The great luxury reset: challenges and opportunities for luxury brands

The Independents Group, a collective of communications agencies, together with brand building agency Karla Otto has published a white paper that looks at the shifting drivers behind the luxury market. While historically, luxury items have served as markers of status and shaping consumers' identity, today consumers are seeking out brands that shape their lifestyle.

“The clothes we wear, the experiences we participate in, and the objects we covet have long signified our social standing, taste, affluence, and personal values. .. Today’s consumers are no longer drawn to brands solely for objects that reflect their identity, … they are searching for brands that have the ability to tell rich and meaningful stories, brands that serve as entertainment entities, and brands that tap into the local and niche nuances of our ever more diverse cultures and communities. Most importantly, they crave creativity and connection in an era oversaturated with content,” pinpoints the report.

Four key questions for the future

To find out more, the whitepaper follows four central questions: What are the drivers challenging luxury today and tomorrow? What will consumers buy and why? Who are the voices inspiring their purchase journey? Where will people want to experience brands in the future?

Insights were gained through round-table discussions and more than 35 hours of expert interviews with market leaders, strategists and creative experts, validated by targeted surveys and interviews with 900 luxury consumers across key markets.

“As we prepare for a new year, we at The Independents Group felt it important to reflect on the current state of the luxury industry, which is facing multiple challenges. A mix of global macroeconomic and socio-political disruptors has created an air of uncertainty, leaving consumers feeling cautious, overwhelmed and seeking new meaning. With great challenge, comes great opportunity, presenting the question: how can brands maintain – and even accelerate – desirability in today’s global market?,” comments IG’s CEO Isabelle Chouvet in the foreword.

What are the drivers challenging luxury today and tomorrow?

The modern luxury consumer is demanding more from brands, namely brands that can enrich their lives and experiences, actively creating a culture they want to be a part of. “People want brands that bring them creative objects, but also new universes to dive into and innovative spaces in which to meet like-minded people,” the study found.

What will consumers buy and why?

The purchase matrix is changing: while consumers once sought status-signifying objects, they now look for culturally rich artefacts and experiences. As such, interest in designer clothing and bags is predicted to decline by 2027, according to the report, in favour of art, watches and jewellery, as well as bespoke experiences found in hospitality.

Who are the voices inspiring their purchase journey?

The way consumers discover and engage with brands is also changing, from traditional methods of advertising to more subtle branded content via the world of entertainment. “Luxury consumers want brand stories that place narrative before the product, inviting them into unique universes where they can get lost,” is the consensus among the experts.

Where will people want to experience brands in the future?

In terms of locations, this sentiment is also reflected in the spaces where consumers will buy products and engage with brands. Luxury means experience and replacing traditional selling tactics with approaches that forge meaningful connections – both in person and online. “Luxury also means best-in-class and unforgettable, which should be key words when crafting events and experiences,” according to the report.

What does this mean for the luxury fashion market?

The tendency of luxury consumers to move from fashion and bags to art, watches and jewellery over the next three years in particular presents a host of challenges for the luxury fashion market. However, this also means a multitude of opportunities in the form of rich storytelling, creativity and strong partnerships.

“In the future, consumers will seek luxury goods with meaningful stories and identities, looking inward and demanding that their purchases positively shape who they are,” is one prediction according to the whitepaper.

Consumers will also strive to deepen their understanding of and relationship with the objects they surround themselves with and the events they immerse themselves in.

“They will seek not only beauty but personal resonance and cultural enrichment when they spend on luxury. And, they will demand that brands behave as entertainers, as visionaries for creative excellence, and as protagonists who actively shape and curate culture and the community around them, placing greater emphasis on a human touch,” is the conclusion.

The complete whitepaper can be downloaded from The Independents website.