Luxury World 'Changing Fast' - Report

Luxury World 'Changing Fast' - Report

Luxury World 'Changing Fast' - Report

As venues go one would be hard pressed to beat the surroundings of the 5-star May Fair Hotel in the heart of London’s West End just a stones throw from Bond Street and Piccadilly. This historic 406-room hotel located on Stratton Street was first opened in 1927 by King George V and Queen Mary in attendance. A plaque in the foyer records the event.
 
It was also the opulent setting for a presentation this July of the latest study on the behaviour and expectations of today’s consumer of luxury goods, which was a joint project by Numberly, a digital-data marketing firm specialising in helping advertisers leverage their marketing strategies, and Albatross Global Solutions, a market-research firm specialising in improving retail performance and understanding consumer trends in the luxury sector.
 
Titled ‘The Journey of a Luxury Consumer - Expectations and behaviour of clients of luxury brands around the world’, this year’s study is the third edition since the analysis was first undertaken. Each year the report adds new features and the current study spans fourteen countries - more than in previous years.
 
Javier Calvar, Chief Operating Officer, Albatross Global Solutions, presenting an overview of the findings and contextualising luxury in a Salon at the hotel said: “The luxury world is changing fast. Luxury brands must keep a finger on the pulse of the consumer in order to anticipate the future and to remain relevant.”
 
The new analysis was based on an online survey comprising some fifty questions and canvassing 3,390 relevant consumers - i.e. affluent individuals in who had purchased a luxury product in the six months prior to the study. The sample was split 50:50 between male and female respondees and evenly spread by age, with consumers polled from Europe (various European Union countries), North America (USA), Latin America (Brazil), the Far East (China and Japan) and the Middle East (Qatar and UAE).
 
Consumers were specifically asked about their expectations, their choices, their experience, their level of satisfaction, and online behaviour when buying a luxury product. The findings highlight some marked differences between the developed and emerging markets.
 
In terms of defining luxury there are four main drivers to luxury consumption globally: Inward Reward to satisfy self-fulfilment (38%); Social Success where people typically buy watches, bags and apparel (28%); Social Status as a badge to stand out (23%) and Social Acceptance (11%). The UK market is a market for luxury that is predominantly one driven by inner reward.
 
Calvar added: “There are those individuals who buy luxury for specific needs and those who buy such products to project an image. Not all consumers are created equal and not all consumers engage with luxury for the same reasons.”
 
The study revealed that the aspect of quality to luxury goods is rated highly in the UK at 87% versus a global average of 83%. Nevertheless the consumer landscape for luxury is diverse. For instance, in emerging markets luxury does play a very important role in terms of social status, whereas in more mature economies satisfying personal needs is a greater driver.
 
Overall the number one channel for purchases in terms of the type of retail outlet/chain for buying luxury remains the mono-brand boutique. Dorothée Lacroix, numberly UK International Managing Director, however noted: “Even if the store remains the main channel for luxury brands, the brand websites are gaining prominence. As such, we want to help global luxury brands to optimise their online advertising strategies with relevant solutions for their international customers.”
 
Despite the rise of smartphones, tablet applications and other electronic platforms, the store still remains the leading information channel for consumers. In the UK, for example, 55% of respondees indicated that they look in the store for luxury merchandise versus 54% globally. By contrast 8% of people in the UK look for information on a smartphone or tablet.
 
Across Asia and particularly in China, Hong Kong and Taiwan, word of mouth is rated highly and very important by 44% of respondees in determining where people will look for their luxury purchases. This compares with 23% in the US.
 
A fairly high 62% of the overall sample indicated that they were not willing to purchase luxury goods online versus 38% who said they were. 34% of UK respondees indicated that they were willing to buy luxury online.
 
Key barriers globally for not buying online were cited as concerns over goods being counterfeit (43%), consumers not being able try the product before purchase (43%) and worries that goods could be damaged in transit (24%). Higher percentages on these issues were expressed in Asia (e.g. 60% concerned about fake luxury products).
 
The study also found that the purchase of luxury goods are largely bought in the home market, as evidenced by the US and Italy revealing figures for doing so of 94% and 92%, respectively. This contrasts with the Middle East where there is a much stronger drive to purchase luxury goods overseas (e.g. 51% in Qatar).
 
These findings highlight that luxury means different things to different people when they buy luxury goods. Whether it is the UK where satisfying inner rewards is high up on the consumers’ agenda and the emphasis is on craftsmanship, or in Brazil where gaining social acceptance is paramount and the emphasis is instead on exclusivity, brands need to get their strategy right.
   
As Calvar noted: “It’s certainly a challenge for luxury brands. How can they be consistent globally and yet focus locally on the specifics of the individual consumer and their motivations?” Equally delivering a “compelling in-store experience” that is consistent and memorable to create brand advocacy will require careful consideration and getting sales advisers to engage shoppers.
 
by Roger Aitken