Boardroom executives can be forgiven for feeling a little unsure when planning for what will come next. Pollsters, global media and betting markets failed to predict the outcome of some of 2016’s biggest political events – from Brexit to Trump. It has become increasingly clear that we are living and working in an environment where it is hard to forsee what will happen next.
Positive Luxury’s 2017 Predictions for the Luxury Industry report, in partnership with Forevermark, part of The De Beers Group of Companies, has found that the luxury market is facing profound uncertainty, too. Our research suggests that in the coming year, transient luxury experiences will become the norm. A culture of impermanence has emerged, from a generation of millennials used to unpredictability, whether it be political, personal or economic.
As a result, we see luxury which is immediate and ephemeral, such as fine wine, luxury groceries, travel and beauty set to enjoy growth, as consumers desire travel, experiences, and authenticity from brands. This trend has been marked in Asian markets, where a thirst for luxury travel is emerging. Such spending is less conspicuous than more obvious material displays of wealth: another indicator of the way luxury consumption is changing.
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That said, traditional institutions such as marriage and a home remain major life goals for millenials. According to De Beers’ 2016 Diamond Insight research, cited in our report, today’s up and coming luxury consumers still crave traditional markers of adulthood. One of the most interesting characteristics of the bridal jewellery category, for example, is its ability to weather economic recessions better than other diamond jewellery categories. In the U.S., millennial bridal diamond jewellery has maintained growth since the late 1990s, irrespective of economic crises.
Rental and ‘surprise me’ subscription models are expected to come to the fore, from monthly designer sneaker subscriptions to luxury beauty box deliveries. In a world where a coat can be ordered on a smartphone in the morning and couriered by bike to a customer’s office in the afternoon, where information and communication is exchanged faster than ever via social media and messaging apps, timing in 2017 will be of the essence for the luxury market.
The question of timing for 2017 is also marked by how production, design and delivery timetables are shifting. One of the biggest game changers of 2016 was the ‘see now, buy now’ season model introduced by Burberry, which saw the brand change its entire production schedule to enable customer to instantly shop runway shows: others like Tommy Hilfiger swiftly followed suit. As financial results for the last quarter trickle in, 2017 will be the proof of whether the model has worked. The jury is still out on whether it can be a success.
"Brands are tapping into the ability of ‘dark social’"
Another trend is the rise of mobile messaging apps like Snapchat being embraced by brands wanting to please young luxury consumers hungry for instant access to catwalk shows, ad campaign stars, and limited edition product. Brands are tapping into the ability of ‘dark social’, that is, non-public social formats like WhatsApp and Facebook Messenger, to create exclusive customer relationships.
These are just a few of the changes our report has tracked for the coming months. In a difficult economic climate, luxury retailers will have to ensure they invest wisely in their people and practices in 2017 – keeping business stable after a turbulent 2016 and setting the course for a strong performance in 2018. In the West, the good news is that positive sentiment seems strong, on both sides of the Atlantic.
Overall, we believe purpose is what will drive growth in 2017. In the face of hard-to-predict change, individuals, and the businesses they work for, can only control their own actions. This presents an opportunity: as governments are failing to address citizens’ needs, companies are filling the role of solving some of the most global pressing issues, from water scarcity, to championing and developing female workers’ rights.
"In 2017, business rather than government has the chance to lead societies forward."
Responsible businesses have the opportunity to innovate. This can mean spearheading AI research and development, or commercialising sustainable methods of production, or using social media as a tool to anticipate and respond to customers’ needs, rather than merely as a marketing device. In 2017, business rather than government has the chance to lead societies forward.
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This presents the luxury market with a unique opportunity. Often working with rare, natural resources and local communities, this is a responsibility and a privilege which, if handled with care and thought, can lead to productive, profitable, positive outcomes for companies, staff and customers, and ultimately society at large.
Businesses should focus on building a progressive, inclusive vision for the future: a quality that will be needed in 2017. By taking responsibility for the way they conduct business, luxury companies can hedge against unstable economies, geopolitics, and a faster-and-faster production schedule.
Beautiful product will always be crucial to a luxury company’s success. But companies which can also exemplify innovative, socially aware values through their purpose-driven offerings will find themselves anchored amidst 2017’s political, technological, social and economic changes.
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