Sophie Doran reports on the experience factor that is driving the luxury industry.
Luxury loves a buzzword, and ‘experience’ is hardly new to the scene. But perhaps we underestimated its significance somewhat, until The Boston Consulting Group valued experiential luxury as a whopping $980 billion industry, growing annually at 14 percent.
It’s undeniable that consumers no longer buy products as much as they experience brands, and that luxury is shifting rapidly from having to being. And finally we have some proof; experiential luxury (exotic holidays, fine foods, art auctions, yachting, spas and the likes) now account for 55 percent of global luxury spending.
Ultra high net worth consumers can now pay $60,000 to be one of 20 people to dive the ruins of the Titanic for eleven hours. Or dine in every three-Michelin starred restaurant in the world over a six-month period, for the cool price of $275,000. Or visit each of UNESCO’s 962 World Heritage Sites over two years for a lavish $1.5 million.
The segment is outpacing sales of personal luxury products such as watches, jewellery and handbags, as affluent consumers move through ‘a natural purchasing trajectory,’ switching from amassing tangible goods that infer wealth, to one-of-a-kind experiences to be shared with peers. And with this shift, we are noticing that these experiences are having a more pronounced effect on what constitutes product. For luxury automakers, this is the creation of retail engagement platforms that have little to do with physical vehicles. Lexus for example has unveiled its Intersect concept in Tokyo, comprising a café, exhibition space and assortment of goods by ‘brands that harmonize with Lexus’ philosophies,’ without a car in sight. The brand is hoping simply to connect consumers with the ‘Lexus universe’.
Burberry has outfitted a selection of garments in its Regent Street flagship with RFID chips, which transform mirrors into digital screens that then tell customers the story of the product and its craftsmanship. Luxury hoteliers are partnering with contemporary artists to facilitate private viewings of exhibitions and even money-can’t-buy visits to studios.
It doesn’t matter what your business is in luxury these days. To capture the attention of increasingly demanding consumers requires an understanding of their universe, and formulating holistic solutions that appeal to a broad base of wants and desires. Pretty product is no longer enough.
Sophie Doran is Editor-in-Chief of Luxury Society.
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