Manufacturers | 10 trends in the luxury sector: from digitization to brand identification Learn more Infotaller Newsletter

Manufacturers | 10 trends in the luxury sector: from digitization to brand identification Learn more Infotaller Newsletter

Manufacturers | 10 trends in the luxury sector: from digitization to brand identification Learn more Infotaller Newsletter

The high-end and excellence sector has undergone a revolution in the last decade, which has brought with it important changes that lay the foundations for the present and the future of this industry, which accounts for 4% of the European GDP and generates more than two million jobs in the EU.

Since 2011, the sector has undergone the most important changes due to the impact of technological development on society, with all that it entails, and the new generations, who, raised as technological natives, have generated new models of behavior, interaction and of consumption. Thus, in these 10 years the sector has been growing at a rate of 5% per year to reach revenues of 1.3 trillion euros worldwide in 2019, according to data from Bain&Company.

The online channel has taken off in this decade, because if in 2012 online sales did not reach 4% of the total income of the sector, they began to grow at a rate of 25% per year to represent 12% of total sales in 2019. The pandemic only accelerated this trend and caused this percentage to grow to 23% of total luxury income in 2021. The forecast is that in 2025 the percentage will be 30%, that is, one of every three sales of high-end products will be digital.

Círculo Fortuny, to which the main high-end and excellent European companies and firms belong, condenses this transformation into 10 trends:

1.- The irruption of ecommerce: the digitization of commerce in the luxury sector

In the last 10 years, ecommerce has experienced unstoppable growth due to the development of new technologies and the new generations, which are digital natives and increasingly represent a greater volume of purchases in the high-end sector. The pandemic has also accelerated the trend, due to closures and confinements around the world.

Hence the need for companies to digitize in a complete and transversal way. It is not necessary to limit yourself to activating e-commerce, but the entire management must be digital and must offer the consumer a 'phygital' experience, which combines the best of the physical world with the best of the digital world to offer a complete experience of excellence.

2.- The irruption of the new generations: from the physical experience to the 'phygital' experience.

The new generations, digital natives, seek that excellence in a much more spontaneous, immediate and comfortable way. They don't want to leave their room to learn about a new product or travel to another destination. And brands have to navigate between two waters -physical and digital- without perceiving differences between them. The new consumer seeks to obtain the same quality experience in both contexts, which is why a 'phygital' reality is created in which these physical and temporal barriers are broken and these two realities alternate spontaneously and without perceiving differences.

3.- Social networks as an aspirational catalogue: the new communication of luxury

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In this new reality that has been created in the last 10 years, social networks have had a lot to do with it, the new live and aspirational catalog in which you can learn first-hand about a product or brand and interact with it. And that is the great novelty: social networks establish a two-way communication that did not exist before between brand and consumer that allows loyalty, attract and at the same time raise awareness.

4.- The rise of Asian tourism in the West

In the last 10 years, Asian tourists have become the main high-impact traveler in Europe, and of course, in Spain. Above all, those of Chinese nationality, which in Spain represents 40% of the total of this type of value-added tourism. These tourists are the ones that made the most outlay until 2019, spending 3 out of every 10 euros of tax free in Spain, according to data from Global Blue. Although the pandemic has made this nationality more inbred and consumes more internally, hence the need to focus on tourists from Southeast Asia and the Persian Gulf, which only account for 11% and 9% of the non-EU visitors in Spain while in the rest of Europe they are around 15%.

5.- New consumption: from the product to the personalized experience and emotion

These 10 years have also given rise to a new pattern of consumption that has gone from 'good for everyone' to 'customization of the experience'. In other words, if before excellence was in the product itself, which was valid for all audiences, who purchased it equally, this form of consumption has led to the demand for personalization and customization of the consumer experience of a high-end good. The new generations seek to differentiate themselves from their predecessors and their contemporaries with products made exclusively for them according to the premises they demand, hence the brands and companies must treat the consumer in a unique way, taking into account their preferences. In addition, the product goes beyond something material, since it reaches the consumer's emotions, creating a sentimental bond that survives the passage of time. Experience gives way to emotion.

6.- The extension of the concept of luxury beyond fashion, accessories and the automotive industry: masters, art and wellness

The concept of luxury is no longer what it was a decade ago. If luxury meant a signature bag or shoes or driving a high-end car, now nothing is like that. We are now talking about a consolidation of luxury and a more natural coexistence with it, which is nothing more than its extension to fields in which it had never before been thought of as such, but which have always been in the field of excellence, such as case of art, which also constitutes one of the main pieces of historical heritage.

The same is true of master's degrees and MBAs. The training of excellence becomes part of the so-called world of luxury, since it is the one that gives access to a high-ranking or executive professional career, which is ultimately the one that obtains the highest management and decision-making positions.

Finally, 'wellness', personal care, is considered a luxury as it allows people to dedicate themselves for a few moments, disconnect from the outside world and be able to achieve a balance between body, mind and emotions that is essential in today's society and its hectic pace. This trend is going to increase over the years, since self-care is configured as one of the experiences that consumers demand the most today.

7.- Sustainability and corporate social responsibility as challenges and the basis of the business model

It is clear: sustainability will be key to defining the leading companies of the future in five years' time. 60% of consumers are already governed by environmental and sustainability aspects to make their purchases. Therefore, the future is sustainable or it will not be, something that in the field of high-end and excellence is even a revulsion, since the brands and companies in the sector have sustainability engraved in their DNA. Although what is currently imposed is a circular or 360º sustainability, which affects the entire value chain of companies, which implies sustainability with the environment, with the client, with the suppliers, with the employees and with the communities in which they operate.

8.- The enhancement of the concept of the craftsman

High craftsmanship and the work of the craftsman have been partly eclipsed at the risk of new technologies and their enormous development. Novelty and innovation have taken over the market in recent years, leaving aside the tradition of artisan work, the one who carries out a meticulous work process with top quality materials to shape a unique object.

It is time to once again value the master craftsman, an essential figure to transmit his knowledge from generation to generation, allowing these trades to continue alive today, as part of our legacy and our history. The return to high craftsmanship involves prioritizing these trades, which also act as an economic engine in many areas of the so-called Empty Spain and guarantee livelihoods for many families and a future for many young people.

9.- The identification of the brand with a history and tradition

Competition in the high-end market is increasing every day, with new brands that have joined the traditional ones with a disruptive offer that engages the new generations of consumers. Although, within that tidal wave, the story behind a firm continues to prevail. Precisely, the brands that have a storytelling behind them, a story that links tradition and family, are the ones that connect the most with the consumer, since they seek to identify with the brand they consume to differentiate themselves, and those stories are the ones that connect people with brands and build lasting relationships.

10.- The family tradition as a business model of excellence

In this line joins the concept of family within the sector of excellence. Because this industry is one of sagas, which perpetuate a 'lifestyle' and a way of seeing the world through the new generations with products and services that carry that family tradition in their DNA. These brands have managed to reinvent themselves in these 10 years by innovating and approaching that more digital and demanding audience, but from their codes of family values ​​and tradition.

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