Keeping Luxury a Luxury is the Sound Bite for 2017
Most financial institutions forecast a growth rate of 3% for luxury goods for 2017.
This meager growth which will fall short by one percentage point from 2016 sails upon several headwinds including the slowdown of the Chinese economy; the crackdown on corruption by the Chinese government which leads the ultra-rich to be prudent when displaying wealth; the terrorist fixation with luxury Meccas such as Paris, the increasing costs to fight counterfeiting; and the potential trade war looming in the horizon as the Trump Administration seeks to execute its electoral mandate to put America First.
As these developments take a toll on luxury goods manufacturers and service providers prompting industry leaders to take refuge and protect the village from this stormy weather. Measures to shield from these winds are all wrapped under the same mantra: exponentiate the scarcity value of luxury so it becomes even more desirable. In short, the industry should take refuge in its differentiating attribute which is the desirability of the impossible.
And the strategic path taken to reach such goal includes a set of interactive actions that aim at creating a beneficial effect upon margins and sales. These actions are:
- Leverage the shockwave created by Amazon that has turned into a marketing powerhouse for luxury goods representing 74% of e-commerce sales for luxury goods worldwide.
- Service needs to be impeccable and this can only be done by in shop attendants that are close to retiring age.
- Shopping needs to become an experience and this can only be achieved through in store amenities such as refreshments and; music and images.
- Counterfeiting has trouble when collections include few styles. The lower the number of items the easier to control and to protect.
- Traditional Advertisement is on diminishing returns mode. You need to step up on niche publications. Should you want to reach the Super Rich, aim at publications that are distributed on private jets and terminals, exclusive clubs and members only restaurants and high end hair styling. Digital media such as e-mail is effective in driving recall with luxury buyers but not in prompting a buy.
- Good Causes need to be told. Most luxury goods are already into fostering green production methods; fighting sweat shops and promoting wellbeing among input producers in emerging markets. These stories need to be told loud and in an entertainment manner. Millennials will spend all their available cash on brands that show community and social concern.
These among other eternal practices such as good location; savvy use of social media and continuing innovation are the rules for a successful 2017.