2014 Luxury Industry Trend

2014 Luxury Industry Trend

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  1 These are thekey trends that defined the luxury industry in 2013, as major luxury brands herald a return to excellence, optimise brand experiences (both online and offline) and cater to an increasingly large – and diverse – group of consumers. Fashion: Communication to Conversion While the industry has historically captured and analysed data – be it retail metrics or online analytics – the pioneers and forward-thinking brands are just starting to use big data in a predictive way. Where it was historically common to react to data points retroactively, new technology platforms and partners can also predict future customer behaviour with astounding accuracy.
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  2 This allows brandsto detect customer drop-off earlier, take action to prevent it and begin to deliver customers with an experience that is actually relevant to them on an individual level, even though this happens automatically. For example, a brand may have two customers who spend the same total amount per year, but one customer spends this in a single transaction where the other makes multiple, smaller purchases. These two customers are not the same and by treating them differently, brands an actually help increase growth and the bottom line. In terms of overall trends, in 2011 our agenda was weighted in digital branding and exploring the risks and opportunities that existed for fashion and luxury brands on social media and ecommerce. Should a luxury brand have a Facebook page? How should they collaborate with bloggers? How should brands translate their offline store experience to an immersive web store… that sort of thing. Fast forward to this 2014 and brands will be much more focused on big data, increasing conversion and tracking global consumers, which all says that the industry is becoming much more driven by return on investment and on using hard metrics to inform branding and marketing decisions. The companies that have mastered how their brands should be conveyed online are now primed to reap the financial rewards of implementing data strategies, whereas the brands that still have not figured out how to express their identities digitally will fall further behind.
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  3 China: Emerging Individualism ! Withthe Chinese government’s anti-corruption campaign in high gear and a global hifta way from logos, 2013 was all about ‘stealth wealth’. Instead, we can now expect an emphasis on self-expression and individualism among Chinese luxury consumers, with several developments paving the way for a focus on shaping one’s personal taste. ‘Stealth wealth’ may have emphasized blending in, but this coming year, Chinese luxury consumers will be searching for ways to differentiate themselves from their peers. However, think niche; not bling.
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  4 The government austeritydrive continues and many wealthy consumers are striving to avoid the label of baofahu, or nouveau riche. While this year’s slowdown led to Bain & Company’s estimate of 2.5% luxury sales growth for the China market, many smaller labels are nonetheless seeing sales rise by double-digit rates. Businesses have decided that now is the time to act upon this trend: niche label-heavy retailers 10 Corso Como, Lane Crawford, and Galeries Lafayette all recently opened mainland locations. Smaller multi-brand boutiques are on the rise in both the brick-and-mortar and e-commerce spheres. Digital outlets for self-expression such as fashion blogs and new social media platforms will shape tastes in the year to come, and retailers are offering more special-edition and bespoke items, as well as VIP services, to Chinese clients. Brands should also take note of this trend’s global implications. More Chinese tourists are traveling independently as their international luxury spending grows, meaning that attracting these individualistic clients to stores abroad is just as important as doing so at home.
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  5 Digital: Differentiated Devices Ata global level, the major trend we are seeing is more and more people being connected and taking advantage of enhanced mobile phones and faster bandwidth. This has resulted in a significant increase of time spent by consumers online but also in more and more platforms that luxury brands will have to consider.
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  6 Taking just theexample of China, Apple announced a major agreement to sell the iPhone, potentially putting the device in the hands of more than 700 million subscribers. Local competitors such as Xiaomi, remain slightly ahead of Apple thanks to massive adoption but this could quickly change. Finally, fast growing niche social networks such as Douban are becoming key as a storytelling medium for luxury brands. Those very brands cannot go against the grain and will have to build their visibility on key platforms by creating highly differentiated marketing strategies, which will have to remain consistent at an international level. If you add on top the fact that e-Commerce is also showing strong promise, with enhanced infrastructure and major luxury conglomerates in the starting blocks, you have an overview of how complex the digital landscape has become. More than ever, relying on strong intelligence analytics will be key to separate the hype from reality and build long lasting relationship with customers.
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  7 Superyachts: New Destinations Amajor goal for the industry is still to ensure that capacity does not significantly outweigh demand and five years after the GFC began 2013 marked an increase in activity levels, in both the new build sector and the second hand brokerage market. Boat show activity was strong, with all the major shows, including the Monaco Yacht Show, reporting increased activity across the board. All this proved a welcome sign for the shipyards and supply chain that support them. 2013 also marked the delivery of the world’s largest yacht, 180m Azzam, one
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  8 of a glutof 100m+ projects in build. Average yacht sizes continue to grow, with the average yacht in build in 2013 reaching 50m thanks to interest in the 70m+ size bracket remaining high. All indications for 2014 so far show that it will be shaped by the increased levels of activity seen in the latter half of 2013 and we look forward to the wide range of unique projects that will enter the order books of shipyards in 2014. As for how owners use their yachts, one trend seen in 2013 that we would expect to continue in 2014 is that there has been a growing popularity of yachts venturing further off the Med and Caribbean milk run to more remote destinations and we predict growing levels of infrastructure in these areas to help meet demand. Another trend not just for 2014, but in general, is that superyacht owners demand the highest quality and standards and this continues to drive innovation and technology throughout every aspect of the industry. Increasing levels of efficiency and making superyachts ‘greener’ is still a major focus for many industry experts. More than anything focus remains on promoting the benefits of the lifestyle that superyacht ownership brings, in order to attract new clientele to the industry.
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  9 Jewellery: Rethinking Precious Ourfascination with top-quality coloured gemstones will only increase as the best of the minesʼ yields dwindle away. So we can look forward to more emeralds, rubies and sapphires of the highest quality in spectacular settings. Colombian emeralds are enjoying an all-time high, and this is set to continue. Pearls, like emeralds, are hugely in vogue and designs are becoming more daring.
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  10 As a consequencewe will see more of the lesser-known stones in unusual shades beyond the more obvious neon-bright colours. I predict we will see more of the shy hues of Spinels, Morganite and Kunzite, a trend on the rise as seen in Louis Vuitton’s smoky purple spinel ring from the Voyage dans le Temps collection and the smoky quartz and lavender jade as seen at Kiki McDonough. And with the Pantone Institute declaring Radiant Orchid the official colour of 2014, we will be welcoming all things purple. The possibilities are wide, from the deep purple of amethyst, powdery lavender chalcedony, violet sapphires, tourmalines, Spinels and jasper to the little-known bright-mauve Sugilite. As for styles, expect to see more mashing up of colours, textures and shapes while moving away from the more ornate and fantastical designs to more abstract themes. I predict less in the way of jewels with elaborate lions, spiders and flowers and more clean designs, like Boucheron’s Perles d’Éclat. The trend for micro-pavé-ing every flower petal and bee’s knee is also likely to wane as we focus on the natural beauty of stones. At the same time, a return to the glamour of the 1960s and early 70s is on the cards, with long chains, wide bracelets and hoop earrings making an appearance towards the end of the year.
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  11 Timepieces: Focus onthe finest All the watchmaking brands older than a century called upon the métiers d’art in the past, as they were initially inseparable from the realm of fine watchmaking, and today we are seeing a trend to revive and showcase this expertise. Enamel artwork, miniature paintings, lacquering, engraving, skeletonizing, guillochage and marquetry are all métiers and skills that are finding favour once again with watchmakers and a clientele in search of exclusive watches. These unique and highly desirable areas of expertise constitute a part of the added value of haute horlogerie watches. In the future, they will represent the difference between exceptional watchmaking and more ordinary timepieces. This should be confirmed by the unveiling of numerous skeleton or enamelled watches in 2014. After a record year in 2013, the watchmaking industry will continue to perform well in 2014, particularly the high-end range which incorporates most of the Swiss sector. The “métiers d’art” trend will translate into a more global approach – one that sees customers looking for
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  12 solid values onthe one hand, and rare or unique models on the other. The aim today for all high-end brands is to stand out from their competitors with their products, and to constantly highlight their differences or particularities. To do this, they are increasingly introducing more métiers in-house, to gain more independence and to master rare skills. The métiers d’art are one of the fields of expertise that benefit from being performed in-house. Travel: the Next Frontier In the travel and tourism industry 2014 will see a continued heightened interest in cultivating Ultra High Net Worth/High Net Worth consumers, the so called ‘one percent’.
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  13 For many years,many travel marketers spent much of their time trying to get on ‘the bucket list’ for aspirational consumers. What they found is that these travellers if and when they came had limited spending power, and once they came, checked off the box unlikely to return. By contrast the tastes of UHNW travellers turns out to be as diverse as their pockets are deep. While private jet setters avail themselves of multi-thousand dollar a night suites and commonly drop four digits on dinner, they spend over $5 billion per year on adventure travel, be it trekking on glaciers in Norway, salmon fishing in Scotland or swimming with Whale Sharks in Mexico. Investment Tourism will be the buzzword for 2014. Tourism Australia launched a formalized program to help match UHNW visitors with investment opportunities and several other countries are poised to do the same. Iceland for example is planning to take advantage of its unique mid-Atlantic location that makes it a refuelling stop for private jets. A program to entice private jet travellers into spending a couple days and then coming back to invest is being launched in 2014. www.fdmre.com