In decades past, luxury consumers were a primarily homogeneous group with ostentatious style and a taste for status-setting items with luxury labels. Today, however, these values are all but obsolete. Luxury consumers are more varied, diverse, numerous, and complex than ever before, and thus less receptive to old marketing and branding tactics such as regionally- and demographically-targeted messaging. Market research shows that the “new” luxury consumer—in all of her instantiations—demands a fresh approach from luxury brands and service providers.
Luxury Experiences In High Demand
One of the most important changes in the luxury consumer is the shift in interest from luxury “things” to luxury experiences. “Shock of the New Chic,” a recent research article by BCG Perspectives, reports that “newly affluent buyers tend to amass tangible goods that show off their wealth. Those who have acquired the ‘things’ they want tend to move on to one-of-a-kind experiences that they can share with others.”
From free-diving with hammerhead sharks to attending art auctions, the interest in luxury experiences is growing across all levels of affluence. American Millennials, for example, generally place much more stock in shared experiences than the elder and wealthier Baby Boomers. BCG’s 2013 Global Consumer Sentiment Survey showed that 51% of American consumers prefer enriching experiences to products. Remarkably, experiential luxury constitutes 55% of luxury spending worldwide, and sales of luxury experiences now outstrip sales of high-end products.
Adapting To The New Complex Consumer
As market research reveals the luxury consumer’s ongoing transformation and diversification, there is mounting evidence that it’s time for big changes in the luxury industry. Although luxury brands generally put less stock into research than their mainstream counterparts, opting instead for creativity and exclusivity, BCG Perspectives stressed that “the formulas for success have become much more complicated.”
Here are 3 ways that luxury service providers can change their “business as usual.”
- Offer luxury experiences. This might mean organizing exclusive events, hosting community meet-ups for high-net-worth individuals, or throwing soirées featuring local luxury brands and products. Think of creative, on-brand ways to enhance your clients’ experience and enable them to share and “live” luxury, rather than just live in it.
- Enrich your sales process. To excel with today’s consumer, all aspects and stages of your service need to be top-tier. “Turning sales activities into deluxe experiences in their own right is nothing new,” according to BCG’s research. “But the practice is reaching new levels of excellence across a widening range of luxury segments . . . and across all channels.” Ask yourself how you can enhance your sales experience in the office, online, and everywhere in between.
Test out new “experiential” business models. Over the past decade, the luxury market has seen a proliferation of businesses based on “sampling” luxury items or experiences, sometimes through rental or subscription models like those of Bag Borrow Or Steal and Birchbox. BCG noted that, “Although some see such businesses as democratizing luxury—perhaps even diluting the participating brands—the new model clearly resonates with consumers, especially Millennials.” In other words, it’s time to second guess the old assumption