2015: The Future of Luxury
the future of luxury
A broad definition of the luxury sector defines the economic opportunity at $1.7 trillion annually, with exponential growth potential in the Chinese market, a key epicenter of the future of luxury, where 70% of current luxury purchases are made by high net worth individuals (HNWI). In mature markets, such as the U.S. and Europe, luxury consumption is currently more democratic, with two-thirds of purchases in Europe made by the middle class, and a 50/50 ratio between middle and upper class purchases in the U.S.
Traditional luxury codes are being challenged by premium mass brands and retailers, and millennials are shifting the categories and experience that will define future luxury consumption. With the emergence of China as the world’s largest luxury market, there is a seismic shift in global influence, as luxury brands have traditionally been either European or Japanese.
BCG/FIT Global Luxury Customer Survey
The Class of 2015 partnered with Boston Consulting Group (BCG) on designing a Consumer Survey that assesses emerging luxury consumer values, which was fielded by BCG with panels of 1,000 luxury consumers in each of three countries: the U.S., India and China. This is the first time that the FIT Master’s Program has included independent quantitative research as part of the annual Capstone research studies.
Research Lead (BCG): Sarah Willersdorf, Principal, Boston Consulting Group, New York
Research Co-Leads (FIT): Amanda Bopp and Laney Marx, Class of 2015
New Luxury Consumer Values
Consumers desire luxury products and services that deliver memorable experiences, and interactions that are more personal, authentic, and expand beyond simply the desire for luxury goods and services. There is a new sense of purpose for “new luxury” that includes a stronger focus on a brand’s authentic story and heritage. Product quality and “ownable” trades of craftsmanship remain important, but consumers are constantly pushing the limits of product performance, in all senses. What values will matter to the future luxury consumer, and will they increasingly transcend product purchase and experience? What does this mean to future consumer relationships with luxury brands?
Group Leader: Corey Moran
Co-Leader: Brooke Burdine
Group Members: Winnie Cho, Kristen Levis, Laney Marx, Alyssa Navia, Pierre Vouard, Mila Talabucon
New Luxury Platforms
The notion of retail is changing for luxury, as quickly as the epicenters of luxury and consumer values. Today, e-commerce outpaces brick and mortar five to one. Further, consumer priorities are shifting towards experience vs. product. As such, luxury brick and mortar retailers must offer consumers a new value equation. What is the right concept for the future of brick and mortar luxury retail? Is there a role for more intimate retail experiences, and is there a danger of fatigue among new consumers with the excess of global flagship stores? What is the next evolution of luxury retail?
Group Leader: Amanda Bopp
Co-Leader: Rachel Ball
Group Members: Julie Conlon, Hannah de Boer, Juliana Hendershot, Sonya Lucki, Priyanka Malhotra, Catherine Velazquez
New Epicenters of Luxury
The rise of consumer spending power in emerging markets and the renewed opportunity for luxury brands in mature markets will continue redrawing the traditional map of global luxury production and consumption. The mere scale of potential Chinese luxury consumption, and the fact that two thirds of that consumption is occurring outside of China, has massive global implications. For years, companies have been organized by geographic location with the intention of achieving economies of scale based on similar consumer demographics. Is this model of business still relevant? How might we look at the global map differently to achieve new opportunities?
Group Leader: Thomas Reedman
Co-Leader: Jessica Zavolas
Group Members: Lauren Haffer, Nola Lawless, Amanda Raus, Amanda Spencer