The Future of Luxury

Lasting memories, «centers of creation» flagship stores, and like-minded cities will drive future sales in the luxury sector, according to new research revealed by graduating students in the Fashion Institute of Technology’s (FIT) School of Graduate Studies Cosmetics and Fragrance Marketing and Management (CFMM) Master of Professional Studies program. The findings were presented by the graduates, who also are emerging beauty industry executives, at the CFMM program’s annual capstone research presentations, conducted in collaboration with event sponsor LVMH Perfumes & Cosmetics, North America, and research partner, The Boston Consulting Group (BCG). The accuracy of the CFMM program’s annual industry predictions has established it as «The Beauty Industry’s Think Tank.»

This year’s exploration, titled The Future of Luxury: Global Research Insights, Emerging Trends, and New Business Models for 2030, included, for the first time, original and primary quantitative research in partnership with BCG. A survey entitled «BCG FIT Global Luxury Customer Survey» was fielded to 3,000 luxury customers in the U.S., India, and China. «This year’s CFMM capstone research on the luxury sector perfectly captures the nature of FIT’s unique culture of research, in which students collaborate with industry thought leaders to produce findings that are predictive of future strategies that will address the complex challenges of global consumer brands. FIT continues to evolve as a major innovation center for the global creative industries,» said Professor Stephan Kanlian, chair of FIT’s CFMM Program.

«As a global leader in the luxury market, LVMH is proud to partner with the FIT Cosmetic and Fragrance Marketing and Management Master’s program, and, in fact, boasts a total of 12 program graduates among the LVMH ranks,» said Pamela Baxter, president and CEO, LVMH Perfumes & Cosmetics, North America and president, Christian Dior Couture Inc. «In 2007, LVMH sponsored capstone research that analyzed the luxury sector, and this year, the graduating class has returned to the topic with new insights, strategies, and research. The business models that the students developed give marketers new ways to look at consumers’ motivation to purchase, their desire to participate in the creation process, and the best ways to reach luxury customers in a global economy.»

«It has been a pleasure to work with the graduating students of FIT’s Cosmetics and Fragrance Marketing and Management Master’s program,» said Sarah Willersdorf, a New York-based partner at BCG. «The depth of understanding and intense intellectual curiosity demonstrated by the graduating students has meant that they were able to field interesting new primary research, as well as develop new and creative business approaches for luxury consumer goods. The resulting definition of luxury can be applied to multiple consumer goods categories, and reaches far beyond beauty and fashion.»

The Future of Luxury research focuses on the evolution of the luxury sector in the year 2030 across three key areas: New Luxury Consumer Values, New Luxury Platforms, and New Luxury Epicenters.

– New Luxury Consumer Values: Future consumers will look for luxury brands that create long-lasting memories and help them lead more meaningful lives. Brand loyalty is disappearing; in fact, most consumers wouldn’t care if 73% of brands disappeared tomorrow. So what will drive purchases when the human attention span is measured at merely 8 seconds, one second less than that of a gold fish?

– New Luxury Platforms: The traditional brick and mortar retail store is at a crossroads, with lines blurring between product and experience. Customers are increasingly looking for bespoke products and experiences. Seventy-two percent of customers in The BCG FIT Global Customer Survey cite «customization» to be a key attribute for luxury products. Respecting the customer’s desire for self-expression and her very limited time, the flagship of the future will offer product assortment curated to the customer’s lifestyle and nearly instantaneous product customization.

– New Epicenters of Luxury:  By 2030, 600 cities will drive two-thirds of global economic growth (McKinsey). As global economic growth becomes increasingly concentrated in cities, it’s crucial to rethink traditional market borders historically determined by country and region. The BCG FIT research suggests reconstructing strategies by patterning cities with similar luxury purchasing habits and consumer values, thereby enhancing predictive capabilities for the next Big Bet Cities. The new epicenters will transcend geographical location, becoming boundary-less. Think luxury without borders.

Fashion Institute of Technology’s Master of Professional Studies (MPS) in Cosmetics and Fragrance Marketing and Management (CFMM) program, one of seven advanced degree programs in FIT’s School of Graduate Studies, was developed in collaboration with industry as a leadership development program for outstanding mid-career executives.

Luxury firms (such as Chanel, Estée Lauder, and LVMH) and consumer packaged goods companies (including Beiersdorf, L’Oréal, Procter & Gamble, and Unilever) nominate talented emerging executives to participate in the program. The curriculum combines strategic business skills and specialized creative and product innovation skills with intensive global field studies in Europe and Asia. Executive mentors from industry and a personalized development plan are part of a tailored management curriculum that develops future leaders for the sector.

As part of the research focus in the School of Graduate Studies at FIT, the graduate program has become the beauty industry’s recognized think tank, producing high level research each year that is presented to an audience of 700 executives and media, as well as in specialized panels, symposia, and forums in both academia and industry.