Engaging the New Luxury Consumer
How to adapt sales & marketing strategies to meet consumers' emerging value-driven expectations
Long before the events of 2020, luxury was undergoing a major transformation. Now, it is estimated that by 2026, millennials and Gen Z will account for 60% of luxury consumers, reports Highsnobiety—which is just one factor driving leaders within the category to reformat their value propositions to align with evolving customer demands. This transformation means updating sales and marketing strategies to not only provide direct brand-consumer connection, but also clearly convey the initiatives, services, and products created with a new consumer in mind.
From fractional ownership to community capsules, the following strategies excerpted from PSFK’s recent research paper are key to understanding the progressive values driving the new luxury consumer’s spending and behaviors.
Fractional Ownership — Luxury by its very nature is exclusionary owing to its high price point and limited availability. Two obstacles that are hard to overcome for younger, aspirational consumers. Building electronic portfolios of luxury goods is one way to overcome this. Emerging platforms are helping consumers to invest in shares of high-end products, providing them with an ownership claim shared many times over. As stakeholders, consumers are able to receive returns on their investment, purchase additional shares, and once an item is sold, earn a cut of the proceeds. An alternative to traditional ownership, the fractional approach provides greater accessibility to the luxury market, as well as an opportunity for consumers to build personal wealth. Startup Otis is democratizing access to investment opportunities, for instance, providing consumers with the opportunity to have an ownership share in goods ranging from artwork to streetwear. Members can swap shares with each other, manage a digital portfolio and profit when an item is sold at market.
Niche Marketplaces — Incredibly popular among shoppers, digital marketplaces often serve as the first stop when consumers are researching online. However, due to the one-size-fits-all model, it's incredibly challenging to stand out and harder to control how customers experience a brand. To alleviate these concerns, leading marketplaces are creating designated channels for luxury players, and helping them to understand how best to position themselves on these sites to maximize their performance. Well-known luxury auction house Sotheby’s, for one, is increasing its reach into the luxury marketplace with its “Buy-Now” platform, where the auctioneer allows customers to directly purchase contemporary fine art, jewelry, wine and home items, in addition to offering its more traditional collectibles for auction.
Community Capsules — Inviting consumers into the creative process, from tuning in to watch the process live, to personally contributing to the design, retailers and brands are providing shoppers with a greater sense of ownership through their involvement. To tap into brand fans’ valuable skills and expertise, companies are creating projects and platforms that encourage consumers’ ongoing participation, and providing them with access to the end result in the form of limited edition or capsule collections. Designer footwear house Jimmy Choo took this route in creating Choo Sketch, a program that tapped the brand’s community to enter their videos and renderings of shoe models that were subsequently highlighted on JC’s social media. To integrate a shoppable moment for followers, the label chose five top selections and released them in a capsule collection—from which all earnings went to charity.
Livestreamed Launches — In place of physical experiences, brands and platforms are integrating live-streaming elements into their launches to immerse viewers in the latest product or brand event. Allowing for brands to remotely connect to their fandoms, livestreams and virtual launch parties offer the interactive element necessary for brands to cultivate an ongoing relationship with today’s socially distant consumer. British luxury label Burberry famously set a precedent by debuting its new seasonal collection via video game streaming platform Twitch, venerated by Gen Z, where it digitally invited viewers of its SS21 show to a virtual catwalk where they could see multiple angles of the show while discussing with each other over chat.
Premium Rental — As legacy companies within the luxury space consider how to engage a growing Millennial and Gen Z consumer base, they’re upending their marketing and operational structures to prioritize accessibility over exclusivity, a leading driver among younger generations. As they navigate what accessibility looks like within the luxury setting, brands are embracing the rental model as a means of creating long-term conversations with customers, while building loyalty through ongoing engagement. Premium department store Selfridges joined forces with clothes-sharing platform Hurr to create its own rental program: the Selfridges Rental Collection offers wares from scores of designer labels in Selfridges’ archive, which renters can borrow for periods of four, eight, ten or twenty days starting at just $40.
And this is just a selection of the full list of trends showcasing how luxury leaders are innovating their offerings to connect with a new wave of consumers — for details about accessing the full research paper, see here.