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In the luxury market, nothing’s cut and dried. 

The term ‘luxury’ has always been difficult to define, especially as its essence is always changing; but premium ice cream company Häagen-Dazs recently had a go.

By prompting influencers to explain what luxury means to them, the brand showed that, for some, it’s simply having the freedom to express their creativity. 

In its traditional sense, luxury suggests exclusivity and extravagance, but this concept continues to blur as the industry grows more inclusive and attainable. 

Our June Zeitgeist research helps us clarify some of the transformations taking place by highlighting where the attitudes of today’s buyers differ from and conform to past standards.

Luxury spending is emotional, not rational.

Shared attitudes offer a stronger characterization of luxury buyers than financial qualities like purchasing power. 

Given luxury is more accessible than in the past, today’s buyers are actually likely to have a low amount in savings (44% do), and 1 in 4 earn a low income – a sign demand often isn’t a reflection of what’s in the bank. 

What’s more, Gen Zs now represent a greater share of the luxury market than Gen X and boomers across the five countries included in our research, which also implies a change in convention.

The pandemic may have caused a lot of economic uncertainty among younger consumers, but for some, it’s an incentive to make the most of life; and brands need to recognize this sentiment. 

Buyers are more likely than average to describe themselves as adventurous (46% vs 39%) and to like exploring the world (64% vs 51%). 

Justifying Bentley’s leap in sales, its CEO sums up their customers’ rationale: “Life’s too short and I would rather come out of this crisis with this in my collection.” 

Unsurprisingly, various luxury car brands speak to those who want to live life on the edge. Infiniti’s ad for its latest SUV puts forward some of the challenges faced during the pandemic and tells consumers to embrace the chaos rather than stall. 

This perspective resonates with luxury consumers for a number of reasons. Buyers stand out for being ambitious, fashion-conscious, and risk-takers – a sign aspirational triggers will continue to drive impulsive purchases. 

On top of this, they’re optimistic about their future finances, which means many likely view money spent as money that can be made again. 

Segmenting by purchase habits also offers greater insight into how expectations among the industry’s main participants are changing. 

When it comes to brand qualities, regular shoppers are most distinct for wanting providers to be funny and young, with big names like Valentino and Gucci setting a new tone by introducing humor to their marketing campaigns.

This chimes with what Häagen-Dazs is suggesting: that luxury is a state of mind that’s evolved over time. Once serious and elitist, the sector is being touched by the more light-hearted, laid-back, and value-based views of its younger buyers. 

Different categories of shoppers tend toward quiet or loud luxury.

The luxury market is definitely changing, but we do have to acknowledge where buyers align with traditional markers. 

They’re more likely than average to pay for a product in order to access its community (+23%) and to want brands to be exclusive (+19%); so when they purchase these items, they continue to buy into the lifestyle of a select group. 

While regular buyers are disrupting this space the most, they’re also clinging more to established ideals. 

Within this group, the experience of buying a product and its social capital are key purchase influencers. 63% prefer to buy high-end items in-store, compared to 54% of occasional customers. They’re also far more likely to want the branding on luxury goods to be clearly visible (80% vs 62%). 

The COVID-19 crisis put existing social inequities in the spotlight, making some less eager to show off their wealth. But research indicating that luxury has become more subtle and discreet rarely breaks this trend down by different audience segments. 

To be more specific: among regular shoppers, the age of signaling status is far from over. 

The convention of buying in-person is more complicated. 

Even though the majority of regular shoppers continue to favor the in-store experience, many have been forced to buy virtually during the pandemic and over a third are now more inclined to purchase luxury goods online. This is big news for a sector deeply rooted in heritage and tradition. 

And prestige alone isn’t enough these days, as this group won’t splash out on just any high-quality item. The online or omnichannel experience they’re seeking demands the perceptions of rarity that give luxury its lustre. 

Compared to the average shopper, regular buyers have higher expectations about brands having a strong online presence, a clear narrative, and overt values. 

In short, this group pays for a luxury brand as much as, if not more than, its product. 

Conspicuous labels may be a priority, but a company’s image is ultimately what attracts them. This reality has allowed high-end brands to sell casual streetwear without any harm to their reputation.

While immersive technology like AR to try on products and live video chats with experts help recreate the luxury experience, many competitors are leaning on other forms of content to amplify their storytelling. 

Whether enhanced interaction comes in the form of Gucci’s gaming service or Berluti’s livestreamed art exhibition, players need to diversify their marketing efforts to attract regular buyers (who skew young). As even though in-store buying is still the go-to preference within this group, most typically find out about new luxury brands or items online. 

Non-fungible tokens are another disruptive trend fronted by regular buyers, who are over 2x more likely than occasional treaters to own cryptocurrency and to know what NFTs are (55% do). 

NFTs are essentially digital rights to rare goods and brands like D&G are among the first to launch collections in this asset class. It may be uncharted territory for many, but these tokens are an exciting addition to the sector and definitely worth exploring – given over 2 in 5 NFT-aware buyers see them as an opportunity to own exclusive content they couldn’t find anywhere else.

Experiences are an increasingly important facet of the luxury market. 

The word ‘luxury’ is usually framed by tangible products like jewelry or purses, but its parameters have expanded over time.

A growing taste for experiences and access, as opposed to ownership, is a long-standing trend. 

While well over half of regular luxury buyers say they’d rather own a product or service than pay to access it, they’re 27% more likely than average to prefer the latter, which hints at where the market’s future is headed.

The rise of experiential luxury pushed the likes of LVMH to acquire hospitality company Belmond back in 2019; and now restrictions are easing, others like Dior are investing in pop-up boutiques at choice beaches.

Over 6 in 10 regular buyers would rather purchase a high-end experience than a product. 

These shoppers are distinguished by their desire to stand out in a crowd, their interest in influencers, and an above-average tendency to use social media to post about their lives. 

Regular buyers’ fondness for experiences therefore makes sense, as they’re a prime way to showcase their lifestyle and build a personal brand – whether that’s demonstrated through glamorous locations or services. 

Also, luxury doesn’t presuppose over-indulgence. The extended period of time buyers spent at home during lockdowns influenced their perspectives. Among those who engage with one of the 30+ designer fashion brands we track, susceptibility to anxiety has risen since Q2 2020, as have sentiments of being overworked. 

It’s not surprising that luxury shoppers, and occasional treaters in particular, are significantly more likely to be interested in outdoor activities, which gives brands the opportunity to add ‘glamping’ equipment and experiences to their list of offerings. In fact, Grand View Research predicts the global glamping market will grow at a rate of 14.1% from 2021-2028.

On the whole, new outlooks on mortality have had different effects on customers. It’s pushed some toward living healthier lives, and others to adopt a ‘YOLO’ point of view where spending is concerned. 

Industry players will need to recognize these newer perspectives if they’re to attain a greater share of the luxury market in 2021 and beyond.

Report Connecting the dots in 2021 Download now

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