What is the role of luxury in a COVID and post-COVID world?
‘Living the life of luxury’ is a term that has been redefined enormously in the past 12 months. With small freedoms the norm, we value experiences and materialistic things differently. Our aspirations have altered, and parts of the luxury sector have become unattainable in many ways.
The pandemic prompted an outbreak of heart from brands, not a tone normally associated with luxury - a £48 billion sector - it also forced many firms to rethink rapidly and adjust the way they do business. Coronavirus “forced me to reset a business model that is no longer relevant,” said Diane von Furtsenberg. Bain & Co consultants predicted that it will take up to three years for luxury sector revenues to recover to pre-crisis levels, although some analysts are shifting this comment to a more hopeful one after Boris Johnson’s progressive announcement on Monday.
From the start of the pandemic (the reality for me kicked in when I suddenly realised I was the owner of 9 tins of kidney beans), I could easily see that the brands succeeding were the ones who adjusted their consumer thought to a more humanist approach, and who adopted not just an improved digital offering, but those who included a smart tech strategy. As the industry looks to move towards the recovery stage and physical stores reopen, the more independent and tech-savvy consumer will mean that brands must adapt to another version of human, the post-Covid shopper.
Erwan Rambourg author of Future Luxe: What's Ahead for the Business of Luxury (2020), commented ‘Brick and mortar is still the future for luxury…as long as your main target is not just to sell, you should do well as a brand by offering consumers a unique experience and a place to spend time and socialize.’
So what do luxury brands need to do to re-engage shoppers?
The desire for authenticity
One company that has maintained very healthy revenue growth throughout 2020 and been a real trailblazer is Farfetch. Just last week Farfetch alongside The Restory (a company that specialises in luxury aftercare), launched an initiative, Farfetch Fix, to give customers the chance to restore their luxury products including bags, shoes and leather goods. The CEO of The Restory commented this is a ‘mission of more thoughtful consumption on this scale’. This is an example alongside many others that prove Farfetch to be a well-considered force, and an example of how some luxury retailers are adjusting their efforts to communicate with the more environmentally-conscious shopper.
With sustainability and ethical discussions more prevalent than ever, luxury brands are forced to respond now. The more established high-end brands are seeing the threat to their business if they don’t, and the Covid world has forced many to react. Bolt Threads based in the US, has produced a material similar to leather that they refer to as ‘unleather’ and is made out of mushroom roots (I am now thinking of ways to make leather out of surplus kidney beans). The brand called Mylo has formed a consortium with Stella McCartney, Kering (Gucci, Balenciaga etc), and a few other companies to produce leather-impersonated goods.
Inclusive rather than exclusive
Consumer behaviour in the beauty industry has evolved at a rapid rate during Covid, and in the post-Covid world these behaviours will largely remain as we will continue to include IoT and beauty tech innovation in our lives. Smart tech can now inform us in the comfort of our own home about what face cream we need or which lip shade would look good on us. Sephora has been paving the way in innovation and with their Virtual Artist app you can test out products on your face using AR. L’Oréal, Shiseido, and Estée Lauder are investing heavily in beauty tech this year and to clarify, ‘beauty tech’ consists of innovative technology Augmented Reality (AR), Artificial Intelligence (AI) and Internet of Things (IoT) which helps create a truly personalised experience.
Pre-Covid, an outing to a spa for a facial was a luxury, but the end result is far more attainable now if technology can inform us of the ideal products for the individual. The global beauty devices market was valued at $39.1 billion in 2018 by Vynz Research and it is predicted to grow to $107.2 billion by 2024’, according to Vogue Business.
From owning to experiencing
In a world where luxury items are less needed in our self-contained lives, this has meant luxury brands had to find a way into the mind of the consumer to maintain relevance. So, in a world where it is hard to be relevant as a luxury fashion brand, Balenciaga launched an immersive video game. Balenciaga engaged with people in the comfort of their own home, creating a unique experience that offered escapism to a younger, fashion conscious audience.
But how do you create an immersive consumer experience in the comfort of your own home if you’re a large retailer that relies largely on footfall? Harvey Nichols, a leading international luxury retailer known to sell some of the world’s most exclusive brands, redeployed their specialist sales consultants and stylists from their physical department stores and had them interact with shoppers via text, chat, and video. Using the Hero app shoppers could gain inspiration and guidance, with Harvey Nichols professionals at the tap of the button. Customers were 10x more likely to make a purchase and spend up to 63% more when they shopped with a Harvey Nichols style advisor.
“The Future is the most expensive luxury in the world” Thornton Wilder
The idea of greater freedom in the months to come has become a luxury to us all, and with the year ahead looking more hopeful, brands need to rethink their omnichannel offering once again for the next stage of our lives.
Whilst brands quickly shifted to a purely online focus, I truly believe many will return to focus on physical customer engagement, and London Fashion Week will return as will other events, but I expect they will become more immersive encounters. True to all brands, and more so than ever for luxury, they must remain dedicated to the humanist strategy set from the pandemic. The push for more purpose-driven marketing will continue, which is why luxury brands must stay focused, authentic and relevant, and define the best way to connect meaningfully with the post-Covid shopper.
Written by Stephanie Thomas, Retail Business Director