Fact: The global luxury goods industry will increase from $309.6 billion in 2021 to $382.6 billion this year.
Amidst multiple global recessions and a pandemic, it’s pretty epic how these multi-million brands stay afloat and even thrive, don’t you think?
Like how do they do it and what are they doing right?
Join us as we take a closer look at the inner workings of Chanel, Louis Vuitton, and Hermès 🙂
Maximises Technology and Welcomes Innovation
Did you know that brands that strongly rely on their own boutiques or department store partnerships will see a decline in their offline sales from 95% to 75%? Ouch!
No wonder luxury brands now embrace e-Commerce which is projected to drive 25% of their sales in 2025.
In fact, 20% – 30% of the luxury industry’s revenue pre-pandemic came from consumers making purchases outside of their home countries.
For Crazy Rich Asians, they often buy luxury products during their travels. But with the travel restrictions brought by COVID, luxury brands had to innovate their digital and omnichannel offerings so the same market would continue to patronise their products.
So what exactly did they do?
They started localising their websites and marketing strategies. For example in China, one of the biggest markets for luxury brands, luxury companies created websites using their language. And to tailor fit it further, more information was added to the pages, an opposite approach compared to its Western counterparts.
Indeed, knowledge is power. Knowing and understanding your customer’s psychology will always be key.
This is also the rationale why luxury brands are capitalising on personalisation. Our internal research shows that one out of five luxury buyers have admitted that personalisation was key to winning their ‘yes’. An Accenture report also revealed that 91% of customers are more likely to purchase from a company that provides offers relevant to their needs.
Uses Brand Storytelling
A study by BrandTotal shows that luxury brands have high success rates through storytelling as these are easier to retain than straight (and mostly boring) data.
Luxury brands have used different angles in their narratives. Some highlight their mission statement while others talk about their legacy, founders and even their employees. Today, what works best is highlighting corporate social responsibility and sustainability to target Gen-Z, a developing market for luxury brands. According to Porter Novelli’s Purpose Perception Study, 71% of consumers are likely to choose a purpose-driven brand if the quality and cost were equal.
At Bentley, for example, they used their website to amplify the company’s actions to reduce their site’s environmental impact for over 20 years. Statistics, results, and future plans were detailed to prove their claim.
Initiates Collaborations
Human psychology tells us that we are hardwired to adore beauty and seek novelty. Clients always expect more and something different even from their favourite brands. Collaborations are one of the ways to shake things up and it proved to be effective in many luxury labels.
Remember Louis Vuitton x Supreme collaboration? LVMH reported having $23 billion in earnings for the first half of 2017, and the 23% profit increase is partially due to their collaboration. It’s worth noting that Supreme is a skateboarding lifestyle brand, far different from the opulent label and it seems odd at first to mix these two together.
This is a risky approach and could receive mixed reactions from the market. However, with the right exposure, and you guessed it, a compelling story, it can be successful.
Facilitates In-Depth Staff Training
QVALON reported that 33% of consumers consider highly-trained staff an important factor when making a luxury purchase. This is why luxury brands prioritise building robust and scalable processes to keep their staff updated and in the loop. After all, they are their first line of defence.
When necessary, luxury brands change how they position themselves in the market. A strategy that has worked for decades must be fine-tuned based on their audience and available technology which is why regular training is key so everyone is on the same page.
