The role of British luxury

At Havas LuxHub, we conducted a survey of 928 luxury consumers in nine luxury markets (UK, China, Russia, Middle East, USA, France, Germany, Italy and Spain) – all in the top 10% household income thresholds in their respective markets – and found Britain to have one of the highest average spends on luxury, at £28,243 per household (average household income £186,630 ). UK respondents indicated their spend on luxury would increase by 4% this year – underpinned first by higher levels of disposable income, followed by seeing more luxury products that they want.

The encouraging piece is that, with a modestly growing UK economy, affluent British consumers are ready to spend when they find luxury items or experiences that they find appealing. Our survey also outlines what they find defines luxury, which can help brands tailor their product assortment and messaging to the UK consumer.

The UK substantially over-indexed – coming in highest of the nine markets – in the importance of ‘superior quality’, cited by 78% of UK respondents (vs. 63% globally). The UK also substantially over-indexed and was the highest market to rank ‘personal reward’ as a core driver of luxury – cited by 44% in the UK vs. 26% globally. In stark contrast, in the UK, sign of social status was a low priority – selected by only 20% in the UK, vs. 37% globally.

While in many of the largest luxury consumer markets, product mix and messaging may focus on ‘show I know’, to appeal to UK luxury consumers, our survey shows it’s about ‘know I know’. This creates a conundrum for luxury brands selling in the UK. According to Bain, 55% of luxury goods sales in the UK are to international visitors. Luxury brands need to market to both the domestic and the international audience, comprised of European visitors, as well as Chinese, Russian and Middle Eastern visitors, who have very different appeal points concerning luxury.

It is also interesting to note that in the UK, reference brands for luxury are not British brands. When spontaneously asked what brands best represent luxury, in Britain, the three most cited brands are Rolex, Chanel and Cartier – none of which are British. By contrast, French respondents invariably selected French brands, the three most popular being Chanel, Dior and Louis Vuitton. Italians cited Italian brands – Armani, Ferrari and Bulgari as best representing luxury. What’s more, in the UK, 66% of luxury consumers prefer well-known luxury brands to niche brands. Some 83% of Chinese luxury consumers prefer the known brands to niche, and USA and Russia are 73% and 72% respectively.

Are British brands doing enough to highlight the values that are most important to UK consumers? Or, are they assuming the values of the international market in order to broaden appeal, but becoming displaced by international brands?

The UK is home to some of the world’s most iconic brands and retailers, but there is potential to create more British luxury super-brands, given Britain’s heritage and values of superior quality, bespoke craftsmanship and artistry. While many luxury brands in the past have relied on intuition, the value of market research is becoming increasingly apparent as British brands come to understand the value of listening to the luxury consumer.

Tammy Smulders is global executive director and UK managing partner of Havas LuxHub. She also serves as managing partner of Havas-owned research agency SCB Partners, which specialises in research for luxury, fashion and lifestyle brands.