In a lot of ways, the sentiment behind luxury has gravely changed. The most significant changes have been cumulating across the last 5-10 years and not just three years. In most cases the pandemic’s impact has only accelerated trends that luxury insiders were already learning to grapple with, bridging the future quicker.
The last three years have highlighted the pandemic’s effect on luxury and more specifically the consumer’s behaviour patterns and changes. However even pre-pandemic the changes were brewing. Market and industry leaders across various avenues of luxury have been trend-spotting for the past decade, and are able to spot the changes in consumer sentiment.
Post-pandemic there has been a significant and undeniable rise on the purchase of luxury goods often as ‘revenge purchases’. The luxury industry at large did persist and prevail in the face of the pandemic, be it; keeping flagships open, holding down retail spaces etc even when shoppers had entirely moved online. In turn, we now are witnessing a ‘reward system’ where shoppers are quick to spend on items they felt they had been missing over the last three years.
With regards to the change in sentiment; We no longer value luxury simply by virtue of inaccessible and unaffordable materialistic objects. Human experiences have superseded that by miles, including but not limited to hospitality and tourism. That said, luxury travel is possibly the slowest industry to recover and yet to bounce back.
There are a few key trends which play a pivotal role in post-pandemic luxury purchases and it has less to do with luxury goods themselves and far more to do with luxury brands. These trends include; brand responsibility, sustainability, diversity, believing in causes such as LGBTQ or climate change etc. The brand responsibility in this case stretches not just to the brand but also to how its employees are being treated for example - bringing everything under scrutiny.
Gen Z in particular (keeping in mind their easy access to disposable income right now and in the coming few years) are particularly swayed by the causes luxury brands are supporting and standing for. They are wary to spot if they can count on the brand’s authenticity, and are careful not to fall for tokenism or fads. Gen Z are currently the largest target demographic for the highest online consumption.
The sales are directly correlated to the marketing, content, and advertising changes in the last few years. There has been a seismic shift towards more ‘raw’ content, influencer marketing, and user generated content. Compared to the times when a glamorously aspirational billboard for Guess and Levi’s would have been enough to spike sales, today there must be a multi-prong approach that straddles the line of relatable yet aspirational (all whilst showcasing core values such as diversity and inclusion of course).
While luxury has bounced back in several notable ways, the initial impact has yet to completely recover in sales. The industry as a whole went through changes that were not entirely temporary. The online shift is here to stay. An industry which otherwise thrived on personal, brick and mortar, in shop experiences, has adapted to an entirely online and user-friendly strategy. Gen Z and even millennials, are not quick to retort back to their old ways and prefer to stay online for ease and comfort. High net-worth individuals and ultra-high net-worth individuals are growing younger and younger each year, redefining the needs and wants of the average luxury consumer a great deal.
The luxury consumer is more diverse today than ever before. They are no longer a predictably older, western cultured, upper-class customer. This notion began being disrupted prior to the pandemic itself, and was further cemented during the pandemic. Perhaps the most promising target demographic of all are the HENRY’s (high-earning-not-rich-yet). They have noteworthy disposable income, however, due to living costs on the rise and taxes amongst other such uphill challenges, they are taking significantly longer to reach ‘wealthy’ status especially if they are living in cities such as Hong Kong, New York, London, Tokyo etc.
Politically, socially, and ethnically, the target has been diversified and fragmented into their individual personal values. Just like themselves, they want their luxury purchases to express who they are whilst reflecting their values - often by being associated to the ‘right’ luxury brands who believe in similar values.
We can’t possibly have this discussion without mentioning the (rather large) elephant in the room; the creation of the ultra-rich-elite. The last three years saw the rich get even richer, with the sheer percentage of billionaires rising by 31% in 2020 alone. So how are they spending their exponentially growing wealth? As a direct by-product of the pandemic, those who can afford it, now value isolation more than anything else. We are talking; home upgrades, technology and gadgets, better in-home dining etc. And in the case of the ultra-rich-elite, we must think; The Bahamas, private jets, yachts etc. This segment was the first to move to their country estates, private islands when lockdown hit and was the first to be found redistributing their spending into things such as art or furniture.
All in all - the last three years has taught us to value life’s fragility and to ‘treat yourself’ in a never-before-seen reward system. Saving for a rainy day, or postponing experiences for when ‘we can afford it’ is now lower on the priority list than ever before.
(Disclaimer: The opinions expressed in this article are those of the author. The facts and opinions appearing in the article do not reflect the views of BestMediaInfo.com and we do not assume any responsibility or liability for the same.)