Disruptors: the luxury industry challenge
Disruptors: the luxury industry challenge
In our ‘Disruptors’ webinar series, we look at industries undergoing major changes, inviting experts to explain key trends and what insights and intelligence professionals can do to tackle them. Here, we concentrate on the luxury industry. You can view the webinar here.
The webinar on disruption in the luxury industry brought together experts Ina Hildebrandt, Director, Ipsos, and Martin Rückert, Chief AI Officer, Market Logic. Elizabeth Morgan, SVP Marketing & Co-founder at Market Logic, hosted.
Ina Hildebrandt led the session with an overview of consumer megatrends that are shaking the foundations of the industry. These insights were revealed in the Ipsos 2018 World Luxury Tracking report, a landmark study that explores lifestyle questions, attitudes towards luxury shopping, and specific needs or desires.
While 2017’s report concentrated on the USA, UK, France, Italy, Germany, Spain and Saudi Arabia, 2018 looked further East, examining China, Hong Kong, South Korea, Japan and Russia.
Affluent consumer trends in luxury industry
Ina introduced 3 trends characterizing the expectations of affluent consumers in these countries.
- Me, Myself & Us: Luxury is a social marker for most consumers, and a means to express personality. It’s also a means of empowerment. For example, affluent women now represent 40% of Maserati sales in China. These trends occur in the context of communities, where “the desire for models and influencers is growing steadily, as brands recognize allies within their target communities who can successfully promote products”.
- Casual Materialism: Luxury consumers are taking a more conscious and mindful approach to materialism, seeking out brands that guarantee their authenticity.
- Intense Fluidity: Wealthy consumers want a fluid web-to-store experience, where items are ordered online and collected at the retail location. This allows consumers to keep the in-store experience they highly value, as assistance by experienced staff is premium.
Heritage v disruption
The luxury business is full of heritage brands with storied histories. According to Deloitte, the youngest company in the luxury Top 10 is thirty years old; most others have been around for at least 50 years. Newer brands are disrupting with modern paths to luxury.
For example, YOOX discounts previous season items from premium brands, while Farfetch gives small independent boutiques an online presence. Other disruptor’s like Goop, promote controversial product offerings – this year’s holiday gift guide includes an abandoned village in Spain, for anyone with $172,000 to spend.
Changing paths to purchase and new competitors are only part of the disruption facing the luxury industry today. For both young and heritage brands, there’s an overwhelming amount of data that insights professionals need to stay on top of: new consumer reports from research agencies, luxury leaders like Gwyneth Paltrow and influencers’ fashion blogs, subscriptions to industry reports from Luxury Daily to McKinsey, and the latest online trends from retailers like Farfetch, Net-a-Porter and Yoox are only a small number of examples.
Next-gen market insights
Martin Rückert explained that AI technology can be used to find relevant insights amidst all this noise. He said “next generation insights platforms bring all your data and tools together, so it’s easier to connect the dots between brands, needs, segments, channels, and more.
AI pushes relevant information to users via cognitive news dashboards, while a state-of-the-art cognitive search engine understands the intent of users to deliver the answers they need”.
So in the face of all this disruption, is it more difficult to be an insights manager today than it was in the past? Ina says “Yes. Many more, very different markets are presenting a far richer variety of needs to fulfil. Successful insights managers have to stay abreast of all that change to act, not just react.”
Martin agreed, noting that “fewer people have to absorb far more information to synthesize what is happening and why, and it’s no longer humanly possible to do this at scale. Thankfully AI technology is here to help, by taking over repetitive tasks and making actionable recommendations.”
As a result, insights managers can save their energy for more important jobs that use their creativity to guide the business.