Luxury has had a unique place in society for many centuries. From the ancient Romans and Egyptians who indulged in lavish garments and materials, to the modern consumer who aspires to own designer products, luxury has long been synonymous with status and ostentatious pleasure. But what does the future hold for luxury brands? According to Tatler Taiwan, 50 per cent of luxury brands may disappear by 2030, leaving consumers with fewer choices and less opportunity to own these coveted items. Read on to explore why Tatler Taiwan has come to this conclusion, and what the future may hold for luxury brands.
1. Investigating the Unavoidable: Luxury Brands at Risk of Disappearance
Luxury brands have long been associated with providing top quality goods and services to customers, but in this uncertain economic climate, threatening their highly-regarded positions. Despite reports that the wealth of the world’s richest individuals has grown during the pandemic, luxury brands are facing an array of challenges that they must face head-on.
- Luxury inflation is reducing the barrier of entry into luxury fashion, making it increasingly difficult for luxury brands to maintain exclusivity at an affordable price point.
- Spending shifts are caused by consumers moving away from big-ticket items such as luxury items, in favour of essential goods and services.
The combination of higher prices and consumer detachment is a recipe for disaster for luxury brands. As the demand for luxury goods dwindles, it’s becoming increasingly difficult to remain profitable. For example, some luxury brands are shifting strategies by moving towards re-sellers and partnering with former competitors to offer discount codes and more. Others are focusing on digital, offering e-commerce platforms and virtual shopping experiences.
No matter what the approach, it will be important for luxury brands to remain vigilant in order to survive the turbulent economic waters. Through innovation and creative strategies, luxury brands may yet be able to weather the storm and maintain their coveted spot in the fashion industry.
2. What Changes are Necessary for Luxury Brands to Survive?
The COVID-19 pandemic has, so far, been a source of massive disruption for luxury brands all around the world. But when the dust settles, what needs to change for these brands to continue to thrive? Here are some potential actions luxury brands should consider.
- Integrated Offering and Experiences: For luxury brands to stay relevant, they need to shift away from purely transactional experiences and provide truly memorable ones across digital, physical and service touchpoints. These experiences should enable customers to bond with these brands in meaningful ways.
- Tech-savvy products: It is becoming increasingly important for luxury brands to develop tech-savvy, well-designed products that bring a unique value proposition. This offering should go beyond the traditional trappings of luxury and provide consumers with unique experiences that become integral to their lives.
- Digital Engagement: In the post-pandemic world, luxury brands need to invest more heavily in their digital presence and capabilities. They should use digital channels to engage with customers in personalised and targeted ways and provide them with access to distinctive experiences that convey the brand’s values and global reach across channels.
- Flexible Omni-channel Distribution: typically, luxury brands rely heavily on physical retail spaces, however, this is changing due to the impact of the pandemic. Due to this, brands must go beyond digital-only strategies and invest in omni-channel approaches that take into account the preferences and needs of customers across all channels.
- Consumer Insights: Finally, luxury brands need to invest in advanced analytics to better understand their customers, their preferences and behaviour. This consumer understanding should be leveraged to develop meaningful experiences that align with their values and continue to shape the luxury brand’s future.
3. The Realities Behind Luxury Brands’ Struggles in A Changing Market
As the global economy shifts and traditional market structures transform, luxury brands are confronted with some serious realities. They must juggle a number of challenges to stay relevant and profitable.
Generational Preferences: One of the biggest difficulties for established luxury brands is appealing to modern customers. They must keep up with trends and find innovative ways to market to younger generations that prioritize values like sustainability and social awareness alongside luxury and quality.
Threat of Oversaturation: The market is becoming increasingly saturated with luxury brands. In order to stand out, a brand must offer something innovative and different, while still maintaining their high-end appeal.
Social Media Pressure: Social media is the defining marketing platform of our time, and luxury brands need to be actively engaging with their target consumers. It’s no longer enough to simply advertise a product - brands must track and respond to comments and feedback, and create compelling content if they want to stay relevant.
Competition From New Markets: New luxury markets, such as those based in Asia, have been increasingly successful. This has caused established brands to reassess their strategies and offerings in order to compete, as well as reconsider where they invest their resources.
4. Taking Action: How 50% of Luxury Brands Can Survive until 2030
This decade, luxury brands face a unique challenge – how to survive the economic disarray caused by the Covid-19 pandemic? A relatively small portion will be able to hang in until the dust settles, while the other half is simply too vulnerable. Fortunately, there is a glimmer of hope that those remaining brands can survive until 2030.
As they face this difficult challenge, each company should take the following steps:
- Focus on their digital presence. No bindings of physical location can present a variety of new opportunities for luxury brands, and they should take full advantage of them. From AR and VR experiences to digital showcases and sponsored content, online platforms can help them gain a greater reach and draw in potential buyers.
- Recalibrate their business model. Luxury brands have to survey the changing landscape of the modern consumer world and change their strategies accordingly. An oversaturated market demands that they take on new business models – such as reselling, subscription-based services, retail and vacations – to stay relevant and appealing.
- Reinterpret their strategy. They have to come up with a new strategy that works in an ever-shifting market. This should be a long-term vision, one that leverages growth, broadens their target audience and develops creative ways to keep customers engaged all year round.
- Reinvent their communication. Now would be the ideal time to repackage their brands in a way that is appealing to a new customer base. Explore trends in communication, such as using influencers and micro influencers, as well as engaging content.
By implementing these measures, and with a bit of luck, 50% of luxury brands could make it in 2021 and beyond. However, they also have to remain agile and pay attention to the ever-changing consumer world. Adapt and survive, that’s the goal.
It seems that while luxury brands have reigned as vanguards of sophisticated depravity within the fashion industry, the democratization of technology is forcing luxury brands to reevaluate their current strategies. Without significant changes, it’s possible that 50 per cent of them may have disappeared from the market by 2030. Stores must look for new ways to integrate the traditional luxury shopping experience with the need for convenience brought about by the digital age or be left behind.
As technology marches on, it’s time for luxury brands to embrace change and progress or risk their place in the future.
