A while ago â€“ with sharp decline in sales – everyone thought that the luxury goods market was fading fast, losing its relevance. But who wouldâ€™ve thought that luxury is back in fashion. But not quite the same way.
According to the latest Bain & Co. Luxury Study in 2016, the sales of luxury goods fell to â‚¬249 billion from â‚¬251 billion in 2015. Last year, it bounced back and reached a record high of â‚¬262 billion. And whoâ€™s responsible for this rebound? None other than the group of people many perceive as anti-luxury goods and pro-experience – the Millennials and the Post-Millennials or more commonly known as Gen Z.
What the luxury brands market did right was embracing the principles of authenticity and community that the younger generations champion, instead of being headstrong about a strategy of aspiration through super-premium imagery.
This shift from being supremely aspirational into something real and genuine is inevitable considering the casualisation of fashion that takes place over the last few years. From the rise of normcore and athleisure about a decade ago, to how streetwear brands of today have really burst into the mainstream.
Going back to Bain & Co.â€™s report, quite a few luxury brands – with impressive agility, quickly reinterpreted their collections to mirror the values of todayâ€™s generation. As an example, under the creative leadership of Vetementsâ€™ Demna Gvasalia, the Spanish brand is now the hottest brand in fashion for the third quarter in a row, according to the Lyst Index. It even launched a collection of running shoes of its own. As an entire market, last year within the luxury goods category, the sales of t-shirts was growing by 25% while down jackets and sneakers were growing by 15% and 10%, respectively.
And with hip-hop surpassing rock as the dominant music genre in the US â€“ the growth of hip-hop just from online audio stream is 72% according to Nielsenâ€™s latest report. Streetwear style really is gaining momentum right now. With a reputation of being real â€“MC Ren from the hip-hop group N.W.A once described their music as a form of journalism called â€śstreet reportingâ€ť, the synergy of music and fashion once again proven to be very impactful in influencing culture. Music about a real message from the street â€“ one that rewarded Kendrick Lamar as the first rapper who won the Pulitzer Prize for music – is now in tandem with the look of being authentic and less dressy.
For those who were born between the year 1980 to 2005, a brand such as Supreme has as much â€“ if not more prestige, compared to luxury goods brands such as Louis Vuitton or Hermes. No wonder Louis Vuitton decided to collaborate with Supreme on a collection and even finally appointed the founder of Off-white, Virgil Abloh, as its creative director for Menâ€™s Wear.
How can mass-premium brands leverage this shift
For years, mass-premium brands â€“ some call it masstige (a portmanteau of the words mass and prestige), have also been employing the old strategy of the luxury goods market. Make it aspirational and all about the illusion of exclusivity. But with the shift, consumers might not be interested anymore in only shiny dreams.
Because of social media and internet access, Millennials’ and Gen Zâ€™s behaviour is changing how other generations spend their disposable income too. It will be quite challenging for mass-premium brands â€“for example those in beauty categories – to solely rely on a strategy of being aspirational. Instead of featuring an uber-beautiful celebrity showing off her hair in a white antiseptic environment, what might be more suitable for this age is to feature her in a setting that is more authentic.
A change of communication focus might be needed. From all things aspirational to everything real but beautifully attainable. A solid community management strategy will also be helpful to make the brand stay relevant within its target audience.
And what is also important â€“ from the shopper marketing perspective, is to implement an integrated omnichannel approach. Providing inspirational experiences through a redesigned customer journey that makes everything seamless. Perhaps even as far as revamping distribution footprint.
Because now when luxury goods brands themselves have decided to move on from aspirational-centric strategy, why should mass-premium brands stick with it?
This is written by Nugroho Nurarifin, ECD, Grey Group Indonesia.