Luxury: the 6 trends set to boost the market in 2020
In an industry now worth more than €1,000 billion, the next generation of consumers is forcing luxury brands to evolve faster than ever. The notion of exclusivity, embedded deep in its DNA, is being challenged by the ramping up of e-commerce and its fast-changing trends. What key trends will the luxury goods industry see this year? We’ve identified 6 of them.
With m-commerce growing fast (55% of luxury consumers who buy online do so on their smartphone), strong demand on the Chinese market, new pockets of wealth (such as Silicon Valley) and the next generation of purchasers partial to new experiences, the market is under pressure to produce innovative products & services, partnerships and technologies. Businesses will undoubtedly have to keep up with these six trends to stay on track as the luxury goods market grows in 2020.
China: THE key new market
Luxury-only online platforms are fighting each other to help brands establish a foothold in China. Alibaba’s Luxury Pavilion features more than 80 luxury brands, including Maserati, Valentino, Burberry, and Hennessy. Last summer, the Italian brand Balenciaga joined JD.com’s TOPLIFE platform, to provide an exclusive home delivery service (in person and by private driver).These luxury-only platforms provide a certain guarantee of being able to gain access to this most unique market, which is as promising as ever.
With the growth of the second-hand luxury market, which should be worth around €25 billion in 2020¹, businesses have to take a fresh look at the resale channel.In December 2019, Stella McCartney announced the renewal of her partnership with The RealReal luxury resale platform. Buyers who consign Stella McCartney items via The RealReal receive a credit of $100 to spend at the British brand’s different points of sale (bricks-and-mortar or online).Linking luxury products to a blockchain could very probably guarantee improved traceability, simplified authentication, and new investment opportunities.
Blockchain can help track the origin of products and improve supply chain transparency, playing a major part in the fight against counterfeiting. The approach consists of creating a digital certificate for each product that will be recorded in a blockchain, along with key information (origin, manufacturer and previous owners).The gold and precious metals industry has very heavily invested in this technology, particularly to fight against “blood diamonds”. For instance, the TrustChain initiative, based on the IBM blockchain, will allow buyers to check the origin of six types of diamonds and gold rings.
This could also be put to use on the second-hand luxury goods market, guaranteeing buyers the authenticity of the resold product.
Pop-up stores and “pop-up hotels”
After decades of meticulously-planned in-store experimentation, luxury brands are increasingly setting up pop-up stores, offering temporary and unique experiences.Prada launched 36 pop-up stores in just the first half of 2019. Collecting data, testing new locations and catchments areas, and attracting new customers are among the main reasons for brands opening these temporary stores. Even more importantly, pop-stores help to redefine retail’s exclusivity compared to e-commerce.Enjoying a unique experience and actually touching these luxury items wrestles the power back from online pure players to brick & mortar stores.
Fashion isn’t the only industry opening concept stores; travel and tourism are also getting in on the act. 700'000 Heures is a new type of French hotel operator: it uses temporary locations to create an exclusive experience via its mobile hotel concept, opening “pop-up hotels” in unique locations, like Place Vendôme, for six months before heading off to another global location.
Artificial intelligence is developing in the fashion and haute couture industries, as it meets brands’ needs for market research to predict trends, chatbots for customer service, custom marketing schemes, and plenty more. For instance, Heuritech (a start-up) offers the ability to analyse images and videos on social networks to identify trends in terms of style, colours, etc.Last year, Yoox Net-a-Porter used artificial intelligence to design a private collection. The e-retailer’s design team used AI to analyse data from customer comments, social media content, and other data sources. Currently, artificial intelligence allows creators to use a data-based approach to create clothes and accessories.The artist Robbie Barrat recently created a full haute-couture clothing collection using artificial intelligence: he drew inspiration from and practised on a full Balenciaga collection, before putting together his own collection.
Source: Robbie Barrat’s Twitter account
Though a future where fashion collections are entirely designed by AI is near, we still need to see if luxury consumers will like this work as much as human-generated design.
One last quite surprising trend has emerged on the growing virtual goods market. It could offer a real opportunity for luxury brands as it is linked to the very lucrative and fast-growing video game market. The free-to-play Fortnite game app generated sales of more than $300 million in less than seven months following its launch, through the purchase of integrated applications by users. This was a sign that consumers are ready to potentially spend money on outfits and accessories for virtual characters.In November 2018, Gucci joined forces with the Genies app, which users use to create avatars that look like them to use in Facebook Messenger, WhatsApp and even iMessage conversations. For Gucci, the app is a real store front, offering nearly 200 fashion items to dress avatars. In the long term, users will be able to buy items they see their friends’ avatars wearing in one click using the mobile app.
The luxury goods industry has the means to achieve its ambitions, provided it puts its mind to it. It’s able to transform its market and redefine this feeling of exclusivity, which forms its very essence. This means that new uses, experiences and technologies must strictly stick to their values and brand image, plus respect their customers’ privacy. That’s the price of exclusivity!