Yolanda Regodón. Associate Director Communication. IE Business School
16 February 2015
The luxury sector, like any other industry, is having to redefine itself in accordance with the behavior of new consumers, and that means making a clear commitment to online sales and experiences
Experiential, digital and personal are the new watchwords in luxury for a sector which is learning to redefine itself to cater for a new generation of clients; one that is more sophisticated, more innovative and better-informed than ever before. That the face of luxury is changing is not big news in itself. What is new is the need to understand these changes, what causes them, and then to share this knowledge. IE has recently released the “IE Luxury Barometer”, the first luxury barometer to be created by the Observatory for Luxury and High-end Markets, by IE and MasterCard. Experts identified ten key factors in the success of luxury brands and services in 2014. It is these that are likely to determine the course of the industry’s development in the coming months and years.
Those who spoke at the presentation of the IE Luxury Barometer are well-versed in finance and investments in the luxury market, and the event provided a valuable opportunity to meet and listen to gurus from the sector such as Luca Solca and Fabrizio Carreti. Solca, a renowned luxury sector analyst at BNP Paribas, has a head for figures like nobody else, and in addition to sharing his knowledge on valuing luxury companies, he also highlighted the importance of investing in the Internet. “We are anticipating a huge influx of luxury brands to eCommerce. The Internet is a great investment for luxury brands. Until now, luxury companies have largely snubbed online sales and marketing, seeing it as lacking the exclusive touch, but this is now changing.” He added the middle classes will make up the greatest sector of new luxury consumers.
Fabricio Carreti is a partner at Permira, and the man responsible for buying, and later selling, Valentino. He spoke with experience about the Maison Valentino and of the brand’s vision, but he also dedicated much of his speech to themes of management and the importance of the relationship between designers and CEOs; today’s designers are businessmen after all, and they need to know how to manage their brands. Christopher Bailey of Burberry is a prime example.
It was an event created for experts by experts, and moderated by IE professors María Eugenia Girón and David Millán, who themselves offered a lot of clues as to the direction in which the industry is headed. The product and the store are no longer enough in themselves. Today’s clients demand a luxury experience from the brand. We are increasingly obsessed with experimenting with and expanding our emotional planes. A few days ago I was reading the reflections of Robert Egg, president for Louis Vuitton for Europe, the Middle East and Africa, regarding the opening of a new store in Madrid. He explained that they had spent years searching for the perfect location to create a true brand experience. It was a challenge, but today it is this blend of the emotional and the exclusive that drives consumers.
More than 75% of those participating in the barometer came to the conclusion that the most important factor for the luxury market at present is to create a memorable experience for the consumer. In second place, came the growing role of the Internet and eCommerce, especially as a medium for reaching new clients and future generations. Next came the importance of conserving the exclusivity of the brand, followed by personalization of the product. And of course we must not forget that today’s high-end consumers are getting younger. What is more, this new generation comes with a new set of values and behaviors, to which the luxury market must adapt if it is to connect with this new segment of the market.
Like any other industry, the luxury sector is facing new challenges, and like any other industry, it must continue to redefine itself and to innovate if it is to remain relevant to new consumers. Innovation implies embracing the digital economy and the values of its new client-base, as well as remaining conscious of the balance between product and experience.
There were many inspiring stories to convince Premium markets of the need to invest. Because today, real luxury has more to do with innovation, customization and creating experiences, than it does with high prices.
My weekly tip: For all foodies living in Madrid or visiting the city, a visit to Gourmet Experience at El Corte Inglés, Serrano, is an absolute must. Incredible gastronomy, experiences and emotions guaranteed!