Luxury goods and services have seeped into the lives of all consumers. Mass engagement has created a reverse premiumization effect, making what was once considered a high-end, luxury feel impersonal and ordinary.
Consumers are looking for ways to deviate from what’s expected of an upscale product or service – from carving out ways to have unique and personalized experiences to authenticating their access to truly elite products.
We see five shifts that signal a new face of luxury.
1. Engagement, Personalized: New Pathways of Elite Interaction
While daunting in the past, Web3 technologies will be leveraged in new, accessible ways to bolster engagement and open new pathways of interaction between high-end consumers and brands. Luxury consumers, who are constantly seeking fresh, captivating interactions with the brands and products, will seek "dimensionalized” experiences that allow them to indulge in new ways.
Bypassing third-party intermediaries, brands will leverage new membership platforms and digital passport products to form ecosystems surrounding a product or event, creating its own currency to be shown off, traded, or redeemed for more.
Friends with Benefits(FWB) has been called a “decentralized Soho House” and a “VIP lounge for crypto’s creative class.” An informal Discord chat room turned exclusive digital members’ club, its valuation reached $100 million in 2022. Admittance requires a minimum buy-in of $FWB tokens, the club’s proprietary cryptocurrency, which unlocks access to exclusive benefits and services.
Balenciaga in partnership with digital ID specialist Eon, the fashion house's latest line of Balenciaga Music merch unlocks an exclusive playlist from trip-hop group Archive. The NFC-equipped T-shirts and hoodies will offer a gateway to a soundtrack specially chosen by creative director Demna. The new song, called ‘Patterns’, was composed exclusively for Balenciaga Music and is not available anywhere else or through any other channel.
2. Seeking Signature: The Personal Brand of Individualism
As the economy rebounds, consumers will seek to reinvigorate themselves and reestablish their personal brand and style. Across consumer goods categories, there will be a continued surge of “signature” trends – think grandmacore or latte makeup, as consumers seek to set themselves apart and bolster their individuality.
High-end consumers will find ways to toggle between the influence of their trend-obsessed Gen Alpha counterparts and the tried-and-true traditions of old-school luxury brands. Consumers will be inspired by novelty and will follow brands who provide them access to a creative, exclusive partner.
According to Instagram’s 2024 Trend Talk (a data-driven look at Gen-Z trends that will drive global culture in 2024), #perfumetok remains on the rise, with “over a quarter of Gen-Z planning to express themselves by discovering a signature scent in 2024”.
Luxury consumers are already delaying discretionary purchases, even as their income and wealth remain solid. “There are soft aspects in their willingness to buy, which is equally relevant to the hard data about the number of people able to spend on these items.” (Forbes)
According to Instagram’s 2024 Trend Talk (a data-driven look at Gen-Z trends that will drive global culture in 2024), #perfumetok remains on the rise, with “over a quarter of Gen-Z planning to express themselves by discovering a signature scent in 2024”.
3. Authenticating Status: When Validation Trumps Easy Access
As access to high-end goods and services expands, luxury consumers are no longer able to differentiate themselves from the masses. They are gravitating towards brands that offer them security and preserve their elite status.
New technologies such as blockchain and two-factor authentication will ensure consumers’ high-value products are validated and quality assured. Limited-edition and hyper-personalized products will go digital with consumers finding it critical to verify authenticity prior to purchase.
Some of the world’s largest luxury groups have turned to blockchain technology to certify the authenticity of their brands’ products and discourage counterfeits. The Aura Blockchain Consortium — whose members include LVMH Moët Hennessy Louis Vuitton and Compagnie Financière Richemont — said on its website that the technology had allowed brands “to put a tamper-proof digital stamp of authenticity on any product or component.” (New York Times)
Ultra-premium Colombian distillery Dictador, recently launched the world’s most expensive rum. Priced at $1.5m per bottle, invitation-only buyers will fly to the brand’s distillery in Cartagena to blend a one-off variety, which will be encased in a 24-carat gold bottle designed by Polish street artist M-City, with a city of their choice etched onto its surface. (Stylus)
4. Altering Exclusivity: The Widening of the Luxury Spectrum
The widened exposure and access that social media has created for luxury products, services and experiences has increased the demand for even more exclusivity.
The spectrum between the mass premium consumer the truly wealthy consumer will create opportunities for brands to offer more distinction that speaks to the nuanced priorities of individual consumers. Exclusivity will be more about new hierarchal networks within memberships and the unique access that new tiered structures create.
Harrods has opened a private members’ club in Shanghai that offers 250 super-rich people exclusive access to Gordon Ramsay’s first restaurant in China, a bar stocked with rare Scotch whiskies, and the Knightsbridge department store’s own-brand private jets. “Online shopping was simply not enough; our Chinese clients love the greater Harrods experience and therefore it was our desire to bring this to China in an innovative way." (The Guardian)
Blackbird, the first loyalty platform for independent restaurants, designed to entice customers into becoming regulars and give restaurants the ability to provide V.I.P. services to regulars. Blackbird gives restaurants and customers a line of direct communication: via text (“SMS concierge”). If two groups arrive at the restaurant and there’s only one table, the restaurant will have the information it needs to determine who gets it: the tourist who may be a once-a-year visitor, or the regular who lives down the block.
Tinder announced a new subscription plan calledTinder Select, an invite-only membership offered to less than 1% of users. Applicants that are accepted can unlock exclusive perks like early access to new features and a virtual badge for $499 per month. It’s the app’s fourth paid tier option, joining Tinder+, Tinder Gold and Tinder Platinum.
5. Investing in Identity: The Expectation of Doing Good
Future consumers will see shopping as a way to invest in a brand’s identity, rather than consume a product. These consumers will see brands as extensions of themselves — seeking intentional products and services that represent their beliefs and align to their values.
Sustainability will continue to be a top priority in their lives and lifestyle, and they will have similarly high expectations for the brands and companies they engage with to do the same. We will see a higher value and interest placed on social impact through an uptick in resale and consignment of non-traditional products in a unique and meaningful way.
The global circular economy revenue for the luxury goods category is predicted to attain $19bn by 2026 (up 111% from 2022). (Statista)
Transparency and traceabilityhave become higher priorities for fashion brands, as the key to compliance for a new wave of regulation. This focus on provenance ties neatly into luxury storytelling, says Liv Simpliciano, policy and research manager at Fashion Revolution. “Knowing where the fibers were grown, who farmed them, who processed them, who made the fabric and who sewed the clothes is the epitome of luxury.” (Vogue Business)
Globally, one in five luxury brands can’t see past consumers as critics, severely limiting communications around their sustainability efforts and this potentially limiting their influence. (Stylus)
What It Means for You…
Food & Beverages: Craft will continue to be enchanting, but luxury definitions will go beyond provenance to focus on wrap-around experiences and cross-category offerings.
Beauty: Beauty brands will face a search for more meaningful luxury as the category becomes a bit more “iykyk” (if you know, you know) and a bit less ”maximalism” and “logo-mania.”
Home & Personal Care: Feeling of alignment with the values of the brand and its community will drive differentiation and loyalty as consumers look to bring these products into their home at increasing rates.
Consumer Health: With a focus on human-touch and technology, Consumer Health should focus on safe, selective, and seamless, where consumers are seen as individuals rather than part of a segment.
