The top 10 trends in luxury retail

Before outlining the trends that she believes will shape the luxury retail space over the next three to five years, Smulders, managing partner of SCB Partners and global executive director of Havas LuxHub, discussed its current influences. These include: political issues such as the rise and softening of BRIC; economic issues such as the recent global consumer confidence index score of 97; social issues such as an ageing population with a higher level of affluence; technological issues such as the effect of digital and mobile; and legal issues such as tax, banking and labour reforms.

Based on these factors, her top 10 trends, and some implications of these for research, are as follows:

1. The ‘trivergence’ of luxury: consumer needs in the luxury space encompass convenience, information and entertainment. Luxury brands must develop strategies to service all three.
2. Hunt for new markets: as China and Russia’s growth fades, markets such as Nigeria represent most opportunity
3. Tribalisation: There is no one type of luxury consumer. “To use the term ‘luxury consumer’ suggests one language, one aesthetic, one set of values,” says Smulders. Potential segments include: the ‘cultural tribe’, the ‘country set’ and the ‘self-made.’ Researchers must conduct research by segment to capture this. It’s also important to refresh research and segments annually to capture changes, says Smulders.
4. ‘Know I know’: This is a shift from ‘show I know’; i.e. a move away from super brands to niche brands. This differs by market: where Chinese consumers prefer widely-known brands, the Spanish prefer niche brands.
5. On sale – for the regular price: Where the UK consumer price index has risen by 29%, the RRPs for designer fashion have risen by 60%. Therefore even when heavily discounted, products are selling for the same price as previously. In the US, 67% of luxury purchases are made at a discount. This figure is 45% in the UK.
6. The HNWM (high net worth millennial): In China, 80% of luxury buyers are under 45. In the US this figure is 30%.
7. The power of travel: 55% of luxury goods purchases in the UK are made by international visitors. This rises to 60% in France. Researchers can use mobile apps for quant and qual to capture shoppers on the move, and must ensure research is properly targeted and respondents are screened to capture their nationality, says Smulders.
8. The editorial storefront: The opportunity for readers to shop directly from magazine editorial could change the luxury online retail landscape.
9. Personalised storytelling: The rise of social media can take away the element of surprise so brands must raise the bar. However, there is an opportunity to let customers promote brands if they have an exceptional/ personalised experience
10. Retailer-led communities: Finding like-minded people and bringing them together can positively affect loyalty. Conducting research in social settings or using retail communities to recruit respondents can tap into this trend, says Smulders.