged.

Every day we have been hearing breathtaking tales on new NFT record sales, from Beeple’s $69 million artwork to 18-year old’s $500,000 Vampire Queen.  However, presently, NFT use cases are in their infancy, particularly for luxury fashion. Luxury brands are contemplating whether the affluent consumers will ever be interested in luxury fashion NFTs? Will consumers achieve any value from them? Will this strategy lead to brand dilution? And so on… But at the same time, luxury brands do not want to miss the opportunities offered by NFTs. Various luxury fashion brands are preparing to release NFTs. As per Vogue Business, Italian luxury fashion house, Gucci lately said it’s “only a matter of time” before a brand like Gucci releases an NFT. 

Just like high-end fashion brands came up with their diffusion lines to make luxury affordable, NFTs may further pave the way towards democratization of luxury. For instance, customers who may not be able to afford real Gucci gown may buy its digital version. They could develop their images wearing the 3D dress and share it on virtual platforms or use it for avatar in games.

NFTs can help resolve Counterfeiting problem which is a major challenge faced by the luxury industry through authenticating and tracking high-end items. Also, by storing info in digital ledger, shoppers can know about the previous owners, etc. which could also help the brands to get royalty for each resale. In addition, digital collectibles can be created by luxury brands using NFTs. They can serve as a new revenue stream for brands.

Note: NFTs can be used along with 3D visualization, AR filters and virtual try-on technology to provide more engaging online shopping experience to the consumers.

Pre-owned luxury:Lately, the demand for pre-loved luxury fashion is growing phenomenally. Environmental concerns, desire for uniqueness, affordability and wide variety are some of the key reasons driving this market. Few years back, nobody could have ever thought that luxury brands would ever collaborate with pre-owned fashion resellers. Moreover, most of the luxury brands were hesitant to enter the resale market due to the fear of cannibalizing sales of new items and risk of brand dilution. However, today this is becoming a hot trend. Lately, Gucci partnered with TheRealReal; Alexender McQueen partnered with Vestiaire Collective, to name a few. A recent BCG –Vestiaire Collective’s research revealed that the global secondhand market is likely to grow at the rate of 15% to 20% over the next five years. Findings also indicated that 62% of shoppers are willing to buy more from fashion brands that collaborate with the resellers. As per CPP Luxury, the global market of pre-owned luxury goods is estimated to grow from current $30 billion to $64billion by 2025.  

Note: It is becoming increasingly important for the luxury brands to look for new business models that promote circularity and sustainability to entice growing number of conscious consumers.

Emerging trends like gamification, NFTs and pre-owned luxury are innovative ways of connecting with the new-age consumers. They may provide immense opportunity to many luxury brands to thrive in the future. However, there holds a key challenge for the luxury marketers to strike right balance between inclusivity and maintaining brand identity and exclusivity. Brands should not jump in the bandwagon rather they should formulate strategies related to these emerging trends by being more client centric as well as by delivering clear value proposition.

(This article has been previously published in Fibre2fashion.)

It has become increasingly important now-a-days for luxury brands to interact, inspire and involve consumers at every touch point of their shopping journey. In last few years, many luxury brands including Louis Vuitton, Burberry and Prada, to name a few, are shifting their distribution strategy to D2C channels as it provides higher margins and more control than traditional wholesale channels. As per a recent report by Bain and Company, online luxury sales grew from 12 % in 2019 to 23% in 2020 and is predicted to reach 30% by 2025. Today over 90% of luxury sales are digitally influenced.

For many luxury brands, adopting D2C strategy during the pandemic has paid off for various reasons- from increasing brand awareness to driving sales. During this time, high-end brands have realized the significance of developing direct relationship with consumers. It not only enabled the brands to offer better customer experience but it also provided access to customer data and direct customer feedback. However, the key question is: What set of strategies should be adopted to develop a successful D2C brand?

Here are 4 key strategies to build a successful D2C luxury brand:

Focus on effective Storytelling: Unlike buyers of regular brands, luxury brand consumers look for experience and authenticity rather than affordability and functionality. Luxury decision making is affective in nature rather than cognitive. Hence, brands should create dream and desire amongst the buyers, so that they are ready to make these indulgent purchases. D2C brands must focus on highlight brand’s DNA and core values. Storytelling should be an integral part of brand communication strategy. It helps to achieve genuine association between brand personality and consumer’s identity. By conveying what the brand stands for, brand’s history, how the products are created and sharing the tale of artisans who give life to the products, marketers can touch the heart of consumers and build an emotional bond with them. Brands must emphasize on product uniqueness, craftmanship and excellent quality in their social media campaigns and other marketing communications.

Note: Real, authentic and relatable stories may help the brands to establish strong connect with their target audience and drive luxury sales.

Invest in technologies: D2C brands should invest in AI-based consumer insight technologies (both online and offline) to win new-age discerning consumers. Imagine you are visiting a luxury masion where you are browsing beautifully exhibited dresses or shoes while sipping on a glass of champagne. Can this experience be replicated online? This has been the greatest challenge for luxury brands to establish themselves on ecommerce platform. Therefore, luxury brands have been one of the slowest to embrace digitization. However, no more these brands can ignore online platforms and consider it just as a communication tool rather than customer acquisition channel.  Currently, AI and VR has made it easy for brands to replicate offline experience to online stores. Digital tools like 3D/ 360-degree product viewing and virtual dressing room can help brands to augment online purchase experience. Also, the humanistic element (through live chat; video conferencing; Whats app calling, etc.) should be intertwined with digital tools to give personalized attention and immersive experience during shopper’s entire digital journey. Strong visual appeal of the e-boutique will enable luxury brands to maintain their unique brand identity.

Note: Luxury companies should spend on making their own ecommerce website rather than only rely on third party market place so that they can acquire all necessary information about their buyers.

Provide memorable experiences: Heart of D2C brands lie in redefining transaction-based stores into emotion-based stores. Brands should make their stores Instagram-able, relatable and sharable to attract young consumers who live in digital world. Let’s take example of start-ups like Warby Parker, Rent the Runway (RTR), The RealReal and Nykaa. They all are digitally native D2C brands.  They started as pure online retailers but today they have their brick-and-mortar stores to provide touch, feel and experience to their consumers. RTR has lately reached unicorn status and have opened large retail stores with cafe, stylists, beauty bar, dressing rooms and space for workshops and events to engage, educate and entertain the consumers. These brands are disrupting the rules and norms of the luxury industry.

Note: It is important for D2C brands to establish experiential stores in addition to their online presence.

Offer excellent customer service: In case of D2C brands, it is important to have robust return/refund policies to gain consumers’ trust. Also, services like BOPIS (buy online pick in-store)/ BORIS (buy online return in-store) should be provided to clients to provide them seamless omni channel experience and convenience. Sales associate should be well trained to serve the role of an expert/ consultant rather than being a mere cashier. They should focus on building long-term relationship with the consumers by providing them excellent service.

Note: D2C brands should aim to exceed the expectations of the consumers and give them ‘wow’ moments at every contact point. Brands should maintain consistency in their message across varied platforms including their website, mobile app, social media handles and brick and mortar stores to develop consumer trust. Now more than ever, digital platforms are allowing brands to increase their reach, tap new markets and acquire new consumers; leading to increase in sales and profitability. In this digital era, building direct to consumer relationships is critical for luxury brands to survive and thrive.

(This article has been previously published in Indianretailer.com)

India is one of the fastest developing economies across the globe. As per the latest report by IMF, India is the only major economy of the world predicted to have a double-digit growth in 2021. Further, CEBR forecasts India to become the world’s third largest economy by 2030. Backed by economic development, internet penetration, policy reforms, growing middle-class population and increasing aspirational consumers, Indian luxury market is all set to see favorable growth over the next decade. The size of Indian luxury market is projected to surpass $200 billion in 2030. According to recent McKinsey report, 300 international fashion brands are eyeing to enter India in next two years. Although, the country provides lucrative growth opportunities to global luxury brands, a lot of challenges pertain for the brands to successfully penetrate and expand in the complex Indian market. India is a diverse market with differences in culture, traditions, languages, region and religion across the country. Therefore, the strategies that have been successful in western markets may not work in Indian context. Marketers must ‘think Indian to win Indians’.

Here are the 5 key success factors to win Indian luxury market:

Brand awareness and visibility

Indian luxury market is still at a nascent stage. Majority of Indian consumers are not aware about the rich culture, heritage and pedigree of these brands which make them distinct from the mass brands. They mainly buy popular luxury brands rather than their lesser-known counterparts as ‘brand name’ plays a critical role in their purchase decision. For instance, few brands that entered Indian market in early 2000s have been able to build strong brand recognition. Therefore, it is important for luxury brands to generate brand awareness and brand visibility amongst the consumers. Marketers can leverage social media platforms to inform consumers about the brand’s unique identity and DNA and create positive perception in consumers’ mind-set. Further, brands need to educate the consumers about the core values the brand stand for.

Consumer segmentation

In order to create effective marketing strategies, it is imperative for the marketers to segment Indian market.  ‘One size fit all’ strategy may not work in India. Based upon the maturity level of the luxury consumers, they can be classified into 2 distinct groups, namely, traditional and novice consumers. Traditional luxury consumers have complete knowledge about the high-end brands. These brands are the part of their lifestyle and they buy them for intrinsic attributes like craftmanship, legacy, savoir faire and timelessness. Their key motivation to purchase luxury products is to ‘stand out’. To attract this segment, brands should come up with exclusive product range and highlight on quality, experiential and uniqueness value. On the other hand, novice luxury consumers buy luxury items to ‘fit in’. They look for extrinsic factors such as brand name, brand provenance and brand logo. For such buyers, luxury brands serve as a trophy for their achievement. Therefore, to lure this rapidly growing segment in India, brands should come up with affordable products and highlight on symbolic value in their promotional campaigns. For instance, luxury automakers like Mercedes Benz and BMW continue to introduce entry-level models to woo new-age luxury consumers.

Standardization/ Adaptation

Today, as growing number of Indian consumers are well travelled, aware and educated, they want to buy the unmodified version of a global brand.  However, to satisfy the ego-gratification needs of ever- demanding consumers, making few alterations like putting their initials, monogramming, etc. can be a good strategy. Further, special collection can be curated by brands during festive or wedding season based on the unique Indian consumers’ tastes and preferences.  For example, Italian luxury brand, Canali, came up with ‘Nawab collection’ to suit the time-honored Indian traditions.

Brands may follow standardized product strategy but at the same time, they may work upon adapted communication strategy to be able to create emotional connect with Indian consumers. For example, Shahrukh Khan and Ranbir Kapoor were signed as Tag Heuer’s brand ambassador in India to alleviate the brand appeal among Indians.

Customer experience

Luxury is a business of creating and selling dreams rather than answering needs. Therefore, brands should not just aim to satisfy consumers, instead they should make all efforts to provide them ‘wow’ moments. Marketers should use data analytics and technologies like AI and VR to provide seamless bespoke omni-channel experience to their consumers. To build long-term association with the consumers, brands must exceed consumers’ expectations every time. Invite-only parties, workshops and events can be organized for patrons to make them feel special. Brands should innovate, inspire and involve the consumers. For instance, Burberry’s ‘The Art of Trench’ campaign allowed the consumers from across the world to share their photos wearing Burberry trench coat. This created feeling of ownership over brand story among aspirational consumers.

Proper sales staff training is very important to alter transaction-based relationship to emotion-based relationship. Indian consumers believe in the philosophy of ‘Atithi Devo Bhava’ which means guest are equivalent to God. Therefore, luxury companies should make each client feel distinguished and special. Multisensory experience should be provided to mesmerize and captivate the shoppers.

Product and pricing parity

Since, Indian consumers are well-versed with the latest collection and releases across the globe, they may not be willing to make purchases in India, especially if the companies do not live up to their expectations. Lack of product variety, outdated assortment and high prices in India may compel consumers to buy from international locations like Dubai and Singapore. Due to high import duties, lot of luxury products are sold at 20-30% higher prices in India as compared to the prices in other global markets, thus making it less attractive for consumers to shop in India. If brands do not want to miss the great growth opportunity present in Indian market, they should match the products and prices on par with their offers in other international markets.

(This article has been previously published in indiaretailing.com)

Covid-19 has caused havoc across all industries including luxury. Companies are forced to relook at their business models to survive in this new landscape. According to McKinsey report, the global luxury goods market is projected to contract by 35% to 39% in 2020. The only option left with the businesses is to adapt or die; pivot or perish. As quoted by Intel CEO, Andy Grove, “Bad companies are destroyed by the crisis; good companies survive them but the great companies are improved and reinvented by the crisis”.

Luxury companies across sectors, from apparel to auto; from hospitality to health and from food to fitness, have pivoted their business models to ensure immediate survival alongside long-term resilience and growth. Companies have resorted to new distribution channels, product line extensions, innovative services, altering product categories and repositioning themselves to rebound. Luxury industry has advanced five years in just three months.

The hospitality industry in India has been the slowest to recover. From Oberoi and Taj to ITC and Hyatt, all are trying to rediscover themselves to bring back the traction. Many have started providing contact-less services such as self-check in kiosks and digital key technology; door to door packages (pick up from home to drop at home); luxury vans with a butler and chef for nearby destinations; etc. As healthy living has become top priority for all, hotels and resorts are trying to reposition themselves by putting wellness at the center of their philosophy. They are offering wellness therapies, mindful menu, yoga and meditation sessions to rejuvenate the guests. Resorts are also trying to reinvent themselves as workcation destination to allow city dwellers to work from such destinations by spending an extended period of time at these resorts.

Few are experimenting with new revenue generating models. For example, Taj is bringing the dining experience to their guest’s doorsteps. They have lately introduced Qmin app for gourmet food online services. Similarly, fine-dine restaurant chain, Diva has launched the concept of   DIY kits for gourmet Italian dishes. CAARA, a catering company, has extended its online food delivery service to include gourmet groceries and Masala Library is sending chefs, servers and food to curate unforgettable moments for their opulent consumers.

Luxury concierge services have tried to put their best foot forward during the pandemic. They have provided all kinds of services to satisfy the whims and fancies of the uber rich- from private air ambulance charter to virtual session with celebrity chef and personalized videos for birthday wishes from client’s favorite Bollywood star.

Similarly, in automobile industry, from Lamborghini and Mercedes Benz to BMW and Tesla, all have been mobilizing their resources to make hospital ventilators, protective plexiglass shields and other medical devices. Mercedes-Benz India has redesigned the complete process of buying a car by making it possible to obtain your favourite Benz from the comfort and safety of your home, through their e-commerce platform ‘Merc From Home’. Demand for pre-owned luxury car segment has seen a surge. According to Big Boy Toyz founder, Jatin Ahuja, 75% of sales is happening via online platform. They have made heavy investment to create webstore that gives immersive online buying experience to their customers.

Luxury apparel and accessory makers such as Dior and Loreal have started making disinfectant gel at their facilities that originally made perfumes and cosmetics. Lately, the luxury British heritage label, Burberry launched reusable and sustainable masks with anti-microbial technology as masks has become not just new necessity for the consumers but a way to make style statement.  Similarly, many Indian designers like Anita Dogre and Shivan and Narresh have followed the suit. Delhi-based affordable luxury leather goods brand Damilano, which earlier used its e-store only to liquidate products on rebates, is now focusing on ecommerce platforms as a growth channel. Likewise, many other brands like multi-designer store Ensemble which are finding it difficult to pull sales through offline channels even after easing of lock down restrictions are resorting to invest heavily in technology to bring the inventory of its physical store to its webstore. With limits on the functions and celebrations, some brands have switched to more classic collection with a longer shelf life, while others have been working on smart casual collections. These brands are not only offering private client appointments for physical store shopping but are also providing personal shopping and styling sessions on Zoom or video chat. They are making all efforts to ensure health, safety and well-being of their consumers.

In the wake of coronavirus pandemic, fitness freak consumers have been restricted to go to gyms, therefore, the demand for home fitness equipment has visibly increased not just in India but across the globe. To capture this opportunity, Louis Vuitton has unveiled the most stylish range of at – home fitness equipment like dumbbells and skipping rope. With work from home becoming a new norm, they have also introduced a set of opulent playing cards under their homeware line to engage their patrons.

Many of these notions are surely there to stay in the post pandemic era. Therefore, investment in technology which empowers human is the need of the hour. As per a McKinsey report, after the 2008 crisis, companies that prioritized customer service witnessed a stronger rebound compared with the market average. It can certainly prove as a game changer for the companies in the current crisis scenario as well.

(This article has been previously published in ET Retail.)

Covid-19 has hard hit the luxury industry resulting in the biggest fall in personal luxury goods market since 2009. The industry has witnessed major transformation with digital being one of the biggest and most impactful one. Ecommerce has proved to be silver lining for many companies that were initially skeptical to embrace digital technologies. Last few months have seen a significant shift in the luxury consumers’ beliefs, values and lifestyle. The key question remains: Will the pandemic alter the way shoppers buy in the future? What will the ‘new normal’ look like?

Here are the 6 key trends paving the way forward for luxury goods industry:

Darwinian jolt: According to the recent Deloitte report, the leading 10 luxury goods brands sold more than the next 90 combined. The big luxury players are becoming bigger than ever while the weak are traumatized by the crisis; thereby resulting in massive consolidation in the industry. Many stressed players, such as, debt-laden multi-brand retailers and cash-poor independent brands are finding it difficult to survive. The exceptionally complex situation of 2020 undeniably increases the likelihoods of more mergers and acquisitions and consolidation within the luxury industry.

Note: In post-pandemic world consolidation of the luxury industry will further deepen. Leading companies need to be agile to grab the opportunities as weak players’ shutter.

First time digital buyers on rise: Covid-19 undoubtedly accelerated the speed of digitization as companies had no other option but to go ‘online’ to reach their prospects. Many consumers who historically purchased through physical luxury mansions have switched to online channels for the first time during the pandemic. Also, there is upsurge in the demand from buyers residing in tier 2 and tier 3 cities who had limited avenues earlier to buy their favorite designer labels at the click of their fingertips. As per recent report by Bain & Company, online luxury purchases were worth $58 billion in 2020, as compared to $39 billion in 2019, nearly doubling the sector’s share of the market for global luxury sales to 23 percent from 12 percent.

Note: In the post pandemic world, some of these buyers are likely to stick to digital.

Surge in serious buyers: The fear of Covid still looms large across the globe. Consumers are shying away from visiting physical stores. They are making focused, to the point visits to retail outlets to fulfil their luxury purchase requirements and not spending time on window shopping and browsing through goods in the physical stores. Further, ticket size of purchases has gone up due to decline in frequent visits. In addition, consumers have become much more informed and are very clear about their needs and preferences. Hence, marketers need to go extra mile to engage and capture consumer’s attention during these times.

Note: In future, brands need to inspire and motivate their buyers by innovative tactics- both offline as well as online.

Back to possessions: Today luxury consumers can’t travel. They cannot splurge money on lavish dinners or big fat weddings. In this scenario, affluent people are parking a good amount of their money on acquiring luxury goods. They are celebrating their special moments like birthdays and anniversaries by purchasing high-end labels. Possessions have become a way to feel good at the time of this crisis. Although, this trend will be more prevalent in short-term till experiential luxury again gain the momentum.

Note: Brand should take this situation as an opportunity to acquire new consumers by creating targeted, focused customer acquisition and marketing strategies

Pre-loved luxury taking lead –As per ThredUp’s 2020 resale report, 50% of individuals are decluttering their closets more than pre-covid times since they are spending more hours at home. Today, increasing number of young consumers are seeing the brands in their closet as not just a way to express themselves but also as a valuable tradeable resource. At the same time, pre-owned fashion gives the opportunity to cash-strapped aspirational buyers to live their dream of owning luxury goods without making big hole in their pocket. Recently, Italian fashion house, Gucci has collaborated with consignment site, The RealReal to expand their target audience in a circular manner. The luxury fashion second hand goods market is estimated to grow from $24 billion in 2019 to $51 billion market by 2023. Further, second hand apparel market is projected to overtake fast fashion by 2028.

Note: In the post-pandemic world, pre-loved luxury may become the new-norm.

Rise in ‘woke’ consumers: Young consumers are extremely concerned about people and planet. With the onset of pandemic, they are rooting for those brands that are aligned with their value system and beliefs. Nine out of ten Gen Z consumers believe brands have a duty to address environmental and social concerns. Therefore, growing number of luxury brands today are repositioning themselves as ‘care taker of mother earth’.

Note: In future, brands are expected to demonstrate increasing commitment towards sustainability.

Today, luxury companies in all categories are compelled to adapt and reinvent themselves in order to survive in the new luxury landscape. There is increasing need for companies to become ‘customer first’ entities to attract and retain their customers. Consumer expectations and buying behavior has evolved during the pandemic and luxury companies need to be on toes to remain in sync with the changing market trends.

(This article has been previously published in moneycontrol.com)

With all businesses and industries throughout the globe in massive chaos, there has been grave economic impact of coronavirus across the sectors from tourism to airline; from entertainment to education; from cruises to cars; from food to fashion and so on. Marketers across industries are trying to redesign their business models and luxury industry is no exception. As per the recent research by Altagamma in association with Boston Consulting Group, it is predicted that coronavirus can bring down global luxury sales between €30 billion to €40 billion. With store closures and customers stooping down in their homes, luxury markets has been severely hit. Major parts of the world, from China to Japan to Europe and US are struggling with weakening demand and disrupted value chains.

This crisis has resulted in paradigm shift in consumer behavior. From being reluctant to using masks and sanitizers to buying them at any cost; from loving to shop in-store to going digital; from enjoying classroom learnings to attending online sessions; from doing physical meetings to making decisions through videoconferencing and from attending glamorous fashion events to viewing live streaming at digital platforms. This change in behavior may become the ‘way of life’ and ‘new normal’ for consumers.

It’s known from the history, each crisis leaves a long term impact and deadly coronavirus is no exception to the rule. The great depression impelled a “waste not want not” attitude that dictated consumption patterns for years. Likewise, the outbreak of Covid-19 may move luxury consumers to assess things from a different outlook. It may alter the key motivational factors for luxury goods consumption. The beliefs, values and attitude of luxury consumers may drastically evolve leading to changing consumption patterns.

 Let’s look at the 3 major changes that this crisis will bring in luxury consumers in the long-term and its implications on the marketers.

• Consumers’ may be driven to buy luxury for “conscientious value” rather than “conspicuous value”. In longer term, because of this crisis, people may be willing to spend more on sustainable brands that reflect their own values and beliefs. Buyers will show increased concern towards fair trade product consumption. They will put more emphasis on benevolent values which may result in ethical decision making. Affluent consumers will rethink and re prioritize their fashion consumption to make it less conspicuous and more responsive toward the society as well as the environment. There will be transformation from “what you wear” to “who you are,” within conscious luxury consumers, leading to rising consumer demands for product traceability, supply chain standards, product legitimacy and quality.

Note: This is great opportunity for luxury brands to redefine their business models and create products that are authentic and responsible. They must think deeper beyond loud logo strategy.

• Consumers may indulge in hedonistic purchases which make them feel better in this stressful period. This has been termed as ‘revenge or retaliatory spending’. They will buy luxury products for ‘ego-centered’ values, that is, personal values such as health and well-being, hedonism and superior quality. Marketers should make efforts to provide comforting experiences to the consumers to help them cope with irrational fears. They must provide offerings which convey emotional values rather than ostentatious symbol of status and affluence.

Note: This is the right time for marketers to go much deeper to unravel what their brand stands for now and what it can mean in future. They must re-think how they can serve the needs of affluent consumers purposefully and create meaningful content to inspire, engage and entice consumers.

• Fear of infection has hard hit luxury shopping malls. People are staying more at homes and buying products online rather than physically going to crowded locations. In long term, this may lead to permanent change in behavior of consumers and online luxury buying may become a new norm. (Just like after demonetization episode in India, consumers who were most reluctant are also gradually embracing digital mode of payments). Therefore, retailers should provide more meaningful online experiences to connect with the consumers.

Note: Online luxury buying will become more attractive in future. This slowdown is right time for luxury brands to equip themselves to digitize the processes and upgrade their systems and technology. This will enable them to develop operational efficiencies and provide personalized experiences to the customers.

The luxury industry remain hopeful to bounce back to previous consumption levels after the pandemic ends. This is the perfect time for luxury brands to prepare themselves for the future by identifying the gaps, turning their weaknesses into strengths and strengths into distinctive competences. This endemic may bring major change in the consumers’ mindset and the value system that underpin their luxury buying decisions. The brands that would work to understand this and adapt accordingly will surely turn out to be the new champions.

(This article has also been published in Business Today.in on 23 March, 2020)

Since the last few years, various incidents like demonetization, cash related purchase restrictions followed by GST have acted as a great deterrent for the growth of Indian luxury market. However, people had gradually digested these effects and Indian luxury market continues to experience a high growth rate. The development of new markets beyond metros in tier 2/3 cities and growth of new affluent class of consumers have been the key reasons for the expansion of this market in India. But, with the outbreak of Covid-19, the future of Indian luxury market has once again become questionable.

According to the recent report by Bain & Company, global luxury sales could drop up to 35% by the end of 2020. With the key luxury markets across the globe now affected, the pandemic poses serious threat to the sector. Some nations like China are predicted to see the rapid rebound, while others nations like Europe and the US could experience an extended impact. Already, there are signs of recovery in China. For brands ranging from Hermes to Louis Vuitton, store traffic is inching back and is projected to accelerate in the subsequent months. Similarly, with the prompt action taken by Modi government to combat the coronavirus epidemic, it is most likely that India will see strong recovery and emerge as a more powerful nation in the coming months.

Presently, with all luxury stores shut down, fashion shows postponed, art and watch events cancelled, supply chain disrupted and low consumer sentiments, it will certainly take a while for Indian luxury industry to bounce back. However, post Covid-19, success of luxury brands in India is mainly dependent on the following 5 factors:

Go Phygital: Luxury brands must break down the internal silos and seamlessly merge offline and online channels. They should increase the use of digital platform not just for transactional purposes but also to engage, interact and provide bespoke experience to the consumers. To fight this crisis, luxury retailers must invest more in online sales and marketing and leverage the full potential of omnichannel marketing strategy. They may consider to moving their promotional budget from outdoor to online.

Be Purposeful: Today, brands need to be purposeful to remain relevant. From Louis Vuitton to Loreal, all luxury retailers have altered their production units from making perfumes to sanitizers and designer wear to medical gowns and masks. Consumers will embrace the brands which show sense of responsibility and empathy in the hour of crisis. Therefore, it is very important for the luxury retailers to step forward and contribute for the well-being of the society.

Remain in contact: It is important for the luxury retailers to remain at the top of the mind of their high-end consumers. They may use tactics like virtual shopping session, online make-up classes, trunk shows or fitness sessions to engage and interact with the consumers. Luxury brand managers can provide personalized attention to the top clients by one to one engagement and conversation with them. They should develop meaningful content that foster a sense of community building during this epidemic.

Introduce entry level brands: At this point of time, when employment and financial markets are under pressure resulting in low consumer confidence and willingness to spend.  Therefore, brands must use the tactic of introducing ‘bridge to luxury’ brands to make luxury available at accessible prices for young Indian buyers. Luxury retailers should see opportunity in this challenging scenario to entice new consumers by coming up with products with lower price points.

Go Green: Luxury brands must re-think about the planet and people while making the products. The outbreak of the virus has resulted in drastic changes in the behavior of consumers. They have become more concerned about the social and environmental issues. Therefore, fashion and luxury brands must relook at their value chain, from sourcing to manufacturing and from packaging to product disposal. Serious attempts should be made move from traditional linear economic model (take-make-dispose) to circular economy by embedding the 3R principle (Reduce, Reuse and Recycle) into production and consumption process.

Although the future is unforeseen and difficult to predict. Luxury brands must remain proactive and reinvent themselves to survive in this tough situation.

(This article has also been published in ET Retail on 31st March, 2020)

Luxury consumer behavior is transforming significantly due to changing consumer’s demographics, lifestyle, values and interests. Over the years, the meaning and definition of luxury has evolved. Today, luxury is no longer restricted to ‘elite few’ rather more and more consumers are trading up to purchase these products. New-age buyers save every month to buy new Mercedes Benz or new Gucci bag. This market segment spend lavishly when they have money, without much consideration about their debt levels. Marketers cannot ignore them as they provide better lifetime value and loyalties.

Luxury market which has traditionally relied on a sense of ostentatiousness and splendor, need to align itself with the values of new generational cohort. There has been shift in luxury consumption from conspicuousness to personal fulfilment. For millennials luxury is more about experience and authenticity rather than just flashy brand logos. Brands should create marketing strategies by keeping in mind, buying patterns, media habits and psychological motivators of today’s luxury consumers. To remain relevant, luxury companies should reinvent themselves. They need to clearly define what they stand for and what their core values are? They should ask themselves, are the 4 Ps of marketing still relevant? Or it’s about the 4 Es: Environment, Experience, Emotion and Ecommerce.

Environment: Luxury warrants a psychological cost categorized as “guilty pleasures” which might lead to negative emotions after the purchase. Therefore, growing number of people are buying sustainable luxury products to experience “guilt-free” enjoyment.  As per a Neilson survey performed with 30,000 consumers in 60 countries across the globe, 60% of global consumers were willing to pay extra for sustainable products. This new perspective and consciousness toward others will shape the future values of luxury industry. Luxury brands along with consumers can no longer overlook sustainability. Brands are expected to regard environmental sustainability as a core pillar of their strategies. Brands like Chanel, Louis Vuitton and Stella McCartney, among many others, have taken pledge to go cruelty free in all future collections. They are continuously reviewing their value chain to make it transparent and are shifting to plant based alternatives.

Remember: Young consumers look for luxury brands that don’t just elevate status but really touch their souls and help them to create connection with the wider world.

Experience: Luxury has always been about the best quality, the finest materials and greatest savoir-faire. However, there has been paradigm shift in the expectations of the new consumers. They want to feel special, wish to get personalized treatment and desire to obtain immersive experience during their complete shopping journey. The entire experience of purchasing luxury goods is as important as the product itself. Luxury brands need to continuously create new experiences and wow moments for their customers. This is an amazing way to build a story in consumer’s mind- a story that you want customers to take home with them and cherish forever. For instance, Tiffany is opening its first café ‘Tiffany Blue Box’ in London to provide a way to its customers to immerse themselves in the world of Tiffany.

Remember: You must focus on delivering customer experience and not just products. Make your consumers part of your story, clearly communicate the value proposition to them and they will become yours forever.

Emotion: Neuroscience reveals that decision to buy a luxury item is overwhelmingly emotional. For today’s consumers it is not enough that a luxury product is well-crafted with great history and heritage. They cherish products which are authentic with unique and intangible quality of truth. Each promotional campaign must express truth which breathes life into the brand, conjuring perceptions of genuineness and endurance.  New generation value the opportunity to interact with the brand and become part of the brand. Through evoking emotions of pride and awe, luxury brands can build deeper connect with their consumers. Brands must think genuinely about what their clients actually care for and go an extra mile to make them live it. The ability to engage, empower and innovate is a crucial factor for becoming successful luxury brand. Gucci has launched a call center in Florence to give consumers a direct seamless connection to the Gucci community throughout the world anywhere and anytime. It enables consumers to interact with call-center assistants over phone, email or live chat and build personal relationships with assistants, similar to brick and mortar world.

Remember: You must build emotional relationship with your clients both offline and online to win them.

Ecommerce: Being a high involvement product, in-store shopping has been the way to shop for luxury brands. These high-end brands have been really slow to embrace ecommerce as a distribution channel. However, nearly 80 percent of luxury sales today are ‘digitally influenced’. Consumers hit one or more digital touch points in their luxury shopping journeys. Online luxury sales is projected to reach $70 billion globally by 2025. As per recent Euromonitor International Report, luxury goods sales are growing nearly three times faster online than in physical retail. Therefore, traditional luxury brands cannot ignore digital platform today. These brand are now trying to catch up with the changing buying patterns of the affluent consumers. Brands from Burberry to Louis Vuitton, all are making efforts to provide a consistent brand experience both in-store and online. The major challenge for all these brands is to maintain the perceived cache of luxury in the digital world.

Remember: You cannot afford to work in silos today. The combination of offline and online is the way forward. Today, the rule book for what it means to be a luxury brand that is loved by its customers has profoundly changed. It’s no more just about making the finest product. It’s also not just about the brand repute that has been built over years. In my opinion it is about really aligning with a sense of deeply held values to create an authentic brand that connect with consumers.

(This article has been published in indianretailer.com on February 4 2020)

Luxury retail is experiencing a paradigm shift. The traditional ways of doing retail are no more effective and requires a radical makeover. Mobile commerce is blooming worldwide as growing number of consumers are using their smartphones to research, compare, purchase and return products. Does this mean brick and mortar stores are becoming passé? Absolutely true, many iconic retailers like Nordstorm, Lord & Taylor, Victoria secret, Barneys, to name a few, are closing their retail stores. To remain relevant, these stores are trying to reinvent themselves by going digital.  But, simply moving sales online will not be enough for their survival. Retailers need to device innovative ways to make their stores meaningful for the new-age luxury buyers. In tandem, digital players such as Amazon, Rent the Runway and Warby Parker are opening physical stores, as a way to augment the online experience. What’s leading to these changes? Customers urge for seamless, bespoke shopping experience through 360 degree access to retail across all touch points is resulting in luxury retail disruption.

Let’s look at 6 major trends reshaping the luxury retail environment.

Phygital Retail: In future, there is need to blur the line between physical and digital retail. As per Juniper Research, fashion brands’ retail spend on AI is predicted to rise from $2billion in 2018 to $7.3 billion by 2022. Software developer SAP is working with Harrods to develop technology that provides customers with personalized recommendations from the in-store screens based on what they are wearing. Omnichannel brands are using digital behavior to inform in-store assortment. Nike store in Los Angeles furnished the store with Nike Cortez sneakers after knowing through digital commerce data that its local customers enjoy running.

Note: Data-driven technology with help luxury retailers to design appropriate in-store strategies.

Experiential Stores: In coming times, luxury retailing will be driven by experience. Recently opened flagship store of Nordstorm in New York is trying to captivate time-starved buyers by providing dedicated service stations for easy returns/ exchanges, etc. The store is providing a perfect blend of technology, innovation and a truly luxury experience. Store associates are well-trained and empowered to augment customers’ experience. Similarly, Sephora is providing free beauty workshops to not only attract customers but also to provide them with something more than just a product to walk away with.

Note: Luxury retailers need to have celebration every now and then in the store so that people will have a reason to talk and step into the store to discover something different every time they visit.

Care is the new Commerce: Organizations have to adopt ‘care is the new commerce’ mindset. They need to understand each step that customer goes through in their journey while making buying decision.  This will help in knowing customers’ problems better and providing them personalized solutions (services) by leveraging analytics and artificial intelligence. Recently, Cartier has initiated a digital customer care system, ‘Cartier Care’ which is designed to build relationship with clients. It provides clients access to comprehensive suite of watch workshop services like complementary battery changes, brightening and engraving, full technical check, etc. It aims to permit customers to sell their timepieces back to the company and acquire creations from latest collections.

Note: Today, luxury retailers need to go an extra mile to serve their clients.

Zero-inventory Stores: There are many luxury retail brands that focus on ecommerce business model. They can benefit from having physical presence. Various researchers have proposed a novel idea, known as zero-inventory stores (ZIS) which will make physical stores as a platform where shoppers can touch, see and experience the items while orders can be placed online. Less inventory would require smaller store format which would mean huge savings on rental costs. Such stores will enable to gain the best of both physical and digital world. Research suggests this strategy is not only cost effective for retailers but has supercharging impact on digitally native customers.  As ZIS provides millennials with an opportunity to experience the product, it would generate more demand and less returns. JLL, the commercial real estate company, predicts more than 800 new stores will open in next five 5 years by top 100 digital players. Will it have any implications on traditional luxury retailers? In my view, this will have lethal impact on age-old retailers, who may have to find alternatives to survive in this complex and challenging environment.

Note: Experience-driven ZIS will help luxury retailers to engage, inform and provide better service to millennials while leveraging online fulfillment.

Luxury brands partnering with resale/ rental sites: Few years back, high-end brands could never have thought to make collaborations with closet-sharing/ pre-owned apps. However, as luxury consumption patterns of consumers are undergoing drastic changes, brands are exploring new ways such as these to generate traffic into their dying stores, attract millennial clientele and boost sales. Also, because of circular nature of the partnership, it is a way to boost the corporate social image of luxury brands. Lately, Burberry has announced an official partnership with pre-owned luxury site The RealReal. Customers who purchased consigned Burberry items through The RealReal are provided with a unique shopping experience at Burberry stores. Similarly, Rent the Runway and Neiman Marcus teamed up to redefine the way consumers shop.

Note: Luxury retailers have to explore new business partnership opportunities to draw millennials into their stores.

POP-IN / POP-UP shop: Physical retailers like Nordstorm created a POP-IN shop with EverLane, a brand known for its transparency approach, to tap today’s discerning, eco-conscious shoppers. Similarly, many luxury brands like Chanel, Louis Vuitton, etc. are opening pop-up stores to test small before opening a full-fledged store. It helps brands to display their new collections and engage directly with customers. Recently, the Hermes Silk Mix pop-up was held in Munich. The pop-up prioritized on enticing young consumers who feel estranged by flagship stores; for whom sense of community holds great significance.

Note: Luxury retailers have to come up with innovative store formats to excite discerning, new consumers.

Today, luxury retail environment is more challenging than ever. Emergence of collaborative economy, growth of social media, advent of AI and VR and changing consumer behavior has made it hard for traditional luxury retailers to survive. The only solution left with them is to adapt and accept innovative new business models to remain relevant in the future.

(This article has also been published in indiaretailing.com on 13 February 2020)