The fluid nature of what luxury means to different people, and the challenges this
presents to the luxury goods industry has been examined in a new report by the Boston Consulting Group (BCG) – ‘The New World of Luxury – Caught Between Growing Momentum and Lasting Change’.
“In this new world of luxury, being iconic and exclusive is not enough to make a brand grow, and fewer consumers are willing to blithely accept high prices as the mark of luxury. They need better reasons to buy,” it said in the report.
It was found that for most consumers the term true luxury connotes rarity, quality, and refinement; and is typically applied to hard and soft luxury (e.g. jewelry and fashion). However an Ipsos survey of 7,496 adults in seven developed countries, coupled with BCG analysis, revealed “experiences” must also be incorporated.
“In the eyes of most consumers, luxury also extends to alcohol and food, as well as to travel, hotels, spas, technology (for example, smartphones), and cars,” BCG said.
Other recent BCG surveys of consumer sentiment demonstrate that values such as stability, family, home, and spirituality became more important as a result of the economic downturn, while luxury and status in its traditional form became less of a priority.
“In the new world of luxury, consumers are looking more to ‘be’ than to ‘have,’” BCG said.
This model values the luxury industry at €1tr ($1.3bn; £846bn). Despite this massive profit pool, the challenges posed by the conceptual shift means the luxury goods industry must manage conflicting priorities in every major aspect of the business
Proving value, offering experiences, embracing new media, building brands, “refreshing” retail strategies and adopting corporate social responsibility should all be vital going forward, BCG concluded.
