Looking at the luxury industry of today’s market, both in luxury goods and experiences, experts believe that the market will continue to shine in the coming years. The luxury industry—led by cars, personal goods, and hospitality—is comprised of nine segments and makes up for about 80 per cent of the total market shares.
Despite recession fears and geopolitical insecurities, the luxury industry still saw a decent increase, reaching an estimated $1.4 trillion in the global market in 2019. Regardless, the once bulletproof conventional luxury market is in the middle of a seismic transformation and suffering from an intense identity crisis.
China has become a major global growth engine for a lot of luxury brands, but over-dependence on this market could have a catastrophic impact if the modest economic growth forecasts and predicted consumption slowdown for 2020 takes hold.
Additionally, the world’s largest economy, the United States, is also showing signs of a slowdown, with the country expected to enter recession before the start of the 2020 elections. With these alarming indicators, it is expected that luxury brands will have to reevaluate their identity and shape their business and marketing strategies accordingly. This will give them a better chance to thrive despite this period of an economic decline.
Here are the top three luxury trends to watch out for this year:
Identity-based consumer behaviour
One method that generates healthy growth in this globalised world is building on the concept of sustaining local communities and local identity. Meanwhile, a parallel approach that doesn’t seem to respect cultural differences will have some negative impacts on the brand’s reputation.
An example is when Western luxury beauty brands use white models to promote their brand. Imagine the implication it will have on their consumers. More likely, the response will be lacklustre. Asian consumers will feel that these companies have no regard for the consumer or market’s situation, potentially abusing and disrespecting the local context.
Blockchain technology
Luxury brands are now experimenting with blockchain to ensure traceability and authenticity. As the proportion of online sales for luxury brands continue to grow, online authenticity will be a major theme for 2020.
The digital technology in 2019 proved to be the most reliable and scalable way to fight counterfeit and offer product traceability. With that, in 2020, there will be more luxury brands adopting this technology on their most expensive products or services.
Personalization
According to experts, Chinese consumers are becoming “more global and more demanding.” It simply translates to the fact that the one-size-fits-all approach will not work on them anymore. To respond to the desire for authenticity and individualism, use personalization. Millennials and other younger consumers now respond more to unique and custom-made products.
Some heritage brands like Goyard, Dior, and Louis Vitton have come up with product personalization tools that don’t tarnish their brand’s DNA. Luxury house brands let buyers express their personalities through customized embroidery services, appliques, monogramming, and hot stamping. These trends are expected to continually have a fundamental effect on the consumption of luxury brands in 2020.
Trends in 2020 for luxury brands are vast, and luxury brands will need to consider novel ways to ramp up their retention efforts. Doing so will enable them to gain and enhance customer loyalty beyond what is considered a standard notion of rewards.
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