Delivery can be luxuriousMarch 2, 2022
The luxury market is exploding this year and is expected to reach the 2019 sales levels. According to Bain “over the next four years, with the personal luxury goods market reverting to annual growth rates between 6% and 8% until 2025.” Although coming off a loose base of 2020 due to the pandemic growth has returned. Additionally, the USA and China showed were the marketing with the largest growth rates for 2021. However, will we just go back to the 2019 levels, or has the luxury market changed.
The pandemic reduced luxury purchases – Luxury furnishings were the only part of the market that grew because of all the time we were spending at home. Many of the luxury brands were very reticent to sell online. It did not mesh with their brand image and the in-person concierge service that many of the brands tries to foster. Many of these companies are changing faster than expected according to Deloitte. But they are changing.
Expansion into the e-commerce channel was inevitable for the brands that were dragging their feet to move into the e-commerce channel because of the pandemic. But there is also the rise of the Gen Z segments and the addition of the Gen Alpha. In the Deloitte report, Gen Alpha (those born since 2010) will consist of over two billion consumers and have a key impact on luxury brands and their growth. Traditional large luxury brands have an advantage over the new and smaller brands to change and adapt new technologies even is many of them were late to digitalization.
Many of the luxury brands will look to adopt technologies that will enhance and be in line with the brand and its promise. Utilizing video for cosmetics or accessories like handbags and jewelry is already being adopted. Extending the brands into social and apps and partnerships with other brands will continue to expand. But the metaverse is even more appealing to many of the brands. They can extend their brand to the virtual world – Many brands have announced their exploration of the metaverse, but we will see where it develops.
A key to luxury brands’ success is the same as non-luxury brands. Keep your customers delighted and that includes getting the e-commerce packages into the hands of your customers as fast as you can for the right price. Given the margins that many of the luxury brands generate they can take advantage of unique delivery experiences to enhance the customer experience.