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Never let it be said that the wealthy don’t have an eye for a bargain. If recent reports in The Wall Street Journal are to be believed, then America’s wealthiest shoppers are changing their attitude and approach to how they shop. More importantly, how they engage online and that knock on effect in-store.
This trend is not unknown to general shoppers but the adoption of bargain hunting by America’s more discerning high net worth (HNWI) shoppers has created a worrying dilemma for luxury clothing and retail brands, that more than likely will be crossing the pond and hitting premium brands here.
The New Normal
If you consider that the sale of luxury goods fell 1% last year, the first decline since 2009, then the sellers of personal luxury goods such as apparel and accessories need to clearly re-examine their strategy. So what’s driving the change?
Firstly, the great white shark of retail, Amazon has made no bones about its intention of entering the luxury clothing market and if that isn’t cause enough, the change is being driven by price comparison or the ability to compare and have choice on price – both online and in-store.
Super premium brands will have super dedicated fans, the more accessible or easier to reach aspirational brands are beginning to see a shift in customer behaviour. Retailers Tiffany & Co and Ralph Lauren have had notable challengers recently, with both pushing out their current CEO’s. The chart below shows the makeup of the global luxury market and +/- growth for last year.
Embracing Change, Enabling Growth
Citing the most recent Luxury Goods Worldwide Market Study report by Bain & Company from the early 90s to 2007, almost 90% of luxury brands were able to grow. From 2014 to date, it is forecasted that fewer than half of all of these companies will grow and approximately only 15% will show double digit growth.
Quite a wake up call. So, what can luxury brands, especially those in the personal luxury goods market, do to address the shift in consumer behaviour and also at the same time, secure future growth?
Well, let’s look at the facts. We know attitudes are changing and we know that customers are increasing looking at online as a way to start, engage and conclude the process from browser to buyer.
Creating a Robust Digital Strategy
Using the various components within the digital marketing suite to channel this new shift of buying habits is key.
Building your communication around the user journey is far more engaging than generic messages in the hope that your prospective customer will buy.
In conclusion, all is not lost for aspirational personal luxury brands. Far from being a threat, the change in consumer path to purchase is a great opportunity that will allow the brand to pivot and allow for a deeper customer experience – which can only be a good thing.