What do HNWIs expect from a brand? And how are these expectations changing? For the luxury Expert Outlook 2016, Canvas8 speaks to Alastair Laidlaw, CEO of Lux Worldwide, Alex Cheatle, founder and CEO of lifestyle concierge service Ten Group and Emma Hart, creative director of Push PR, to find out how the desires of luxury consumers are shifting.
Alastair Laidlaw is founder and CEO of shoppable luxury guide, Lux Worldwide. 2016 will see the launch of LUXIOS.COM – an online luxury store and personal shopping service for over 50,000 HNW and HNW individuals.
Luxury isn’t about how expensive a product is. It’s about how a brand is perceived. Rarity, quality, design, materials and craftsmanship are just some of the values that contribute to desirability. Without an understanding of why an essentially utilitarian product – such as a watch, a car or a handbag – can command such a premium price, a product will remain nothing more than an expensive commodity.
Digital can be highly informative, interactive and immersive. It’s second only to seeing first-hand how a product is made, or meeting directly with the designer or maker – which is impractical for most brands. Digital brings brands and consumers together at every stage of the sales process.
Luxury isn’t about how expensive a product is. It’s about how a brand is perceived
Expect to see brands invest even more heavily in video, animation, 360-degree macroscopic photography, augmented reality and mobile apps. Advertising will shift from traditional to both existing and emerging digital platforms. Seismic further changes lie ahead in terms of media consumption and the way people discover, research and purchase luxury goods.
Luxury brands were not quick off the mark with digital, but there’s now consensus within the sector that ‘the future of luxury is online’. Recently, two of the most important luxury car brands in the world have done huge things online. Rolls-Royce rejected a traditional motor show launch for the Dawn, in favour of an online campaign, while Bentley created an emotion-reading app to help divine which type of car is most inspiring to each individual customer. And these brands seem to have set the tone – they weren't the first, but after this, many more luxury brands may find the confidence to take some ground-breaking digital risks.
Digital is a way to bring brands and consumers together at every stage of the sales process
EventsPhotosNYC, Creative Commons (2015) ©
The shift in focus to digital is a direct consequence of changes in consumer behaviour. Virtually all consumers now research online, even if they still purchase in-store. Buying ultra-luxury items online is fast becoming the norm; consumers now have more confidence in the entire experience, from the convenience of shopping online to logistics around delivery and returns.
Brands are also able to engage potential clients by using digital to promote and offer bespoke touches or customisation. Anyone who may be thinking about buying one of McLaren’s brand new sports cars is likely to spend a good deal of time designing their new car to their very own personal specification with the brand’s highly functional online configurator.
Buying ultra-luxury items online is fast becoming the norm; consumers now have more confidence in the entire experience
Expect to see more apps that allow you to build or design your perfect version of a particular item. Not only does this approach build an emotional connection between the consumer and brand, but it provides the additional benefit of valuable consumer data. The customer gets their ideal product and the brand finds out what their customers actually want – potentially reducing the range and total amount of stock they have to keep to hand.
The global growth and recognition of British luxury brands such as Victoria Beckham, Bentley and Burberry is amazing to observe, but the renaissance of traditional values in luxury products will hopefully help secure the long-term future of smaller heritage brands and hundreds of incredible artisanal manufacturers.
Apps will increasingly let people co-create luxury bags, cars or coats
Victoria Beckham (2015) ©
Alex Cheatle is founder and CEO of lifestyle concierge service Ten Group. Ten Group is the leading lifestyle concierge service with 500 staff and 17 offices around the world.
Products impress your peer group if you're wealthy, but some of your peer group aren't. If you're wealthy and so are all your peers, experiences are what impresses them. And actually, at the top-end, there are a growing number of wealthy people who aren't that interested in luxury products; you know, there are plenty of wealthy people who just don't wear a watch or own a top-brand car. They're just not interested in showing off that way. People who consume luxury items today are often in their 60s and beyond. To grow out of showing off is the norm, but you never grow out of appreciating luxury experiences.
The coming year will see an increased focus on luxury services. We've already seen that growth happening in the developed world; Americans and Europeans are the big spenders on luxury experiences, including fine dining, luxury travel or live entertainment – paying upwards of £3,000 to see a Wimbledon semi-final, for example. But Asian economies – particularly China – are catching up, and when this behavioural shift takes hold, the impact will be considerable.
There are a growing number of wealthy people who aren't that interested in luxury products; they're just not interested in showing off that way
In response, brands are either stripping down and becoming better at what they do, or they're becoming broader in terms of their proposition. One example is Italian brand Zegna. It's got a wonderful programme for people who buy their suits and other items, whereby they offer them experiences, which are in line with the brand, to reward them for being a committed customer. These people feel appreciated but they also understand the brand more, live the brand more. That loyalty programme, which is entirely experience-based, has been incredibly powerful for them. And that's going to happen more.
People don't necessarily associate financial services with luxury, but if you take a brand like Coutts, it’s not only about being a financial services brand, but being a lifestyle statement, too. So it's not a surprise that Coutts rewards its top clients with experiences and services that fit with that lifestyle. But not every brand is able to do this. Others will strip all the way back to the core and simply focus on what they do very well. You might have another financial services brand that just does what it says on the tin – it might be high net worth, but it won’t be luxury.
Luxury experiences come with far more bragging rights attached
Burberry (2015) ©
I think businesses need to choose. Are they going to have a transactional relationship with high net worth consumers, or are they going to build a more experiential and luxurious relationship with their customers?
For me, luxury is a lot bigger than some of the core categories. I'm really impressed with how some dining brands have become luxury brands. A few years ago, there were no premium restaurant brands globally, there was Nobu, but that was about it. Now you've got Hakkasan all over the world. Hakkasan a great example of a brand developing in multiple locations and everywhere it is, it's incredibly high quality. It really is luxury. It's managed to scale its brand, which is an astonishing development.
People thought that you could have a tailor who could make an incredible suit, but that you couldn't have a brand selling something in shops all over the world that was good as a bespoke item. But you can
Probably 20% of the top restaurants now are global brands and that didn't happen at all ten years ago. I think luxury brands reaching into other areas and having more confidence that they can get the basics right; things like the service and the food itself. But that's really exciting. If you take Hakkasan as an example, and it is a good one, many people in the eating out business saw brands like that expand abroad and waited to see it fail. And it just hasn't.
It's as fundamental as a single craftsman producing a boutique luxury item and evolving into a global megabrand. I'm surprised by it, but I'm impressed by it. They've managed to achieve quality at sale that underpins the luxury proposition. What other markets can become global brands if restaurants can do it? Ten years ago people believed you couldn't have the world's top restaurant unless you had the chef in that restaurant. People thought bigger chains would be like McDonald's. People thought the same about other sectors. That you could have a tailor who could make an incredible suit, but that you couldn't have a brand selling something in shops all over the world that was good as a bespoke item. But you can.
Brick-and-mortar stores provide customers with an experience
Sean Marc Lee, Creative Commons (2015) ©
Emma Hart is the founder and creative director at Push PR. Launched in 2002, Push PR is a global communications agency focused on creative digital and print campaigns for the luxury market.
There's a significant shift happening with transparency and story-telling, and the individualisation of businesses and brands. Instead of seeing big, corporate and untouchable brands, it's about stripping things back and creating a brand experience. You take your consumer on a journey and you keep them on that journey. You're looking at the lifestyle, you're not just looking at the label they want to wear. It's almost going back to old-school customer service, where they come in once a week and you have a very close relationship with them. It’s about getting to know the top ten consumers, who come in once a week, rather than the 5,000.
The brick-and-mortar retail experience has always been integral to luxury, but it's getting bigger now, and stores and brands are coming back to a physical presence. But that physical presence isn't about driving sales, it's about creating an experience. While supermarkets install self-checkouts, with luxury it's the absolute antithesis of that. It's about human contact, it's about conversation, it's about time. We really believe time is a luxury, now. People talk about being time-poor or time-starved, and are becoming more interested in mindfulness and being in the present. It's about buying time for yourself.
While supermarkets install self-checkouts, with luxury it's the absolute antithesis of that
Another huge area of luxury development this year is sustainability. People want to know about the journey of the brand, the provenance of the product in terms of textiles and factories. Ten years ago, 'ethical' was completely tied up in its associations with hemp and yoghurt, but now it's very much for the luxury market.
There's an incredible brand called Eileen Fisher, which is huge in the US and launched in the UK four years ago. The whole ethos is extremely powerful. By 2020 it intends to be 100% sustainable and all its products are an investment in this vision, which they make customers a part of. The brand will bring people in for think tanks, and these people aren’t even necessarily influencers, as such. That's really powerful.
Sustainability about more than hemp and hippies
Eileen Fisher (2015) ©
Luxury has moved away from fast fashion and instant gratification; today’s luxury is built to last. Especially in fashion, there are even more neutral pieces to give foundation to people's wardrobes, rather than more garish, out-there pieces. The luxury purchases are the long-term luxury pieces.
Cultural enrichment is something that's huge for the luxury market. It's about education and about finesse; being educated and knowing what's right to invest in, in terms of the long-game. Many brands have changed tack in this way. So take Gucci and its new creative director. Everyone said; 'who’s this guy?' It's already done the unexpected and disrupted the luxury market by backing the underdog. Because luxury is not about the obvious; it's about thought-provoking statements.
The future of luxury is all about simplicity. We're so overloaded that now we're trying to remove everything from our headspace
If someone asked me what the future of luxury is in one sentence, I'd probably say it's about stripping things back. We can see it in the trend for industrial interiors and stripped back concrete that looks almost unfinished. It's about simplicity. And it directly relates to the mindset people have got. We're so overloaded that now we're attempting to remove anything unnecessary from our headspace.
Creativity is very much in the luxury space now, too; when you think about it, being creative and having the time to be creative is actually a luxury in itself, these days. So who’s actually investing time into being creative and sourcing campaigns. Where are they going with it? Are they using traditional models? What's the next step for luxury communications? That's what we're interested in at the moment at Push PR in terms of how we develop our campaigns.
Shared Values: A growing expectation for brands to rise to society’s challenges.
Inside Track: In the information age, staying ahead has greater value
Experience Hunters: When people have enough stuff, they seek experiences