It is important that we consider the current backdrop, with the luxury industry among the worst sectors hit by the COVID-19 pandemic. Whilst the global economy shrank by over 3% in 2020, sales across luxury decreased by a sizeable 14%, but the sector is now nursing itself back to full health recording real value growth of just under 6% in 2021, to reach a V-shaped rebound of US$1.2 trillion in sales by the end of 20221. However, the industry has been further hit by unforeseen geopolitical issues, such as the war in Ukraine, as brands lose high-spending Russian clientele and continuing Covid infections in Asia preventing travel, rising inflation rates adversely affecting supply chains, energy prices and consumer spending, and the UK’s loss of its tax free shopping status has dealt a severe blow to the recovery.
The silver lining is that we’re determinedly pushing boundaries with stand-out creativity in an industry that was previously slow to adopt new trends, and despite predictions of a recession by Christmas, the luxury industry is currently experiencing a very encouraging bounce back post pandemic, relying upon a client base with an insulated spending power.
As PR and marketing professionals, we’ve seen seismic shifts in the communications landscape, our brands are fast adopting an omnichannel approach, providing customers with a seamless shopping experience, whether they are shopping online on a smartphone or in a brick-and-mortar store. Clients are keen to investigate Web 3.0 opportunities in the Metaverse and gaming, whilst continuing to weigh up options in NFTs and crypto, with the latter deriving increasing critique from certain quarters while Bitcoin and Ethereum have hit record lows – but as rapidly as we educate ourselves the landscape continues to evolve. Significantly, the first ever Metaverse Fashion Week took place this year, featuring luxury brands, household names and digital-native designers. We’ve particularly been watching the spirit industry’s flurry of NFTs, with most recently Diageo-owned Johnnie Walker teaming up with BlockBar to offer seven bottles from its rare Masters of Flavour series as NFTs, plus digital artwork, and a ‘unique’ experience.
The Future of Sustainability
Post-Covid, there is a demonstrable optimism being shown through ‘Citizen Capitalism’, with individuals acting as allies in holding corporations to account and exercising an ‘aggressive culture of engagement’ while seeking out their planet-friendly, purpose-driven brands, demonstrating key tenets like diversity and social inclusion, but also charity and philanthropy as ‘uneasy affluence’ becomes more widespread.
Future consultancy, The Future Laboratory, has reported on marketers using it to push everything from packaging to social media campaigns, while some greenwashing brands still operate unchecked. In its ‘Sustainable Futures’ report, the agency commented that the term has lost its purpose, citing eco-fashion veteran Stella McCartney saying: “I barely even know what the word ‘sustainable’ means anymore.” Therefore, brands have to work even harder to prove a tangible Environmental, Social and Corporate Governance (ESG) framework with impact.
Key examples across private aviation, yachting, travel and real estate
Award-winning jet charter broker, Victor, set a new benchmark as the first aviation business to be double net zero on all flights, offering 200% carbon offset as standard at no extra cost to the customer, but is now going one step further with a sustainable aviation fuel offering, leading the charge in climate change action within business aviation. Meanwhile, SAY Carbon Yachts is producing carbon-made luxury day boats with 50% less fuel consumption compared to their peer group, and with one model, they have also ‘electrified’ yachting. In the travel industry, Guest, the world’s most exclusive private member’s travel club has been seeking ways to reduce its environmental impact, and is committed to giving 30% of its trip profits back to local communities and the environment through its charitable initiatives with World Housing and Rainforest Trust.
Notably, we have just held a sustainability panel discussion for some of London’s leading property voices for international real estate investor and developer, Ghelamco, renowned for its creation of sustainable, energy neutral concepts and a one-of-a-kind approach towards green building. Their first project in London is The Arc, a mixed-use hub, slated to launch during Q1 2023 in Shoreditch, which is a fully electric development boasting 30 % lower than multi-fuel-operated competitor. It also boasts triple certifications including BREEAM, WELL Gold and DGNB.
Health is the New Wealth
A focus on health and wellbeing is now embedded in every single aspect of consumer lifestyles too. Post-pandemic consumers have heightened awareness of the importance of holistic health, which is fuelling demand for luxury wellness propositions. One such example is leading global developer and operator of destination resorts, ultra-luxury hotels and residences, Kerzner International, launching the new hotel brand, SIRO – an immersive lifestyle destination at superyacht destination Porto Montenegro, which blends the boundaries between hospitality and wellness through a fresh perspective and energising experiences.’ To facilitate the rollout of the brand, Kerzner has enlisted the help of athletes from around the world to play an advisory role.
We’re also seeing an increasing trend for health diagnostic services, such as Echelon Health, offering health assessments designed to suit your individual needs and prevent disease; or mind and body optimisation through body hacking. For example, the BioHacker’s Residence by architects, Superficium Studio, is a remote space designed for the US’ DIY biohacker community; this desert facility grants guests the privacy to explore self-optimising practices, such as 3D organic printing and gene-editing technology.
Significantly, by 2026, 61% of the luxury market will be composed of Millennials and Gen Z, up from 39% in 20192. A focus on youth culture is fostering unexpected Gucci collaborations with rivals like Balenciaga, gaming organisation 100 Thieves and metaverse platforms like Roblox, for which it created the Gucci Garden, and now Gucci Town, where users express their individuality through virtual clothing, and connect with like-minded individuals. Another standout partnerships success has been seen surprisingly from same sector brands, Omega and Swatch, creating the Speedmaster MoonSwatch collection. Also, within the watch category, collaborator George Bamford has an increasing status globally with his Bamford Watch Department, despite previously being a pariah to the Swiss watch industry. The canonical status of Rolex explains why in some circles Bamford is regarded as an ‘antichrist’ offering changes in colour and text additions or cartoon characters like Mickey Mouse, Snoopy or Popeye to a watch dial for limited editions.
The lifting of travel restrictions, coupled with pent-up consumer demand has provided the explosive resurgence that the travel industry was so desperately craving, but with consumers seeking purpose-driven offerings, taking fewer holidays, but spending more time and more money whilst they’re away to make up for lost time.
The key new trend that is going to redefine boundary-pushing travel experiences, if it isn’t unstuck by environmental concerns, is commercial space travel with a three-horse race between key players SpaceX, Virgin Galactic and Blue Ozone. Luxury travel companies have been quick to add this to their repertoire, for example luxury travel company Pelorus, joining forces with space training provider Orbite, to create an astronaut orientation programme.
The modern luxury consumer is not one homogenous group anymore – traditionally we would have segmented a target audience by age or gender, but now tribes can be defined by their values and desires. According to Irregular Labs and Gucci, 25% of Generation Z expect to change their gender identity at least once during their lifetime. For clients, we have been exploring the exponential growth in gender fluid brands and campaigns, with one of the most prominent names being Harris Reed, a British-American who has created deliberately non-gendered fashion, worn by the likes of Sam Smith and Harry Styles. In fact, Gucci this summer at Milan Fashion Week unveiled the ‘HaHaHa’ collaboration with Harry, who had teamed up with designer Alessandro Michele (the brand name reflecting both of their initials), who was known for exploding into the fashion world proposing what was then a new era of gender-fluid dressing.
What does luxury mean anymore?
The world of luxury itself is evolving at a rapid rate, and we think that those who are astute, with their finger on the pulse, in the realms of culture and entertainment will ride the crest of this new wave. They will be offering an expanded repertoire of compelling lifestyle content, shared experiences, plus brand and tastemaker collaborations across their channels, rather than solely offering a product or service’s value proposition. People don’t buy luxury for logical reasons but for emotional ones, and brands need to tap into the mindset of those tribal communities to attract, resonate with and encourage an audience to act.
1 All figures in first paragraph provided by Euromonitor
2 Boston Consulting Group & Altagamma
A very big thank you to our friends at Euromonitor, the world’s leading independent provider of strategic market research, and The Future Laboratory, one of the world’s most renowned futures consultancies, for supporting with information, facts and figures for this article