February 2, 2017
Despite the economic slow-down, 2016 set the bar high for luxury brands. From customization to environmental initiatives, marketers took steps to align their brands to meet an evolving and increasingly more complex luxury ecosystem. In 2017 the challenge for luxury brands will be to innovate in the ways touch their audience and in the channels and technology they adopt to stay relevant. What will successful luxury brands be doing to give their customers the individuality that they so desire? What would be the key luxury trends set to dominate 2017?
Desire Overtaken By Identity
Luxury used to be defined in the minds of consumers by objects or possessions. Rising affluence and connectivity is powering a shift towards lifestyle as a definition of luxury, one where status is less about labels or price tags. In 2017 it could well be — so long Hermes Kelly bags, bye-bye Lamborghini Aventador, ciao Bora Bora and hello more ethical and creative lifestyle experiences. If luxury is less about price, how is it being defined?
Our luxury audience is innately curious; they look for authenticity and stories that resonate. Luxury sectors are witnessing a power shift from the glossy pages of fashion magazines to the keystrokes of online influencers. Luxury car marques like their fashion house, jewelry and chronometer contemporaries are on parallel strategies leveraging art; history, philosophy, geography and science as inspiration for their story. Technology could become the cost of entry, while their brands’ stories share their audience’s passions for the exhilaration of the driving experience. As audiences opt out of objects in preference for experience, so luxury brands need vibrant content to tell stories their audiences will consider worth discovering.
Consumer as Creator
Creating attractive, engaging personalized content at scale is eye-wateringly expensive and resource intensive even for LMVH. While luxury marketers continue to be the guardians of their brand’s narrative, they are increasingly embracing a consumer as creator model in a more nuanced strategy, which harnesses the power of constructively engaging consumers in a conversation and channeling their inner brand advocacy. This ‘talk to your favorite blogger’ concept acknowledges the power of influencers to shift social networks be it Instagram’s 500 million users or Twitter’s torrent of content.
The Rise and Rise of the High Income, Not Rich Segment
We first met HINOR in 2016. Expect this cluster of future luxury lovers to emerge as even more critical in shaping the luxury sector in 2017 as they evolve into the guardians of the luxury market. Demographically, HINORs (High-Earners-Not-Yet-Rich) are typically aged between 25- 34 and enjoy household incomes of $125k to $300k represent a major opportunity for luxury brands. HINORs are prodigious consumers of online content and live digital lives on social media where ‘social influence’ is a key factor in their decision making.
While HINORs have half the spending power on luxury items as ultra‐affluents, there are a lot more of them and this mix of disposable income and numbers makes them an attractive target for luxury marketers. Heavily networked through social media savvy, female HINORs find make-up artists for recommendations on products, style tips and trend insights. In 2017, expect to see cosmetic brands contact influencers digitally to place their brand in context.
Male HINORs, in particular, are increasingly attracting the attention of luxury brands. Their high disposable incomes, highly driven attitudes and a desire to spend on exclusive products and experiences put this demographic in the driving seat of luxury brand growth. They are also accelerating the drift from desire to identity through their preference for ‘high touch’ experiences and lifestyle enhancing products”. Expect to see this segment continue to disrupt the luxury market in 2017 and beyond.
Buckle Up: 2017 Could Be A Thrilling Ride
The luxury sector encountered daunting turbulence in 2016. They are likely to continue these trends of being buffeted in 2017 by a downturn in Europe’s luxury tourism, weakening economic growth in Asia, and the prospect of a trade war between the U.S. and China. Savvy marketers will use these three trends to tweak their strategic thinking so adapting to an evolving luxury ecosystem, one which reflects their audience’s desire for more meaningful and more individual forms of personalized luxury consumption.
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