The 2021 Luxury Retail Trends Report reflect an industry at an inflection point. As with many sectors, the global coronavirus pandemic of 2020 shocked the luxury retail market and contributed to financial losses across the industry. Luxury consumers, their shopping habits, and their values have also changed as a result of the pandemic, forcing luxury brands to realign their value propositions in order to better engage the new luxury consumer.
TREND #1: Investment in an Online Luxury Buying Experience
From being virtually nonexistent 10-15 years ago to now making up over 12% of total luxury sales worldwide ($37 billion last year alone), online sales continue to soar for luxury retail brands. This trend is expected to continue with online sales projected to comprise 25% of total luxury sales as soon as 2025.
This further indicates just how crucial it is for luxury retailers to be equipped with the technology and knowledge to build a relevant, brand-consistent online buying experience for their customers. More than simply having online purchase options, luxury retailers have to ensure that their online experience encapsulates what it means to buy from their brand. This includes but is not limited to flawless functionality and utility for the consumer, beauty and elegance in website design, and thorough customization capabilities for a variety of different personas. Many high-end companies like Rolex have embraced this market shift and truly personify what it means to offer these functionalities and more within their online buying platforms.
The world of luxury is changing, and this change was accelerated by the COVID pandemic. In order to survive in the new world of virtual retail, companies must be willing and able to create a fully online luxury buying experience for their customers.
eCommerce sales are projected to make up 25% of luxury retail sales by 2025.
TREND #2: Pairing Luxury Items with Experiences
Gen-Z and Millennials’ spending habits differ drastically from those of previous generations. Almost 50% of this demographic would rather spend money on travel and experiences than on buying a home or paying off debt. So, what does this mean for luxury retail brands? It indicates that far less disposable income is being spent on luxury goods, whereas in years past these purchases took a higher precedent. To combat this new spending trend, luxury retailers are having to get creative with how they market their products, where one of the most effective strategies has been associating products with experiences.
There perhaps is no greater example than the Omega Speedmaster Professional, the first watch on the moon. The Apollo 11 moon landing was over fifty years ago, and the watch is still near the top of best-selling watches year in and year out. The watch has been intentionally unchanged over the past fifty years to give younger consumers a chance to buy into the experience and history of the moon landing. Luxury retailers can take a page out of Omega’s book and offer younger generations the marriage of product and experience that is trending in the marketplace today.
50% of millennials are prioritizing spending on travel as opposed to buying homes/paying off debt.
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Contributions by Katerina Baduk and Noah Baker