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Post Covid-19: How can Luxury Fashion Brands rebound in India?

As coronavirus impact seems to be slowing down in some parts of the globe like China, luxury brands sales have started rebounding. Lately, with Covid-19 lockdown lifted, flock of Chinese shoppers have been found in luxury boutiques in mainland China. The ultra-high net worth individuals are the major drivers of luxury sales under Covid-19, as they are least affected financially. Even if there is some cut in their numbers, it is just like a drop in the ocean. However, young consumers are also seen contributing in this drive as they are diverting their travel and holiday budgets into buying luxury items.

Now, the key question coming in our minds- Will the similar buying pattern be witnessed in India also after the lockdown is over? Will we see surge in luxury spending post covid-19 in India?  Will the consumers become desperate for ‘revenge buying’ after being in quarantine for so many weeks? Of course, there will be a set of consumers who would be rushing to indulge in luxury shopping experiences to rejuvenate themselves as luxury is the ‘way of their life’ and they cannot live without it. (As we recently witnessed that even after 70% ‘corona’ tax people were queuing outside the liquor shops). While, there would be other set of cautious buyers who would want to move away from discretionary spending and save for the unforeseen future. Luxury marketers have to devise right set of strategies to entice both these segments.

Here are the 5 comeback strategies for luxury fashion brands.

Emphasize on products with “Long Term Value” or “Investment Appeal”: India is a value-conscious market.Luxury brands will be able to capture the attention of luxury buyers by clearly communicating the long-term value proposition and investment rationale in the ownership of their products. Believe it or not, connoisseurs will be willing to pay even more on quality, timeless items that offer high value and perceived as investment items. The record high sales of $2.7 million of Hermes recently in China on the first day of its reopening post lockdown is the best case to learn from.

Note: Companies should highlight the legacy, craftsmanship and hard work that goes behind producing such items via Instagram stories, videos and other digital means.

Add “New Product” Categories: Companies will need to introduce new product categories keeping in view the altered lifestyle of luxury consumers. Fashion items which we considered essentials such as pajamas, masks, aprons or comfort wear can be new style statements. Hence, luxury brands should focus on these categories and extend their product lines. Brands like Louis Vuitton are selling designer masks to consumers to turn the new necessity as a way to express one’s identity. Similarly, luxury brands should focus on introducing new sustainable or green products to capture on the prevailing sentiment of the luxury buyers. During these times, most of the consumers have realized that ‘less is more’, so they would prefer to go for quality rather than quantity. They might shift from fast fashion to slow fashion. Instead of buying 10 articles from Zara, they may settle in buying one piece from Chanel.

Note: The companies should focus on more meaningful luxury.

Sustainability and Cause Marketing- A Must Have Arsenal in the Marketing Mix: Covid-19 has left a deep impact on the emotions, thought process and perception of luxury buyers. Consumers across the globe have realized the power and importance of ‘Mother Nature’ in our lives. It has made all of us more concerned, attached and sympathetic towards the society and environment we live in. In view of these circumstances, sustainability has become the cornerstone of all strategies and marketing efforts of companies and luxury brands are no exception to this phenomenon. For instance, haute couture brands from Chanel to Burberry are using their resources to make protective clothing to safeguard healthcare workers. Cause Marketing can be a major arsenal for luxury brands to win customer’s attention during these sensitive times.

Note: Companies which will act responsibly will only be able to survive and thrive during these difficult times.

Prepare for new business models: During this pandemic, consumers may shift from the unhealthy ‘throwaway’ culture to new economic model – ‘circular economy’, which brings the notion of restoration and regeneration in place of traditional end-of-life concept. New business models like re-commerce, pre-owned fashion or consultancy services will emerge stronger. For instance, consumers could pay on an hourly basis, for getting one-on-one styling advice in person or online. These services will facilitate consumers to learn to use already available clothes in different ways rather than buy new ones.

Note: This is the right time for companies to explore new business models.

Formulate Strategic and Tactical Plans around Digital

Digital has to be the new normal for luxury brands.As even post lockdown consumers due to the fear of pandemic will increasingly shop over digital channels. Companies will need to invest in technologies that offer omnichannel shopping experience to luxury buyers, be it use of Augmented and Virtual Reality, Shoppable Videos driven Live Fashion Shows, Data Analytics and AI driven personalization tools or Virtual Shopping Assistants. Recently, for the first time ever, Shanghai fashion week went completely digital. Over 150 brands live streamed their collections via Tmall, Alibaba Group’s e-commerce platform. Consumers were given the opportunity to ‘see now buy now’, which allowed the shoppers to buy runway items instantly with their phones.

Note: In future, more and more brands have to adapt to connect with consumers online.

The outbreak of Covid-19 has altered the shopping behavior of luxury consumers. The luxury buyers, who were always on the hunt for something new, have become more cautious about value, conscious about environment and concerned about the society. Luxury brands will need to take a serious relook on their strategies in order to reestablish themselves in the Post Covid era.

Note: This article has been previously published in Fibre2Fashion Magazine.

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6 Key Revival strategies for Luxury Industry: Post-Covid

Luxury consumption is driven by feelings, emotions, self-identity and social status. These motivations will never wane or fade. However, the beliefs and values that shape what people consume and how they consume is undergoing drastic changes. With the outbreak of Covid-19, there has been paradigm shift in luxury consumer behavior. This makes it imperative for luxury companies to transform their strategies as well as offerings.

Here are the 6 key shifts that will determine the success of luxury players in the Post- Covid era.

  1. Opacity to transparency: With consumers’ growing concern about the environment, fair trade practices and sustainable resourcing,luxury companies should ensure transparency and visibility in the entire supply chain, right from the procurement of the raw material to delivery of the final product to the consumer. Luxury brands such as LVMH are embracing blockchain technology to trace luxury goods supply chain. Such technologies will help in gaining consumer confidence and trust by bringing awareness about the authenticity of the product.

Note: Ethics will become as important as aesthetics as consumers prioritize purposeful brands.

  • Disconnection to connectivity: Despite of gradual reopening of the stores, consumers are reluctant to visit these stores as the fear of the virus still surrounds. Across the globe, there has been massive shift to digital channels. It is highly probable that some shoppers will stick to digital offerings even after the pandemic is over as it will become the ‘way of their life’. Therefore, luxury companies should make all efforts to connect with their consumers at all touch points, be it physical or digital. In the near future, if the companies do not have their own digital platform, they should look for partnerships with existing marketplaces (for example, Farfetch; YOOX Net-a-Porter) to sell online. They should explore collaborations with tech companies to boost not only their digital sales but also give a compelling reason to shoppers to visit their physical stores.

Note: Companies should invest in technology to build deeper connect with people both online as well as offline.

  • Linear economy to circular economy: The long-term sustainability of the luxury industry is under significant threat from various social, economic, human rights and climatic factors. Circular economy approach requires companies to use sustainable raw materials, close the material loops and keep the material and products in the loop, as long as possible. Transition requires a new organization, a new mindset and new forms of action by companies. Italian fashion label, Gucci has recently announced that it will cut the number of fashion shows from five to two every year in an effort to reduce waste.It is first major brand to make such a bold decision to support the move to a leaner, less wasteful fashion system. Similarly, Adidas and Allbirds have collaborated to create a sneaker with the ‘lowest ever carbon footprint’.

Note: Luxury brands need to do careful and smart slowdown with more emphasis on sustainability, creativity and craft.

  • Status symbol to self-expression –Today, consumers want to spend on luxury products to express themselves rather than to flaunt.  They want to rejuvenate themselves and feel special by owning high-end items. Luxury is no longer about ‘fit in’. In the most recent quarter during the pandemic, affordable luxury brands have been severely hit as compared to true luxury brands. Although, Hermes reported a 6.5% drip and LVMH’s fashion category reported a fall of 9% in revenue, affordable luxury brands such as Coach has seen a drop of around 20%. Affordable brands which are resorting to deep discounts to get the sales may run into the risk of jeopardizing their brand equity. During this crisis, even the younger generation has started valuing quality, craftsmanship and design over quantity. Hermes sales of $2.7 million on a single day after reopening of its Guangzhou flagship store, clearly highlights that there is increased aspiration for timeless and eternal luxury.

Note: Luxury brands should focus on values, heritage, craftsmanship and authenticity rather than emphasizing on loud logos.

  • Rigidity to flexibility: Companies will have to devise newer ways to work, add new product lines as per the changing consumers’ lifestyles and explore new strategic associations. Once the lock down lifts, companies will have to redefine their processes. They have to ensure that safety, hygiene and social distancing norms are adhered in-store through contactless selection and try-ons, self-checkout counters, automated doors, etc.

Also, with onset of the pandemic, health and well-being has become priority for everyone. From ethical beauty products to organic food; from conscious clothing to fitness equipment, are seeing increase in demand.  Likewise, there is surge in demand for household appliances, home decoration pieces, indoor games and electronic devices, as people are spending more time in their homes. Luxury brands should capitalize on the opportunity to serve these areas. Recently, French Fashion house, Louis Vuitton has unveiled designer gym equipment range. Similarly, top designers are entering into home décor or selling designer masks and chic track pants.

At this time of crisis, companies can look for new partnerships and alliances to strengthen themselves. For example, Walmart for the first time has entered the clothing resale market with online fashion resale platform ThredUp to sell previously owned branded clothes, shoes and handbags.

Note: The ability and speed to adapt to the new environment will be the key factor in determining the success of the brands.

  • Classic stores to experiential places: Today, brands need to make their physical stores instagrammable, sharable and relatable to entice millennials and Gen Z who breathe in the digital world. However, while doing this, they must stick to their brand’s DNA and core values. This will make the brand authentic and meaningful for the new generation.

Note: Brands need to redesign their stores into experiential places. They must be innovative and modern, yet holding to their roots.

To emerge as winners in the ‘new normal’ luxury companies have to understand the evolving expectations of consumers, their changing preferences and priorities. Luxury companies that restructure their business processes, relook at their value chain, rework on their product portfolio, redesign their distribution channels and redefine their communication strategies to embrace the new needs of the consumers will certainly emerge as champions.

Note: This article has been previously published in Indiaretailing. Com

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Going Digital: The only option for Indian Luxury Market

For a long time, luxury brands from Rolex to Rolls Royce and Louis Vuitton to Lamborghini, have been facing ‘Internet Dilemma’ of how to be inclusive and yet maintain an aura of exclusivity. Therefore, this sector has been the last one to embrace digitization. But, with the outbreak of Covid-19, the rules of this industry are certainly bound to change.

Covid-19 is wrecking a severe blow to luxury sales globally and India is no exception to the same. Luxury market, although rapidly growing in India, is still at a very nascent stage and thus, unforeseen events like this pandemic is forcing luxury brands to take steps in all fronts to keep the industry growing. One such step which brands have relatively ignored over the years is online luxury retail.

We all know that luxury is one of the most difficult and challenging sector to replicate offline purchase experience in the digital realm. The task of creating unique, magical and unparalleled shopping experience online for luxury brands is a long, challenging path that luxury brands in India must navigate in order to remain afloat during these troubled times.

The key question that keeps coming in the mind of luxury entrepreneurs and professionals – how luxury brands pursue the digital path? To answer this question, we need to first understand psychology of luxury consumers and their purchase behavior. In the past we have seen during other crisis that luxury industry has been the first one to be affected but also the first to bounce back. It is simply due to the phenomenon of ‘Revenge Buying’ – an increase in consumption due to forced abstinence. We have seen this phenomenon recently happening in China where Hermes achieved a record single day sales of $2.7 million during the reopening of their flagship store post Covid-19 lockdown.

So, can this phenomenon occur in India as well- Absolutely Yes! After witnessing this deadly incident so closely, ‘YOLO’ (you only live once) will be the reason for irrational spending behavior of the new age consumers. The number of luxury shoppers driving this spree may be limited but those who will buy will possibly overspend as they get the opportunity to splurge for the first time after so many weeks.Also, millennial population will be more inclined to do digital shopping rather than visiting physical stores. The fear factor of getting virus at crowded places will force the luxury buyers to focus on online luxury shopping more than ever before.

However, easier said than done, the route towards digital for luxury brands in India require lot of strategic thinking and tactical plans. The task of replicating unique, personalized luxury buying experience offering in offline stores will require investment in world class digital technologies- ranging from augmented reality/virtual reality to artificial intelligence, data analytics and so on. Tools like 360 degree viewing, virtual dressing room, etc. are some of the latest must-haves that brands will need to incorporate for successful digital retail foray. In addition, the humanistic element should be intertwined cleverly with digital tools to make consumers feel pampered and well attended during their purchase experience.

We all know that Indian consumers primarily buy luxury goods to show off or their luxury purchases are motivated by significant others. As per recent research, 57% of Indian consumers shop via social media compared to 30% global average. Hence, luxury brands should use social media to their best use and deploy all tactics to integrate social commerce in their digital strategies. 

The brands will also need to be very selective and focus on the digital communication, online public relations and allied content strategy. Today, consumers are becoming increasingly concerned about sustainability and environment, focused on frugal lifestyle and avoiding discretionary expenditure. Hence, companies need to clearly deliver their commitment towards sustainability element in their brands and long term value proposition over generations for luxury buyers. Indians are value conscious buyers and events like Covid will make them even more concerned about the value derived from purchases. Hence, it is critical to understand these idiosyncrasies of Indian luxury consumers. 

As per the recent McKinsey Report, India is home to the second largest digital base in the world. From the current around 600 million internet users, it is projected to reach 800 million internet users by 2023. With democratization of internet, rising number of HNIs, increasing brand consciousness and growing number of new age consumers, the online luxury market in India is ready to bloom. The time is ripe for Indian luxury brands to wake up and take the digital route. Digital is the way forward but the path towards digitization is full of challenges, yet rewards are attractive enough to navigate this challenging path. Take the right steps, get your act together and establish your presence in one of the world’s most rapidly growing luxury market.

Note: This article has been previously published in ET Retail.com

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Implications of Covid-19 for Luxury Industry in 2020 and beyond

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)

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Covid-19: Opportunities in crisis for Indian Luxury Market

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)

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4 Luxury Marketing Strategies to win New Age Consumers in 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)

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6 Major Trends Reshaping the Luxury Retail in 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)

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Unraveling the Indian luxury market in 2030

India is one of the fastest growing luxury markets in the world. The size of Indian luxury market is expected to grow from the current $30 billion to more than $200 billion in 2030. Over the next decade, Indian luxury market is well poised to see positive growth through the economic development, well- being of its people, greater connectedness and policy reforms. It will offer plethora of opportunities for luxury companies to serve the young, affluent, connected and confident Indian consumers.
Here are the 6 major trends for Indian luxury market over the next decade that can help luxury companies to envision the future Indian market.
1. Millennials will be key luxury driver: India is one of the youngest populations in the world and it will continue to remain till 2030 with average age of 31 as opposed to its Western (40 in the USA) and Eastern (42 in China) counterparts. India will add more breadwinners to the world than any other nation. This population will be reared in more confident and open India and thus, will aspire to live a better life and splurge money on discretionary items, unlike their previous generational cohorts. Looking ahead, this favorable demographics will drive strong luxury consumption growth.
Note: This generation will want luxury to be more meaningful and reflect their individuality and values rather than just being a symbol of status.

2. Rise of Gen Z: By 2030, India is estimated to have around 370 million Gen Z consumers between the ages 10-25. For them, digital will be the ‘new norm’. They will embrace tech-driven consumption models. They will have a distinct set of values and beliefs as compared to Gen Y. This segment will redefine the rules of the luxury market. Luxury companies need to pay close attention to this cohort as they will be the influencers for future. Gen Z will choose brands that are ethical, socially responsible and transparent. They will look for more brand interaction and will have greater influence of social media than traditional marketing channels while making purchase decisions.
Note: Luxury companies should work towards development of technologies such as IOT, AI and VR to be able to provide more opportunities to new-age buyers for brand engagement.

3. Growing middle class: It is predicted that middle-income households will grow from 158 million in 2018 to 300 million by 2030 (World Economic Forum, 2018). Upper middle-income households will drive 47% of total consumption as opposed to the current 30%. Over the next decade, 80% of incremental spend will be driven by middle-income consumers. These consumers will particularly climb up the ladder and demand for better products and services. Therefore, luxury companies should offer huge variety of ‘masstige’ brands in categories such as apparel, accessories, watches, handbags and personal care products. Also, spending on entertainment, health and fitness, travel and dining out will substantially increase which will provide immense opportunities for global high-end players to penetrate in these segments in India. For instance, a recent research by Bain PRICE estimated that dining out could well be a $400 billion opportunity in 2030.
Note: Luxury marketers cannot ignore middle-class consumers as they will be the growth engine of Indian luxury market

4. A more connected India: In India, internet users are expected to increase from the current 627 million to around 1.1 billion by 2030, as per the recent report by World Economic Forum. It will produce more informed consumers who will appreciate brands to be more transparent. Democratization of internet access will provide huge opportunity for luxury brands to reach consumers in interiors of India which otherwise would have been a great challenge for luxury brands to tap such a dispersed and fragmented Indian market.
Note: In future, e-commerce will play a major role in bringing luxury in the forefront.

5. Luxury going to smaller towns: As per recent report by World Economic Forum, India’s top 40 cities will constitute of $1.5 trillion market by 2030. With the increase in purchasing power, urbanization, brand awareness, brand consciousness, social media, easy access and aspirations, Indian consumers residing in large as well as small towns will be willing to spend more on luxury items. There will be tremendous change in consumers’ outlook and purchasing patterns. From high-end luxury automobiles, upscale restaurants to affluent lifestyle brands, there will be ample demand coming from different segments across India.
Note: Luxury companies looking for growth will require to reach a highly spread continuum of large and small towns.

6. Tech-led Business Models: New business models driven by technology such as rental services, subscription models, etc. will be future business models in India. As per a report by PricewaterhouseCoopers, the rental market will reach $335 billion by 2025 globally and Indian share is estimated to be around $35billion. Young consumers believe in ‘usership’ than ‘ownership’. They seek for experience, convenience and variety. Therefore, more and more such users will favor sharing economy. Startups like The Clothing Rental, Flyrobe, The Stylease, Rent it Bae, etc. see huge growth potential across India for such models in future.
Note: With evolving consumer attitudes and high internet penetration, luxury consumption on sharing basis will be next big thing in the Indian market across categories including watches, apparel, bags and automobiles, to name a few.

As per Euromonitor Report, 77% of India’s populace will include millennials and Gen Z in 2030. These young, affluent, tech-savvy and buoyant consumers will pave the way for further innovation in products, services and business models in luxury realm.

(This article has also been published in indiaretailing.com on 25 October 2019)

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5 Keys to provide great Luxury Customer Experience

In today’s competitive world, undoubtedly, consumer is the king and companies need to exceed consumer expectations to create loyal customer base. Technology driven global leaders such as Apple and Amazon have raised the bar of consumer purchase experience by providing excellent customer service, convenience, vast variety, on-time deliveries, free returns and what not. Luxury industry is no exception to this phenomenon and increasing consumer expectations from luxury brands makes it imperative for them to understand consumer psychology to thrive in the dynamic luxury retail environment.

For luxury brands and retailers, understanding the luxury consumer journey is most important to be able to deliver best to these well-versed, discerning consumers. It is about knowing what exactly your consumer wants and being able to provide that and much more. Luxury retailers must work to make consumers’ shopping experience a seamless journey. Every time when consumers interact with luxury brands, it is important for retailers to make them feel delighted. This will create customers for life and maximize customer lifetime value for luxury brands. Just think about the last time you stayed in a luxury hotel or shopped at a luxury store or took a ride in luxury sedan or visited a gourmet restaurant or ordered something on a luxury portal. You will certainly have some memory about how you felt about the entire experience. Did you loved the experience or hated it? Was it worth your time and money?

Happiness research reveals that retailers need to trigger emotions of shoppers not just during the time of actual purchase but also during pre-purchase and post-purchase phase. It requires putting the customer at the center of the entire consumer purchase journey and providing flawless experience across all touch points. Personal relationship built on trust should be at the heart of every customer transaction.

Here are 5 keys to provide great luxury customer experience:

  • Hyper-personalization: Luxury companies should use technologies like artificial intelligence enabled consumer data analysis to improve hyper-personalization in terms of product, promotion and shopping experience both in-store as well as online. For example, luxury Brands like Gucci and Valentino are using AI which help sales associates to recognize customers, greet them by their name and provide personalized recommendations based on consumers’ preferences and past purchase history. Sephora also uses AI technology to allow users to upload their picture and virtually apply makeup and visualize how products would look on them. The chosen products can simply be purchased via mobile, thereby making the whole purchase experience seamless, convenient and highly satisfying.

Similarly, live chat can provide real time assistance to the online luxury buyers making them feel important. Such engagement will boost consumers’ confidence in brand and refrain them to move to competitors’ brand. A recent study has found that shoppers who are engaged through live chat are 4.73 times more probable to convert and they can spend nearly 60% more than those who are not engaged.

Note: Technologies like AI and live chat are providing a new opportunity for luxury brands to offer better and seamless customer experience both online and offline. But, at the same time, technologies such as blockchain should be used to ensure data integrity and privacy.

  • Unified customer insights: Luxury companies should draw unified insights related to consumer profile from all channels such as social media platforms, brick and mortar stores, online stores, website, etc. This will help them in providing unmatched customer experience. For example, omnichannel brands are using online consumer behavior to make decisions regarding their in-store assortment. A Nike concept store in Los Angeles has furnished bright-colored products in their store based upon the data acquired from consumers’ digital footprint.  A 360 degree view of customer insights across touch points will permit luxury retailers to develop more captivating, discerned offers and deliver more meaningful customers experiences.

Note: Luxury retailers need to consciously invest in data driven analysis of in-store purchase behavior which will be the key in providing better customer experience in the future.

  • Customer feedback: For luxury companies, it is very important to get honest customer feedback regarding service, product assortment, physical environment, salespersons’ attitude and overall consumer experience. For instance, once a consumer is through with the purchase and making the payment or is checking out of the hotel, he/she should be requested for feedback preferably on a platform which is easy to measure. (Since most of the times either luxury brands don’t have consumer data or even if they have, it is in the form which cannot be measured and so it is useless). This will help brands to gain valuable customer insights and accordingly design strategies to provide frictionless consumer experience in the future.

Note: Luxury brands must quickly act based upon customer feedback as if they will not care about their customers, they will lose their customers forever.

  • Invest in customer service training: Regardless of the growing ecommerce business, physical stores and sales associates remain central to the success of luxury companies. Luxury sales associates have the power to transform transaction-led business into emotion-based relationships. As per a recent research by US based Luxury Institute, more than one-third of affluent consumers globally reported helpful sales associate as a prime reason for buying a particular luxury brand. More than 50% of opulent consumers mention product-related expertise as a key characteristic required by luxury sales associate followed by trustworthiness, courteousness and helpfulness.

Note: No matter how significant technology becomes in providing superior customer experience, role of sales associate will always remain most important.

  • Building micro-moments: Luxury brands claim that they are in the business of creating dreams and making them true. Therefore, brands must surprise and wow their customers again and again. Marketers must amaze their consumers by doing something which they least expected. For instance, sending a small gift with a hand written note wishing them on their birthday or giving a little freebie with their order just to make them feel special or simply inviting loyal customer to an exclusive VIP sale to make the customer feel part of the elite community.

Note: Small things like a handwritten ‘thank you’ note after the purchase can create a ‘wow moment’ for consumers. So take the extra step to thank them, put them in the limelight and make your brand more memorable and special for your consumers.

In today’s disruptive environment where everything can be copied by your competitors, unarguably the best way to win is- offering a ‘wow customer experience’. This is a most powerful moat to drive sales and develop eternal brand.

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How to develop a Sustainable Fashion Business

The world is steadily moving towards sustainability. In fact, sustainability is well-poised to be the new normal. Now-a-days, veganism is a growing trend, battery driven vehicles are talk of the town and ethical fashion is a buzz word. High-end fashion labels are all of a sudden trying to reestablish themselves as ‘organic’, ‘green’, ‘cruelty-free’, ‘eco-conscious’ and ‘honest’. They have realized strong need to change their business models to succeed in the new paradigm. However, the path towards sustainability is not easy. The key question that haunts everyone is: What fashion brands need to do in order to evolve them as a sustainable brand?

Today’s discerning young consumers are much more aware and concerned about the environment as compared to their previous generations. They have refined tastes and preferences and are willing to spend more on quality products. They are not just fashion conscious but are also intrigued in knowing more about what goes behind creating a particular product. They want to know: Who makes their clothes? What are the materials used? How the materials have been sourced? Are fair trade practices implemented to create the product? What dyes are used and what is the social and environmental impact of the clothes produced? According to Sustainable Fashion Blueprint Report, 2018, sustainability is considered as one of the key factors while purchasing fashion products by the consumers. This clearly reflects the increasing awareness among consumers about sustainability as well as growing concern for sustainability in consumer decision making process. This poses great challenge for the companies to redefine their long-term strategies to fulfill consumers’ call for ultra-transparency and sustainability in the way they operate.

Here are the three most important things that are necessary to develop a sustainable fashion business:

Entrepreneur mindset

Even though creation of sustainable brand has lot to do with resources, but it is more important to have a mindset or willingness that goes a long way in creating such brands. Entrepreneurs’ beliefs are vital while framing an organization’s strategy and are manifested in their priorities, resulting in organizational process and outcomes. The perfect example of this fact is Stella McCartney, who is a role model for sustainable fashion. In one of her interviews, she stated “We really don’t have long now, to change things. But I honestly believe it’s doable – I couldn’t do what I do if I didn’t believe that”. Her eco-friendly ethos has led to disruption in the fashion industry. She has partnered with suppliers to introduce innovative textiles, from leather alternatives to recycled marine plastic and yeast-based silk. Recently, she has made the world’s first fully recyclable hoodie for her Adidas collection through collaborating with textile innovative company Evrnu. They used 60% NuCyclfibre, a material made using the threads from old garments and 40% organic cotton that has been diverted from landfills.

Remember: In order to implement sustainable fashion principles, the most important point is the strong urge to create an ethical product. Unquestionably, entrepreneur need to make long-term commitment and allocate dedicated budget. Use of technology like block chain; networking and partnerships with other actors; certification like Fairtrade, GOTS, etc. and learning by example from early adopters will act as key enablers in the process.

Organizational values

By having intensive knowledge about the value chain and the key influences at each phase, an organization can begin to start its sourcing, design, production and distribution in a more ethical way by considering its impact on people and planet. An environment of transparency can be developed across the value chain. For instance, global luxury group Kering, which owns brands including Gucci, BottegaVeneta, Saint Laurent, Alexander McQueen, to name a few, aims to develop 100% transparent and responsible supply chain by 2025. In 2013, the group developed Material Innovation Lab (MIL) dedicated to ethical material.Through collaboration with start-ups and academia, the group has developed new sourcing solutions and innovative raw materials. 

Remember: Sustainable initiatives should be fostered both internally and externally. Internally, fair trade practices (e.g. fair wages, proper working environment, etc.) should be followed and employees should be incentivized to encourage the adoption of sustainable practices throughout the supply chain. Externally, partnerships and collaborations with innovative start-ups should be promoted that will help an organization in reaching their sustainable goals.

Education

Sustainability efforts are not gaining strong traction among end-users owing to several factors such as lack of awareness and knowledge as well as lack of visibility and availability of sustainable products. Premium prices and limited styles also deter consumers who make an effort to try sustainable products. Brands need to patiently and diligently educate consumers about why their products are priced more, why they should care about the materials used and its environmental and ethical impact. Consumers should be motivated to buy less and learn to choose quality over quantity. Social media and other tools can be used to promote awareness about sustainability among vendors, consumers, etc. Also, there is a strong need to educate fashion entrepreneurs about strategies to implement sustainable supply chain practices.For example, Kering provides training to new-age designers. The group has partnered with universities across the globe to design sustainability curriculums. 

Remember:Education can play a key role in bringing change in the attitude of future designers, employees and customers. It can help enlighten the issues of social and environmental sustainability and encourage them to adopt green practices.

Businesses that can address these challenges can surely leap ahead in the sustainable fashion goods industry. They need to redesign their traditional business models to create a sustainable fashion business.There is great opportunity for businesses to move towards a more conscious
approach to fashion and help drive a shift to a more circular, sustainable industry.

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Sustainability: New norm for Luxury Fashion Industry

 Recently, a paradigm shift has been witnessed in luxury domain.  There has been increased pressure on luxury companies to adhere to sustainability from not only government, media, NGO’s but also from the growing number of ethical luxury buyers. As the number of well-educated, socially responsible, affluent, global elite is rapidly rising, the concept of sustainability is becoming top priority for luxury brands. Today, global luxury consumers, especially millennials, expect companies to act responsibly. According to a 2018 study performed by McKinsey & Company in association with Business of Fashion found that 66% of millennials are willing to spend more on brands that focus on sustainability initiatives.

In the past few years, sustainability value has derived importance in buyers’ purchase decision.  Luxury buyers want the brands they use to reflect their concerns and aspirations for a better world. There has been a transformation from ‘conspicuous’ to ‘considered’ consumption, from ‘what you wear’ to ‘who you are’, within conscious luxury consumers, leading to rising consumer demands for product traceability, supply chain standards, product authenticity and quality. They want luxury brands to focus on moral issues related to luxury products and have convincing answers to questions of environmental and social responsibility. Therefore, many luxury fashion brands are working towards redefining their business models with the focus on reducing social and environmental problems through the use of progressive production methods and innovative textile inventions. They are using environment-friendly raw materials, like organic cotton and natural dyes, for instance, the leather of a Dior handbag is attained from Italian bio farms. Many organizations are also using recyclable packaging to ensure circular luxury processes.

Few luxury fashion retailers including Prada and Armani are retaliating to the rising consumer demand for making the value chain transparent and sustainable.  Eileen Fisher, an American clothing designer is disrupting the linear production model of take-make-use and dispose. She uses recycled fabrics and give new life to old textiles and discarded garments. Fisher has collaborated with numerous environmental conservation organizations and local artisans with a motive to support planet and people.

A recent study by the Ellen MacArthur Foundation reported that 73% of 53 million tons of garments produced every year ends up in landfill or incinerated. Sustainable consumption act as stimuli among luxury buyerswhowant to feel good and not guilty, when they are purchasing a certain luxury brand. Luxury warrants a psychological cost categorized as ‘guilty pleasures’ which might lead to negative emotions after the purchase. Therefore, growing number of consumers are buying sustainable luxury products to experience ‘guilt-free’ enjoyment. Millennial aspire to rationalize their luxury buying by contributing to social ‘well-being’.

It is a known fact that luxury industry is lagging behind other industries in creating and fostering sustainability. The Danish Fashion Institute (DFI) has pointed out fashion as the second most polluting economic sector after oil business.  Considering the gravity of the situation, luxury industry is progressing towards sustainability as luxury consumers seek for superior quality products which provide no harm to environment. Few luxury fashion brands like Burberry, Gucci and Stella McCartney have set examples for others.

The British heritage label, Burberry, last year took a pledge to stop destroying unsold clothes, which it previously did as a way to preserve its exclusivity. Burberry has partnered with sustainable luxury company Elvis & Kresse to convert 120 tons of leather offcuts into new items. It is also working to drive industry wide change to move towards zero discharge of hazardous chemicals (ZDHC) in the textile supply chain.

Similarly, Gucci, in its effort towards sustainable development, has recently launched Gucci Equilibrium, an online platform designed to connect people, planet and purpose. In October 2017, it made announcement that no fur will be used in any of its collections. It is also working towards creation of new natural materials.

Another example is Stella McCartney who is known for eschewing leather, fur and feathers in her collection. She has created an alternative to leather, made from mycelium- the root structure of mushroom. McCartney is continuously working on redefining fashion through the use of cutting edge technologies and sustainable materials like reengineered cashmere, ethically sourced wool, organic cotton and recycled textiles. She has aligned with various NGO’s such as Parley for the Oceansand Fashion Positive, to bring awareness among the people about how our clothing choices impact the world in which we live.

As we look forward, it is evident that there is a considerable risk to luxury brands that are resistant to invest in people and planet. Therefore, luxury companies should work on reshaping their business models to make it more ethical. Embracing sustainability will provide them with opportunity to enhance their brand image and reputation and possibly create additional value and gain competitive advantage over the other brands.

Though luxury and sustainability appear to be antithetical to each other, but luxury fashion brands must put efforts to reposition themselves as ‘the care taker of mother earth’ to establish a positive brand image among the new luxury buyers.  By 2050, the global economy is predicted to use three planets worth of resources annually. To change that trajectory luxury brands must commit to use less water, leave less fabric waste and emit less carbon. They must invest in renewable energy, innovative technologies, alternative ethical materials and empowering communities.

(This article has also been published in Textile Times in the month of May, 2019).

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Decoding the Millennial Mindset for Luxury Brands

Millennials are the next rulers of the luxury market. They are more likely to spend more on luxury items as compared to the previous generational cohorts. Millennial consumers are projected to account for 50% of the luxury market in 2025 as compared to the current 32%. They are of significant interest for luxury brands as they tend to provide better lifetime value and brand loyalties. These new-age audiences neither follow celebrity trends nor believe in mindless consuming. They are much more demanding, selective and discerning than their parents and grandparents. Since, millennials’ beliefs and core value structure are significantly different from their prior generations, therefore, it becomes imperative for the luxury marketers to understand ‘millennials’ mindset’ and develop innovative approach to entice this lucrative market segment. Here are the 5 key characteristics of millennials which will help luxury brands to establish better connect with this peculiar group:

  1. Purpose-driven: Traditionally people have been buyingluxury brands for its history, craftsmanship, image, exclusivity and superior quality. As per Deloitte survey, these are no longer selling points for millennials. This generation look for purpose, transparency and genuineness. Millennials show greaterconcern for people and planet. As per Nielsen report, 73% of millennials are willing to spend more on a product if it comes from a sustainable brand. They demand for sustainable options that reflect their own values and beliefs. For example, Gucci has been able to pull its sales by winning the trust of millennials through its purpose-driven, ecologically progressive program, ‘Gucci Equilibrium’. Similarly, Adidas is focusing on purpose-based brand creation with emphasis on reducing waste and environmental impact. It has created ‘sustainable sneaker’ by utilizing eco-friendly items. Therefore, luxury brands must exhibit that they stand for a purpose and not just for profits. They can create a niche for themselves by promoting sustainability and ethical business practices.
  • Loves to spend: This market segment spend lavishly on discretionary items, without much consideration about their debt levels. Unlike their parents, they are less motivated to save and therefore have greater disposable income. They believe in instant gratification and ‘living in the moment’. Therefore, in 2017, young consumers accounted for 50% of Gucci’s profits.

Millennials prefers to spend more on experiences instead of products. They are willing to pay premium for comfort or services, particularly, opulent millennials who spend more for VIP experience like a gourmet private chef and golf-cart chauffeur service. They look for personalized experiences or products that are either exclusive or specially designed for them. For example, Louis Vuitton offers a monogramming or hot stamping service for their items which provides shoppers an opportunity to make their own unique product by adding their initials. Therefore, luxury brands must provide unforgettable experience or product that resonates with millennials’ self-expression.

  • Open to experimentation: Millennials are likely to try something new if it reflects their personal values and passions. They are open to experiment alternative business models thathave emerged in the luxury fashion industry such as luxury renting, luxury fashion libraries, luxury resale, etc. These new concepts provides members an opportunity to try different styles and looks without having to pay full price. Young luxury consumers don’t want to bind themselves to a single product, rather they want to enjoy the flexibility to try new items more frequently. In addition, short-term rentals gives them opportunity to flaunt and express themselves. For instance, if they want to show –off their discerning taste with Rolex or Bulgari watch but they can’t afford it, they can simply rent it. Therefore, embracing new-age focused alternative business models such as luxury fashion ‘recommerce’ can provide a way forward to luxury companies.

Millennials are embracing collaborations as they consider it ‘cool’. Collaborations like Louis Vuitton with Supreme; Chanel with Pharrell Williams; Gucci with Dapper Dan, have been highly valued by millennials. Thus, to succeed, a brand needs to provide millennials an experience instead of simply a label.

  • Tech-savvy: Millennials have been identified as first high-tech generation and they embrace new media much more than previous generations. Digital experiences are most important to this segment and luxury brands cannot afford to ignore this fact. They need to create emotional connect with them and build online shopping experiences to access young shoppers in their natural habitats.

Millennials appreciate personalization, interaction and co-creation. Unlike, previous generations. they are not passive consumers. Mercedes Benz’s ‘Take the wheel’ campaign is a perfect example of creating brand story by empowering and engaging millennial shoppers. A challenge was given to 5 Instagram best photographers to spend 5 days each behind the wheels of Benz CLA. Each photographer posted pictures on their account and the one with most likes was gifted the car. The campaign generated 87 million organic impressions on Instagram and more than half a million mentions on Facebook and Twitter. Therefore, luxury brands should utilize social media platforms like Instagram to provide savvy millennials a feeling of ownership over brand story.

  • Signal public self-consciousness: Millennials with high propensity to spend money, combined with goal of signaling fashion consciousness and status to other people, makes them an attractive segment for luxury brand companies. They spend unduly on high-end brands and this needless spending is possibly due to their desire to own luxury items to augment their social status. From handbags to hotels, this generational cohort has keen interest in status symbols. Therefore, luxury brands should stress on social cues to attract this audience.

Luxury brands must decode ‘millennial mindset’ and accordingly create new marketing and branding strategies to allure this most significant market segment.

(This article has also been published in ET Brand Equity on May 19, 2019).

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Strategies for brands to succeed in Indian Luxury Market

Indian luxury landscape is rapidly evolving. With rise in middle class population and increase in disposable income, demand for luxury goods has expeditiously increased in India. Be it Canali’s nawab suit, Chanel’s tote bag or Balenciaga’s clutch, luxury goods are flying off Indian racks. Ralph Lauren launched its first store this year in New Delhi’s luxury mall- DLF Chanakya and brands like Alexander McQueen and Saint Laurent are all set to have their first standalone stores in India by mid of this year. Indian luxury market is expected to grow tenfold in the next decade from the current US$30 billion to US$ 180 billion by 2025. However, India still lags far behind other developing economies like China in terms of its share in the global luxury market. India is a culturally diverse nation with varied languages, religions, food, music, dance and customs. With such diversity, Indian luxury market provides huge set of opportunities as well as challenges to luxury brands. Therefore, it is critical for luxury players to understand idiosyncrasies of typical Indian consumers to successfully serve this lucrative and growing market. Here are four key strategies for luxury brands to succeed in the complex Indian market.

Understand Indian buyers: Indians perceive luxury brands differently. Their values, beliefs and attitude towards luxury vary significantly from their western counterparts. Luxury goods are mainly purchased for personal or social orientation. Indians buy luxury primarily for social gratification. They go for loud brands and signal their status through luxury consumption. Therefore, marketers must highlight on symbolic value derived from luxury brands to gain traction from Indians.

Indians are extremely value-conscious buyers. They are now well-travelled and educated and therefore aware of offerings available in rest of the world. They want full product mix, latest variety and style without having to pay a premium for it. They compare the product and prices across markets and cease the best deal. Therefore, luxury brands must make sure that they maintain parity while catering to Indian market.

Indians, even today are skeptical about buying luxury brands. For instance, they may buy gold worth million dollars at the spur of the moment but when it comes to spending the same amount on luxury brands, they may consider it as a wasteful expenditure. They look for value of raw material and potential resale price while making their purchase decisions. However, with greater exposure towards the international luxury brands, this mindset is gradually changing. Luxury marketers need to raise brand awareness among Indians. They may hire opinion leaders, influencers or Bollywood stars to promote these brands. For example, Shahrukh Khan’s association with luxury watch brand Tag Hueur has been a great success.

Entice young luxury shoppers: Demand for international luxury brands is rising among young Indian consumers with increased access to internet, overseas travel and growing discretionary incomes. Millennials are the next rulers of luxury market. They are experimental, discerning and demanding. Luxury brands can no longer use standalone platform to attract and engage these consumers, they have to provide them seamless bespoke experience which is consistent across all platforms. Young consumers choose social media to stay updated, therefore, a strong social media presence is key for success of these brands. Marketers should unleash the power of social media to tell their brand story and engage consumers to tell their own stories of brand interaction.

Invest in sales personnel: Sales personnel are the brand ambassadors who serve as the face and voice of the organization. They interact with the customer and make or break the brand in their eyes, hence luxury companies should put sincere efforts to empower and enrich their employees. They should be trained to understand what the brand stands for, its DNA, history and heritage so that they can rightly pitch it in front of customers

Focus on innovation: As quoted by Peter Drucker, “Because the purpose of business is to create a customer, the business enterprise has two—and only two—basic functions: marketingandinnovation.”

Age-old luxury brands known for their history have been reluctant to embrace technology. Today, luxury brands need to be innovative to gain attention of new luxury consumers. It is through innovation that these companies can extend existing products and invent new products suitable for Indian customers’ need and wants. For example, Mercedes Benz introduced compact luxury hatch back A class, particularly for Indian market to attract aspirational buyers. Further, innovation is the best way for luxury companies to create space for themselves in competitive Indian market. For example, they must work on advanced real time data or AI based analytic tools to make informed decisions about their target customers

To conclude, to be successful in Indian luxury market, brands must innovate continuously with an enthralling brand story, a clear approach and a system to deliver a consistent, notable experience for consumers.

(This article has been published in Fibre2Fashion on 20 April, 2019).

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7 Tactics for Luxury Sales Associates to turn Prospects into Brand Advocates

Luxury retail landscape has undergone radical changes in the past few years. Thereby, it makes it imperative for luxury retailers to shift their focus from product to impeccable service; from selling to offering personalized experience; from providing consumer satisfaction to giving them ‘wow’ moment at each touch point; from being exclusive to being inclusive; from providing delayed gratification to offering instant gratification; from store associate to a story teller, expert and advisor; from happy visitor to loyal customer and brand advocate.

The convolution of modern retail sales process along with ever-changing business environment scenario makes it essential for luxury brands to empower and enrich their sales associates. Following are the 7 tactics that will help luxury sales associates to convert their prospects into brand advocates.

  1. Know your customer: Knowing what is vital to clients, their expectations and the role of luxury brands in their lives may help sales associates to develop deeper connect between clients and the brand. Have knowledge about your clients’ profile to provide personalized services and recommendations. Empathize your clients, listen to their specific needs and develop a personal bond with them. It is very important to engage customers, assist them and greet them as a distinctive guest.

Remember: Luxury customers want to be treated special.

  • Know your product: Pay attention to intricate details of your products. Make sure that each product has a story to tell and purpose to define. When customers resonate with these stories, they may understand the luxury brand DNA and brand promise which may create customers for life. Educate your clients on full range of merchandise available or else, you may undersell them. Let your clients decide what enthuses them rather than you limiting yourself or your clients.

Remember: You represent the best and you must be your best to sell it to clients.

  • Know your competitor: Do thorough market research and have knowledge about the industry’s best practices. Benchmark direct and indirect competition, identify improvement areas and enhance consumer’s experience. Focus on continuous learning as what is relevant today may not be relevant tomorrow.

Remember: Luxury clients are most discerning and well-equipped.

  • Develop interpersonal skills: Greet your clients with an enchanting smile, offer genuine help and assist them in finding the right product.  Build one-to-one individualized relationship with your clients. Be confident in reaching out to them in a way that makes them excited to hear from you. Keep a constant touch with them at every connect point through use of gifts, emails, letters, etc. and remind them of being special. Be passionate and show your enthusiasm.

Remember: Right attitude is key to selling luxury

  • Curate unique experience: Create a memorable experience at each step of customer journey, right from the point they enter into the store to initiating the sales process, from product demonstrations to closing the sales, from product delivery to post-sales follow up.

Remember: People may not remember what you said, what you did but they won’t forget how special you made them feel.

  • Make suggestive selling: Develop rapport with your clients and seek for ways to suggestively sell additional products to them. Don’t pressurize customers or hard sell but also don’t confine yourself to just one product that customer asked for. For example, if your client is looking for a shirt, why not recommend him a matching trousers or a pair of shoes to complement it. It might interest your client.

Remember: If you don’t pursue, it could be a missed opportunity for you.

  • Adapt new technologies:  Use CRM tools and advanced technologies to provide exceptional customer service. These tools will enable you to get access to intricate consumer details not just about their birthdays and anniversaries but also their previous purchased items, their preferences, prior visits, social media handles, etc. It will empower you to effortlessly create seamless shopping experience for your esteemed clients.

Remember: In this digitalized era, you cannot ignore technology.

(This article has also been published in Luxury Daily on Feb 4, 2019).

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Next Frontier of Luxury Retail

Digital disruption has changed the norms of the traditional luxury retail industry. It has resulted in a radical shift in consumer shopping behavior, their beliefs, and expectations. Consumers live online today, even while they are inside physical stores. They have become more demanding than ever. Their growing need for ease of shopping, prompt service, and personalized solutions has left retailers with the only option, ‘either go digital or die’. It has become imperative for retailers to redefine their traditional business models, embrace digitization and unleash tremendous opportunities provided by emerging new ecosystems.

In today’s complex business environment scenario, luxury retailers need to work towards re-inventing consumers’ shopping experience by understanding their pain points, needs, desires, and aspirations. Retailers should embrace technologies such as blockchain, artificial intelligence, smart sensors, computer vision, chatbots and facial recognition to solve problems like counterfeiting, delayed check-outs, queuing, product navigation, waiting time for product returns, delays in online order pick-ups and late order fulfillment.

Just as e-commerce giants like Amazon and Alibaba offer remarkable online consumer experiences, luxury retailers are trying to curate lifetime memories for consumers through facilities like spas, beauty salons, personal styling classes, coffee houses, restaurants, fitness facilities, cookery sessions, wine bars, theaters, and art gallery. Top brands such as Gucci, Tiffany, and Chanel are giving shoppers better reasons to stick around longer and engage with the brand through coffee and caviar. High-end brands like Ralph Lauren are using smart mirrors to help consumers see how they look in different dresses and lip shades without actually putting them on. Rebecca Minkoff’s store in New York features an interactive video wall and self- checkout.

Brands like Ralph Lauren and Polo are using interactive fitting rooms to engage consumers. It uses RFID technology to recognize the product a consumer brings inside the fitting room. The mirror shows other available colors, cuts, and sizes for each product. It also makes suggestions based on the item a consumer has brought in and also enables consumers to do social media sharing. In addition, the consumer can change light settings and avail language options. A ‘call an associate’ button connects the consumer with a sales associate who gets all that a consumer has asked for. It provides consumer access to the entire store and the associate just being inside the fitting room. This is how technology is helping the companies to blend physical and digital channels to reinvent in-store shopping experience.

Millions of people visit luxury stores and once they exit from the store, there is no way to trace them. Technology is helping brands to replicate the concept of e-commerce data collection and use this data to make informed decisions. The trail of digital data that consumers leave behind is used to engage, inform and provide tailored offers to them. As soon as a consumer (X) enters into the store, through data analytics, he /she is addressed as, “Hi X, how are you doing”? It’s all about bringing what consumers expect on digital into the physical. Retailers like Neiman Marcus and Burberry have leveraged data analytics and smart technology to provide personalized product recommendations based on shoppers past purchase behavior and predefined preferences. Burberry has been successful in introducing an array of digital experiences into its physical store, created to replicate the online website experience. It includes magic mirrors, live 3-D streaming of runway shows and RFID tags that gives access to interactive digital content which has greatly helped the brand to boost its performance.

Although, digital channels have undeniable advantages physical stores still rule the hearts of the consumers with most consumers choosing to end their journeys there. The next frontier of luxury retail will seamlessly merge the physical and the digital to offer hyper-personalized experiences and provide operational efficiencies. Digital channels would reshape store footprints. Most of the tasks done today by store associates including checkout customers, fold clothes, inventory management, open and close store, etc. will be taken over by automated processes and machines. Store of the future will be equipped with a robot- enabled inventory management, AI-generated recommendations and wish lists, touch-less checkout, smart shelves, virtual shopping assistants and smart mirrors to name a few, relieving store associate from mundane tasks to work as a specialist and client’s mentor. Associate will be instrumental in providing a wonderful experience to the consumers and transforming them into loyal advocates and brand ambassador, thereby humanizing the technology-enabled retail experience. Thus, the coming years will be the golden era for consumers, with technology-enabled shopping experiences giving them simplicity, flexibility, convenience, information and pleasure they deserve.

(This article has also been published in ET Retail on Jan 16, 2019).

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Luxury in India: The way forward

Indian luxury market is poised to reach US$ 50 billion by 2020 from the current US$30 billion (Assocham Report). Growing middle class, multiplying millionaires, rapid urbanization, higher disposable incomes, favorable trade policies, burgeoning millennials and social media proliferation are the key drivers fuelling the growth of the Indian luxury market. The Indian luxury landscape is undergoing a drastic shift; from conspicuous consumption to self-indulgence; from buying logo-driven brands to looking for experiential value and product authenticity; from going to physical stores to accessing online platforms; from being limited to upper echelon of society to being democratic; from brand new to pre-owned luxury items; from Bollywood celebrities to social media influencers and from uninformed and loyal consumers to well-travelled, discerning and prudent consumers.

Following are the key trends that will redefine the future of Indian luxury industry:

The roaring digitalization: In India, digitally influenced spending is presently around $50 billion a year and it is estimated to grow ten-fold to $ 500 billion by 2025 (BCG Report, 2017). Growth in internet penetration, convenient payment platforms, efficient logistics, user friendly shopping experience and better value proposition offered to consumers are some of the key factors triggering the growth of online shopping in India. Online luxury shopping is catching fire while putting the role of physical channels at risk. Various international luxury brands are collaborating with premium e-retailers to reap the benefits. As per BCG report, 50 to 60 million consumers are making fashion purchases online in India and these numbers are estimated to double by 2020. Around 70% of premium apparel purchases will be digitally influenced in the near future. Therefore, global luxury players need to rethink their digital strategies.

Younger luxury buyers: India is home to the world’s largest millennial population (AT Kearney Report, 2016). As millennials possess high spending power, they are driving and ruling the entire consumer market. They have greater preference for luxury items as compared to Gen X and baby boomers. They are regularly seeking social media as the first source of information. They crave for personalized and targeted promotions. This extremely valuable cohort provides great opportunity as well as pose challenge to the luxury marketers as this generation is significantly different from their older counterparts. Therefore, it becomes imperative for the luxury marketers to understand this lucrative consumer segment and the values associated with them.

Growth of luxury in emerging cities: As a result of increasing opulence, consumer spending in emerging cities are rising by around 14% per annum whereas expenditures in top tier cities is growing by nearly 12% a year (BCG Report, 2017). For more than a decade, luxury brands have put all their efforts in enticing wealthy consumers in metro cities only. However, sales records clearly depicts that tier 2 and 3 buyers are outpacing their counterparts with respect to their luxury appetite. Emerging cities like Ludhiana and Surat are now among the top 10 markets for luxury cars. E-commerce is providing a further spurt in this phenomenon. Recently, Montblanc’s offering through digital platform Tata CLIQ Luxury attracted first sales from Kanpur, followed by Bilaspur, Raipur, Coimbatore and other tier II cities. For luxury brands to tap this big opportunity, it is important to understand the tier 2 and 3 consumers’ mind-set and accordingly devise suitable marketing strategies.

Offer beyond Product: Today, it is really crucial for luxury brands to offer unique services and exceptional products. There is need for trained store associates who aren’t there, just to ‘hard sell’ but to understand, engage, interact and build long-term sustainable relationship with the consumers. Sales associates should be experts in their domain and encourage customers to ask questions or seek advice. 
‘Wow’ shopping experience should be offered to make the clients feel ‘special’ before, during and after making the purchase. In order to achieve this, luxury companies have to invest in latest technologies and ‘out of the box’ ideas. Burberry offers entertaining and engaging experience to its clients by having large screens and live-streaming hubs throughout its Regent Street flagship store in London. Sephora provides beauty lessons to provide unique experience to its clients. To attract the increasingly demanding young Indian consumers, luxury stores will have to offer more than just shopping. They can enhance shopping experience by having their own cafes, art galleries or even spas in their outlets.

Marrying Physical and Digital: Luxury retailers should offer a seamless, bespoke experience across online and offline channels through omnichannel marketing approach. Burberry offers collect-in-store service, where consumers can browse and select items on digital platform and then go to brick and mortar store to collect those items. Luxury marketers should harness the power of social media for storytelling and engaging the target group.

E-influencers making a mark: Social media influencers are now-a-days proving to be very effective. Today’s consumers trust word of mouth over companies’ advertisement. More than 70% consumers in India are more likely to make their purchase based on social media reference. Furthermore, around 70% of teenage YouTube subscribers trust influencer opinions over traditional celebrities. Therefore, luxury marketers need to invest more on influencer marketing.

Pre-owned luxury goods gaining traction: Second hand luxury goods market is rapidly growing in India as making luxury affordable makes it attractive proposition for value-conscious Indian buyers. Start-ups like Luxepolis, Confidential Couture and Envoged are working in this untapped market and see tremendous growth potential in this segment in the times to come.

Going green: Lately, brands like Gucci, Burberry and Stella Mc Cartney have pledged to be fur free. Indian consumers, particularly millennials are increasingly becoming environment conscious. A recent study by Mastercard revealed that about 70% of buyers in India give importance to ‘green’ and ‘ethical’ while making their purchase. Therefore, luxury brands need to innovate to entice Gen Y who yearn for sustainable produce.

(This article has also been published in ET Retail on December 3, 2018).

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Sustainability key in transition from conspicuous to considered consumption

The word ‘sustainability’ is permeating every industry in the world. Rising concerns about environmental degradation and climate change has forced individuals as well as corporations to embed sustainability as an integral element in their day to day lives. In context of luxury, sustainability is all about conserving the art, culture, traditions and ‘savoir faire’; taking care of people and planet. Although, luxury and sustainability have been long considered as antithetical to each other. The unique characteristics of luxury like rarity, timelessness, heritage, restricted supply, hand-crafted, superior quality, localize production and high prices, links it closely to sustainability.

Lately, there has been increased pressure on luxury companies to adhere to sustainability from not only government, media, NGO’s but also from the growing number of ethical luxury buyers. Today, global luxury consumers, especially millennials expect companies to act responsibly. As per 2010 Havas Media sustainable consumption research conducted with 20,000 consumers in ten countries, 86% of buyers examined sustainability aspects while making purchase decisions. It was also found that 80% of consumers under the age of 35 wanted to go for sustainable option.

In past few years, sustainability value has derived importance in buyers’ purchase decision.  Luxury buyers want the brands they use to reflect their concerns and aspirations for a better world. There has been a transformation from ‘conspicuous’ to ‘considered’ consumption, from ‘what you wear’ to ‘who you are’, within conscious luxury consumers, leading to rising consumer demands for product traceability, supply chain standards, product authenticity and quality. They want luxury brands to focus on moral issues related to luxury products and have convincing answers to questions of environmental and social responsibility.

Sustainable consumption act as stimuli among luxury buyerswhowant to feel good and not guilty, when they are purchasing a certain luxury brand. Luxury warrants a psychological cost categorized as ‘guilty pleasures’ which might lead to negative emotions after the purchase. Therefore, growing number of consumers are buying sustainable luxury products to experience ‘guilt-free’ enjoyment. Millennial aspire to rationalize their luxury buying by contributing to social ‘well-being’.

Luxury, for decades has been used to depict social-self. Traditionally, the desire of ‘buying to impress others’ was considered as the key motivation behind the purchase of luxury brands. Today, sustainable consumption has evolved as a new form of ‘conspicuous consumption’. Consumers are now spending money on ‘green to be seen’.  Their lifestyle and purchases include everything from organic food to bio-dynamic wine to eco-friendly apparel and zero-emission electric vehicles. They are willing to pay premium for sustainable luxury products to display their success and economic accomplishment to the society. With sustainability becoming a new norm, ‘social’ individuals feel secure while buying luxury products labeled as: ‘organic’, ‘sustainable’ and ‘ethical’.

It is a known fact that luxury industry is lagging behind other industries in creating and fostering sustainability. However, few luxury brands like Tiffany, Gucci and Stella McCartney have set examples for others. Tiffany is among the first few companies to restrict the use of coral in jewelry. From sourcing to production, it makes sincere efforts to act ‘responsibly’.  It has created fair wage practices for workers and has custom-built, LEED- certified factory. It has also set its target to reduce greenhouse gas emissions to net-zero by 2050. Similarly, Gucci, in its effort towards sustainable development, has recently launched Gucci Equilibrium, an online platform designed to connect people, planet and purpose. In October 2017, it made announcement that no fur will be used in any of its collections. It is also working towards creation of new natural materials. Another example is Stella McCartney who is known for eschewing leather, fur and feathers in her collection. She has created an alternative to leather made from mycelium- the root structure of mushroom. Most of her collections are made up of sustainable materials.

As we look forward, it is evident that there is a considerable risk to luxury brands that are resistant to invest in people and planet. Therefore, luxury companies should work on redefining their business models to make it more ethical. Embracing sustainability will provide them with opportunity to enhance their brand image and reputation and possibly create additional value and gain competitive advantage over the other brands.

(This article has also been published in Luxury Daily on September 27, 2018).

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Millennials Redefining the Norms of Luxury Industry

Baby boomers have traditionally been the major spenders on the luxury goods across the globe. However, 85 percent of luxury growth is propelled by Gen Y and Z (Bain & Company Report) today. New age buyers are taking truncheon from boomers and disrupting the rules of the luxury industry. With the democratization of luxury and shifts in power and consumer preferences, the meaning of luxury is being redefined. This major shift is driving luxury companies to restructure their strategies to suit the peculiar preferences of new generation buyers. Brands need to understand ‘millennial state of mind’ and develop innovative approach to entice millennial shoppers. As these new luxury buyers are young, more progressive, more discerning, less wealthy and less loyal, it may provide huge challenge as well as great opportunity for the luxury companies. Therefore, let’s take a closer look at these new norms of the luxury industry and its implications for luxury brand marketers.

  1. Shift from Offline to Online: We all know that consumers’shopping journey has seen radical transformation in the last few years. The rise of internet has led to ‘ROPO’ effect which means ‘research online, purchase offline’ or vice versa. According to recent McKinsey report, one fifth of luxury sales globally will take place online by 2025. Therefore, E-commerce should be taken as an opportunity rather than a threat. A holistic, omni-channel approach should be implemented to provide consistent, bespoke purchase experience to the customers across all touch points, be it be offline or online, events, social media, advertising and PR.  The engagement and interaction with customers across these multiple channels should be seamless and in alignment with each other.

As around 80% of the sales would still be coming from physical stores, it is noteworthy that stores wouldn’t lose their purpose. This poses a bigger challenge for retailers to provide immersive in-store shopping experience to consumers as they would only be willing to visit stores if some differentiated experience is provided to them. Therefore, it is critical for retailers to adapt new technologies to create a convergence between online and offline platforms to empower shoppers’ journey.

  • Shift from Possessions to Experiences: A recent research reveals that at least three in four millennials prefer to pay money for an experience rather than a product. They would rather love to splurge on a lavish holiday or buy front row tickets for a concert than spend on purchasing a car or home. Therefore, marketers need to create seamless consumer journey that permits them to buy tickets, attend the show and share the experience across social channels. They should find ways of how more value can be added to consumers’ experience.
  • Shift from Ownership to Shared Economy: Does a $3000 dress still a luxury product when you are renting it for a negligible price? Such questions certainly make the definition of luxury blur today. But, the new luxury buyers are changing the rules of the game. There is a growing trend of pre-owned luxury goods. Why buy a designer dress when you can rent it? Millennials with spending power are reluctant to spend on big ticket items. They rather prefer to live the moment than to own a product. They believe in the concept of ‘shared economy’. This makes it critical for the luxury companies to remodel their conventional businesses to remain relevant for the new age buyers.
  • Shift from Self- Orientation to Sustainable Orientation: There is a visible shift from ‘conspicuous buyers’ to ‘considered buyers’. Today, consumers want to use the brands that care for environment. This makes it imperative for the luxury brands to shift from linear economic model to closed- loop circular model. Companies need to think of not just profits but also be considerate about people and planet. Realizing the importance of this concept, many luxury firms are redefining their supply chain processes and striving to reduce social and ecological problems through the use of sustainable technologies.
  • Shift from Sales Assistant to Virtual Assistant: Technologies likeartificial intelligence, voice controlled shopping and augmented reality are set to act as ‘second sales assistant’. Interactive chatbots, virtual trial rooms and personalized recommendations through apps are emerging as must have tools to lure new-age buyers.

All these shifts are certainly going to reshape luxury landscape, thereby making it crucial for luxury companies to rethink their brand strategies in order to remain relevant in this disruptive business environment. Today, luxury buyers want the brands they use to reflect their concerns and aspirations for a better world. Through the use of technology and innovation, wider range of sustainable options could be created for the new-age luxury consumers.

(This article has also been published in Luxury Daily on July 20, 2018).

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The digital dilemma for luxury

The luxury brands that have trusted upon multi-sensory experiences for ages are now facing digital challenge. Luxury is about uniqueness, rarity and scarcity whereas digitalization is all about breaking boundaries and reaching the masses. The very nature of the two contradicts each-other, making luxury sector reluctant to embrace digital technologies for years. However, as digital platform has become part and parcel of our lives today, luxury marketers just can’t do without it.

New-age technology has revolutionized luxury domain by providing endless opportunities to luxury retailers. Artificial intelligence, augmented reality and voice-controlled shopping are set to reshape luxury retail landscape to make it more customer-oriented. Opulent consumers are expecting effortless and immediate luxury experiences. Voice-controlled ecommerce is enabling luxury brands to provide exceptionally fast service at a minimum cost. Augmented reality such as smart mirrors is allowing luxury consumers to interact and gain appropriate information such as price, materials used or options available, more conveniently. It is facilitating consumers to ‘try’ new offerings at home before buying online. For example, Sephora’s Virtual Artist app assists its users to test makeup products before making virtual purchase.

According to research by McKinsey, almost one-fifth of personal luxury sales will take place online by 2025. Although only a small proportion of luxury sales happen online today but it definitely adds to the offline buying experience. Most of the buyers today explore the product online before indulging in actual buying, either online or offline. Many luxury brands including, Burberry, Gucci, Coach, Louis Vitton, to a name a few, are using digital platforms to establish deeper connect with millennials and providing them with seamless bespoke experience across all channels. They are making huge investments on search visibility, social media marketing, m-commerce and e- commerce platforms. Many brands are extensively using Instagram as sure-fire way of promoting their labels and generating maximum exposure among the youngsters. Instagram has truly been able to engage people through sharing minute details about fabrics, stitching style, designing as well as inspiration behind the collection.

Let’s take a look at the digital initiatives taken by the top luxury brands in the recent past. Burberry launched the first ever “see now, buy now” campaign which was indeed a great surprise for its patrons who were more than happy to buy their dream immediately after the runway presentation. Many others like Tom Ford, Tommy Hilfiger and Ralph Lauren followed the suit. Another one is interactive 3D campaign which enabled customers to design their own Burberry scarves on their mobile handsets and post it on the Piccadily Circus “Curve” screen. Similarly, Chanel has been successful in evoking passion and enthusiasm among people through its engaging YouTube videos. Gucci has been able to pull its online sales many fold times through its easy to navigate, interactive, engaging and fully-functional e-commerce store.

However, these campaigns have gained tremendous success but the big question is: Will the luxury brands known for its rarity and exclusivity lose its sheen by being omnipresent? Will fashion immediacy dilute the image of luxury brands in the long run? Will instant gratification result in moving the luxury brands away from its dream to create desire?

Many luxury houses are taking smart moves to deal with such problems. Some brands are coming with exclusive collection of their designer pieces available only online while others are showcasing limited addition of their items online to select clients. They are trying hard to retain extravagant feel of their brands while going online. Again, the question that comes to mind: Will these efforts help online luxury market gain traction? Future of the luxury industry rests upon the answers to these questions.

(This article has also been published in Luxury Daily on 29 June, 2018).

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Circular Economy in Luxury: The New Consumerism

Have you ever thought why to own something that you only use occasionally or why buy an expensive product whose appeal may not last? Definitely yes…this thinking of consumers is influencing their consumption behavior. Today’s consumers are increasingly searching for maximum value and seeking to redefine what is imperative to them. They are guided by sustainability, frugality, shared economy and wellbeing. This concept of ‘New Consumerism’ began a decade ago during global financial recession and continued after that. Circular Economy is one of the several trends of ‘New Consumerism’ which has made impact across various industry. Today, the luxury fashion industry is going through phenomenal change in its landscape and is influenced by circular economy. Today, consumers’ beliefs, attitudes and consumption patterns are changing, with increasing number of consumers looking for sustainable products, marks the beginning of a new consumerism. There has been sizable shift in the primacy of what consumers actually value from ownership to shared economy, from possessions to experiences, from conspicuous consumption to conscientious consumption and from self- orientation to sustainable orientation. They are looking for value beyond the product itself through investment in health and well-being. They want to feel good and not guilty while purchasing a certain luxury brand. With the rising concern about social and environmental sustainability among opulent consumers, especially Generation Y, ‘Green is the new Black’.

In early times, the yearning of ‘buying to impress others’ was considered as principal motive for acquiring luxury brands. However, lately with the consumers’ move towards new priorities, luxury brands are working towards redefining their business models with the focus on reducing social and environmental problems through the use of sustainable technologies. They are using environment-friendly raw materials, like organic cotton and natural dyes, for instance, the leather of a Dior handbag is attained from Italian bio farms. Many organizations are also using recyclable packaging to ensure circular luxury processes. Few luxury fashion retailers including Gucci, Prada and Armani are retaliating to the rising consumer demand for making the value chain transparent and sustainable.  

Circular economy in luxury is a concept of reviving the essence of luxury with its long established emphasis on rarity, reflective buying, restoration, longevity, endurance, hand craftsmanship and consideration for people and planet.Luxury brands are making serious efforts to move from traditional linear economic model (take-make-dispose) to circular economy through embedding the 3R principle (Reduce, Reuse and Recycle) into production and consumption process. The fashion industry unquestionably influences heavily on the environment. It uses vast amounts of water throughout all processing operations, uses 25% of global chemicals, contributes towards unloading polluting chemicals and industrial waste into the world. The Danish Fashion Institute (DFI) has pointed out fashion as the second most polluting economic sector after oil business.  Considering the gravity of the situation, luxury industry is progressing towards circularity as luxury consumers seek for superior quality products which provide no harm to environment. Prada is using variety of biodegradable natural fibers in place of polyester. Stella Mc Cartney uses no leather in her luxury collection. Her 70% products are handmade, recyclable and reusable. The circular economy is an appropriate response to face the issue of environmental pollution, because it is a system designed to create new wealth without downsizing the intrinsic quality of the product.

Many players in the luxury industry have realized the importance of sustainability and thus are remodeling their conventional businesses by incorporating concepts of reuse, share, rent or recycle which are essence of circular economy. For a category that is still in its nascent stage, there are quite a few business models. One such online platform running successfully in India since 2015 is “Flyrobe.com’ that rents designer ethnic and Western apparel. Another popular online platform is Swishlist.in. Pre-owned clothes are solution to a growing section of the fashion-conscious people. The clientele of such companies not only embraces people who cannot afford such expensive clothes but also those who are driven by the need of not repeating their outfits or people who rent for the love of fashion. There is cultural shift in consumption of luxury fashion viz. consumers are open to wear hand-me-downs, even if not within the family, people are not interested to spend heavily on one- time usage of such products, and there is aspiration to wear luxury clothes. There has been increased emphasis on ‘Reusability’ by focus on functionality over ownership which leads to the growing trend towards pre-owned luxury goods. Consumers of pre-owned luxury fashion are more contented because they get to uphold their self-respect by secrecy of consumption than declaring their affinity for cheaper clothes. They are working on the principle of circular economy to generate ‘Restorative’ economic model and create timeless luxury items which are inherited from one generation to another. Circular economy has also inspired these brands to follow the concept of ‘Reduce’ through production in smaller batch sizes with slow production cycle. Luxury conglomerates like LVMH and Kering are shortening production cycles across brands. Though luxury and circular economy appear to be antithetical to each other, but luxury brands are putting efforts to reposition themselves as ‘the care taker of mother earth’ to establish a positive brand image among the new luxury buyers.  

(This article has also been published in Luxury Daily on May 22, 2018).

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Marwaris and Luxury

The highly successful Marwari community has a long tryst with royalty, luxury and grandeur in their lifestyle. Yet, the thrifty nature of Marwaris prevented them from indulging or splurging on luxury goods as compared to other ostentatious communities of India. With the changing times and evolution of next generation of Marwaris, meaning of luxury has been redefined and given way to more liberal thinking towards luxury consumption among Marwari luxury buyers. Dr. Sheetal Jain, Founder of Luxe Analytics, a luxury market consulting firm and a Marwari entrepreneur herself, explores this changing facet of luxury among Marwari community. She is an internationally published and quoted luxury professional and one of the pioneers of Indian luxury consumer research in India. 

Indian luxury market is mushrooming and among the fastest growing markets in the world. According to an Assocham study, it is estimated to multiply at the rate of 25 percent per annum and reach from the current $18.5 billion to $50 billion by 2020. This sudden growth can be attributed to the changing Indian mindsets and value system, growing brand awareness among the youngsters, multiplying disposable incomes, urbanization and increasing number of middle class population. Marwaris who are considered as the most opulent community in the country, can very well become the flag bearer of the growth of luxury brands in India.

‘Marwari’ refer to baniya or community of skilful traders from all over Rajasthan. The word ‘Rajasthan’ is derived from raja + sthan, meaning place of kings. Rajasthan, till today is considered as a hub of royal families. Jaipur, Mewar, Jodhpur, Bikaner, Udaipur and Jaisalmer are still among the popular royal families of Rajasthan. In addition, for decades affluence and luxury has been embedded in the lives of successful Marwari families. There has been a penchant for luxury jewelry, luxury cars such as Rolls Royce and other symbols of opulence. Therefore, luxury is not new to Marwaris. Marwaris are known for their rich culture and heritage of luxury since the time of maharajas. What is new to Marwaris, however, is the shift to the new forms of luxury.

Erstwhile Marwaris have flourished their businesses by migrating from their homeland Marwar (a region in Rajasthan) to distant locations such as Kolkata, Chennai, Mumbai and other trading hubs in India. Over the years, Marwari business community has developed strong hold over these places. Men migrated to these locations over a long time ago, however, their families joined them later. Today, these bustling Marwari hubs in cities like Kolkata are witnessing radical shift in the predominant Marwari culture, be it be related to lifestyle, education or purchase patterns. Conservatism, key characteristic of a typical Marwari, has paved way to dynamism, innovation and openness. This has led to significant transformation in the luxury consumption behavior of Marwaris. The luxury purchases for the older generation of Marwari families were more value-oriented and restricted to few items like Jewelry and clothing. However, with the changing times and emergence of new generation of millennial Marwaris, affluence is taking a newer dimension. The younger lot is taking the luxury legacy of Marwaris to newer heights with more diversified indulgence. The increased availability and growing exposure to global luxury brands owing to rising overseas travel, social media and changing perceptions about luxury among the Indian consumers have contributed significantly to this new trend among Generation Next of Affluent Marwari families in India.

Marwari Women, then and now

A rich part of Rajasthani cultural heritage is its alluring Jewelry. For years, Marwari women has been embellished with beautiful jewelry from head-to-toe, to name a few, borla, nath, rani haar, bajubandh, bangadi, haathful, tagdi, payal and bichuwa. With their limited education, exposure and knowledge, they saw these jewel pieces as the best option to splurge money. Luxury, for them revolved around possession of expensive jewelry as it was seen as a value investment.  Their world was confined to the boundaries of their household. They had limited aspirations in life. However, the new age Marwari woman has radically transformed. She is independent and confident. She is no more restricted to just her household and kids rather she is making a significant mark in the society. There has been massive change in her lifestyle. Ghagra-odhani, the traditional clothing of Marwari women has become a rare attire, seen only during the weddings of close family members. Borla and ghongat has become passe. New Marwari woman is well- educated, well- travelled and well-versed with the trends across the globe. She has transitioned from saris to shrugs, from pajab to anklets, from customary clothing to designer labels. Her wardrobe is no more packed with only sarees, lehangas and Kundan jewellery. She has become a contemporary women who has the perfect mix of western and traditional outfits. Her closet carries branded apparel, bags, shoes, sunglasses, perfumes, and wide gamut of beauty products. She wisely chooses the best accoutre as per the occasion. She is no more hesitant to purchase a Louis Vuitton bag worth Rs, 1 lakh as she believes in living for the moment and not saving for the rainy day. She lives for the experiential value. She loves to spend money on spa or driving a luxury sedan rather than just buying loads of jewelry. You will be thrilled to know that the first Indian woman owner of one of the world’s most luxurious sports cars, Lamborghini, is a Marwari woman!

Education, then and now

Marwaris have been known for their business acumen, adaptability and success. They are risk takers, great bargainers and venturous. Entrepreneurship is relentlessly encouraged by Marwari community. Education often takes a backseat among Marwaris where it is a long established tradition that sons join their family businesses as soon as they pass out from school. There prevails a strong belief that starting a business will get you more reverence than a college degree. However, in the last few decades this mind-set has radically changed. The younger generation is taking up varied careers like, architecture, hotel management, fashion designing, journalism and teaching. The book, ‘The Marwaris: From Jagat Seth to the Birlas’ also posits that today the young Marwari is going abroad to get the best education at leading international institutions. They are transforming traditional approaches to business and embracing new-age technologies. Millennial Marwaris are receptive, discerning, experimental and willing to explore the world. They are unrestrained towards indulgence in new forms of luxury. They see value in spending on lavish cars, vacations, food and watches.

Extravagance, then and now

Think Marwaris, think money. The Rajasthan-born community has been well defined for the affluence, traditional lifestyle, conservatism and strong focus on “value for money” in their luxury indulgences. They have firm belief in frugal living and saving. They are considered as shrewdest businessmen across the globe. A typical Marwari is known for calculating interest before investing. For years, he has been happily spending huge money on gold jewelry as he see it as an alternative source of investment, but given a choice to spend the same amount on luxury art piece or designer handbag which can also be carried forward as a legacy from one generation to another. A traditional Marwari would never ever give it a thought, for him it is utter waste of money. However, he would not be hesitant to spend hefty amount on lavish wedding as it symbolizes his status in the society. But with times, the mind-set and value system of young Marwaris are evolving. They have no more restrained their luxury spending to just jewelry or weddings.  Rather, they are going beyond to attain individuality, hedonism and self-gratification. They are moving from external to internalization of luxury. They are looking for experiences that help them express who they are.

The Marwaris, aptly called the Jews of India, have transcend over time to illustrate new maturity in their orientation towards consumption of luxury goods and services. New-age Marwaris are depicting similar purchase behavior as evident among youth not only in India but around the world. In nutshell, Millennial Marwai luxury buyer has evolved in pace with the global trends. Today’s Marwari luxury buyers are driven by classic characteristics of luxury such as rarity, quality, craftsmanship, technology and aesthetics. The abode of affluent Marwais are the most lavish, with seamless, exceptional decor. Marwaris have become avid travelers to the most exotic destinations like Iceland, Greece, Finland, etc. We can see today’s Marwaris flaunting various luxury brands from Manish Malhotra to Michael Kors; from Sabhyasachi to Jimmy Choo, from Mercedes to Porsche, to name a few.

Even though Marwari community is not as flamboyant as other communities such as Punjabis, they indeed present a wealth of opportunities to Indian and global luxury brands eyeing growth in the Indian sub-continent. Marwaris have amassed huge amount of wealth over the centuries. It’s the right time for the luxury brands to penetrate deep into this community that has seen the epitome of success in wealth creation.

(This article has also been published in Marwar India magazine on March 15, 2018).

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Unfolding India’s Luxury Market in 2018

Today, the luxury market in India garners huge attention as most of the global luxury brands have already arrived or are expected to enter. Luxury retailers have realized that India is one of the world’s most vibrant, diverse and challenging markets for brands that want to capture this market. Success of luxury brands is mainly determined by their ability to understand the complexities of Indian market, to innovate and tweak their strategies to provide affluent consumers unique and bespoke brand experience. India is a distinctive and multifaceted market and reveals a pot-pourri of cultures, customs, and history. Chadha and Husband in their book on ‘Cult of Luxury Brands: Inside Asia’s Love Affair with Luxury’ described that “each country has its own endearing eccentricities that make it unique”. Luxury retailers need to understand following five unique key characteristics to serve Indian market well.

Evolving Indian market

India is still in nascent stage of its development as a luxury retail market. There have been up and down trends in last 10 years in luxury sector. Because of these variations, it’s getting very complicated to precisely judge and gauge the luxury market. While India is visualized as an upcoming market as there is lot of potential, there are also people who believe that the potential of Indian market has been overrated. However, positive thing is size of the market, which, in itself makes it very exciting for people to sit in long term. The top-selling items in the luxury market are watches, automobile, real estate, fashion accessories, handbags, super premium beauty/personal care products, luxury electronic gadgets, shoes and apparel.  

Regulations

Since November 2016 there has been introduction of several cash related restrictions which made an impact on luxury sector- first demonetization, then the 2 lakh limit, after that PAN Card business and the last of them was the GST implementation. Though these policies have initially obstructed the growth of Indian luxury sector but it is believed that these changes may be favourable in the long term. Recently, government has approved 100% FDI under the automatic route for single-brand retail trading and also eased the mandatory local sourcing norms. This would provide greater flexibility to the global retail brands and increased consumer access to global brands.

Diverse characteristics of Indian consumer

Indian consumers are very different from a consumer in China or the West. Indians culturally are value conscious and always look for a good bargain. People always seek value and search for information regarding at what price they can get brands internationally. As import duty is very high, consumers often find it cheaper to purchase from Singapore, Dubai or London. Consumers are ready to experiment; they have become bold. It’s not conventional pattern of buying anymore. People are ready to experiment with colours, styling, irrespective of age. Consumers are brand conscious and logo-centric and logo has to be shown well. For men, shoes with prominent logo sell more in India. Women shoes do not sell well because they don’t see value. However, women buy sunglasses and handbags which are more visible. People like to show-off. Indian buyers give a huge importance to perception and value. Quality and craftsmanship is a selling point but not decider point for Indians, it is prestige that people associate with brand that they are paying for and therefore more than anything else it is perception of the brand in the country that is either making a brand successful or is creating struggle.  

Great demand for affordable luxury brands

Affordable luxury brands like Michael Kors, Kate Spade, Coach and Charles & Keith have been successful in capturing the hearts of young aspirational Indian buyers. These international brands give an option to the brand-conscious Indian shoppers to buy status symbols at a much lower prices than the average luxury brand. According to Euromonitor International, this segment is rapidly growing at the rate of 40% per annum, outpacing rest of the segments.

Luxury space constraint

Real estate is heavily regulated in India; consequently luxury brands generally launch stores in luxury malls or hotels, through joint ventures with local distributors. Presently, there are very few luxury malls in India which cater to luxury brands. In India, luxury retailing is confined to the three metro cities- Mumbai, Delhi and Bangalore. Tier 2 and 3 cities, with large populations and growing wealth are not catered too well. But retailers have to realize that it is not only metros where people have money or purchasing power, even small cities clients also generate revenues. There is no high street for luxury brands in India. All existing high streets are very cluttered and over-crowded and hence, do not provide a suitable ambience that luxury retail demands. In addition, the cost of setting up luxury stores in high streets is very high which dissuade the retailers to open stores in such areas.

Luxury players need to understand that Indian market has some distinct characteristics and in such an environment they have to operate very cautiously and selectively to create value for Indian consumers. Failure to recognize these variations in terms of their levels of luxury addiction, and consumer attitudes for luxury brands can detach retailers to understand consumer behaviour of luxury buyers.

(This article has also been published in Business Today on 24 Feb, 2018).

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Evolving Trends in Global Luxury Market

Over the last decade, global luxury industry is witnessing rapid changes due to shift in focus from class to mass; traditional media to social media; offline to online; Baby Boomers to Generation Y; developed markets to emerging markets; physical possessions to experiential value – to name a few. However, how these evolving trends will influence the luxury industry in the years to come is a question for now!

Let’s have a close look at some of the changing trends in Global Luxury markets and its implications on global luxury marketers.

Millennials to Rule the Luxury Market: Gone are the days when luxury was the monopoly of ‘elite few’ who grew with silver spoon and inherited the old money. Over the years, the luxury consumer base has evolved. Now the time has come to shift the focus from baby boomers to millennials. Luxury brands no more see growth opportunities in targeting your grandparents rather they see potential in new age buyers who aspire to buy high-priced designer labels. A recent report by Bain & Co. revealed that millennials are set to constitute 40% of world-wide luxury market across all personal luxury goods categories by 2025. Middle class population in countries including China and India are estimated to add 50 million new users to existing luxury market. This has made it imperative for luxury marketers to come up with affordable and accessible luxury items to tap this growing market segment.

Drive for experience based spending: Today, millennial generation looks life through a different lens. They value experiences more than physical products. Marketers can no longer win them by just selling a product rather they need to create an experience with them. Today’s youth think of spending on a lavish holiday or on front row seats to watch live concert of their favorite celebrity rather than on buying a home or a car. A recent study by Harris Group revealed that around 70% of affluent millennial population prefers to spend more on experience rather material possessions.

Digitalization: The new mantra of success in luxury marketing is going digital. According to a recent research, 95% of luxury consumers are digitally connected and around 75% of luxury purchases are affected by atleast one digital touch point. In the coming years, it will be critical for the marketers to create a unique, integrated, bespoke online experience for their luxury consumers.

These are few upcoming trends in global luxury market which will redefine the future of luxury market.