In these times of crisis in the world of retail, large-scale distribution and many other sectors are affected by inflation and energy prices. For these sectors, many players are implementing sales strategies. But how can luxury brands continue to reinvent themselves?
Luxury products, an irresistible attraction!
Magnificence, Excellence, Emotion: these three words perfectly characterize the definition of luxury.
Luxury products are not designed to satisfy a need, but rather a desire. Luxury makes you flutter, capsize... and above all, travel.
When consumers decide to buy a branded product, they expect an extraordinary experience. One that perfectly matches the product's positioning, one that will make them feel unique and special. An essential complement to the product in this sector, the customer experience remains an asset for the company. It's a key differentiator at the heart of a brand's strategy, both in terms of how it's received and how it feels to be presented with a new product.
Luxury and inflation
A sector unaffected by crises?
How is the luxury sector faring in this uncertain economic climate? How is inflation, which continues to dominate headlines around the world, affecting this sector?
With price rises reaching the +6.2% mark in October 2022. Inflation cripples the purchasing power of most households. However, while rising prices may eventually reduce profitability and economic growth, the luxury sector has proven immune to this scourge.
Posting extraordinary results, conglomerate LVMH is forecasting +22% growth for Q3 2022 . As for Hermès, the brand recorded a +32.5% rise in sales, and is therefore forecasting price increases ranging from +5% to +10% in 2023. This growth is due, in part, to the good health of the Asian market (despite health restrictions at the beginning of the year), helped by the fall of the euro against the dollar.
But the luxury world must remain vigilant
Nevertheless, forecasts clearly show that the luxury goods industry is not immune. Indeed, analysts are expecting a slowdown in sales growth from this final quarter onwards. As HSBC analyst Aurélie Husson-Dumoutier points out, "resilience will be tested from Q4 of this year onwards", while Citi analyst Thomas Chauvet retorts: "Slower economic growth and lower consumer confidence and credit card spending in the US paint a 'cautious' picture of the consumer as the holiday season approaches".
To anticipate and, above all, to avoid falling into the trap of stagnating or falling sales. What are the areas in which the luxury sector needs to focus, evolve and reflect in order to increase its immunity and remain impervious to inflation?
Emphasize the close (even friendly) relationship between sales advisors and their customers!
It's no novelty that sales advisors need to get close to their customers in order to understand their expectations, and to be psychologically close to them in order to better understand their personalities.
The sales advisor's approach is to gather as much information as possible about the customer's desires, preferences in terms of colors, patterns, etc., helping the brand to get an idea of the customer's expectations, providing inspiration for the next collection, and facilitating the proposal of all the items that might attract the customer's attention.
The advisor is invited to call regularly to hear from the customer and find out how satisfied they are with their purchases. He or she takes advantage of the opportunity to find out if the customer has seen the latest collection, to point out items he or she might like, or even to present a selection of items via social networks that the customer has kept exclusively for him or herself.
Today, these techniques are digitalized to maximize the customer experience, whether in-store or online. Luxury brands are tending to turn to digital tools to personalize and simplify the customer journey. Among these tools are Levanna/Bayretail/Spockee, which are solutions that connect customers with sales advisors, providing them with all the information they need to guide them through their purchases, satisfy them to the utmost and meet their high expectations.
Thinking and developing the 2nd Main!
Second-hand on the rise
2nd hand is becoming increasingly popular in the luxury sector, encouraging customers to buy the latest collection by selling off their old ones. The brand thus attracts a new category of clientele and satisfies the mother clientele by offering them a multitude of solutions that encourage them to buy. Gucci and Stella McCartney are prime examples of this practice, which has clearly contributed to the growth of their sales.
Resale into2nd hand is now a strong point for all the major houses (an environmental and 100% winning practice), and the tools that perfect this process are: Faume - rediv or 100% custom solutions. As mentioned above, the sales advisor is always ready to listen to the customer and suggest all possible solutions to ensure that the customer does not refuse to buy. The integration of this new mode of consumption strengthens CSR positions vis-à-vis customers looking for commitment from brands, and also helps to improve the commitment of existing customers and recruit new ones.
The right solution for the world of luxury
The integration of2nd hand enables the brand to make the most of products already purchased and to benefit from their new market values: luxury products are noble products (thanks to their ultra-premium materials and workmanship), but they are also iconic objects that stand the test of time. The brand that then adopts repair services will enable the product to enjoy a second life, to last over time and to gain in legitimacy and value.
Last but not least,2nd hand enables us to offer a wide range of products to suit customers' needs and budgets, as well as the development of new materials that can be recycled to create new products. Thanks to this practice, the products of luxury brands are considered to be investments that will later be resold (principle of product scarcity = higher prices). This practice also engages a new, more responsible generation (millenials), more concerned by the environmental constraints of over-consumption.
Adopt a CSR strategy and innovate with vegan materials!
More and more brands are adopting a CSR strategy by creating " vegan " capsule collections. Using 100% plant-based materials that have no impact on nature. Customers have been dazzled by these mature and, above all, responsible practices.
Stella McCartney, created by the former artistic director of Maison Chloé, has created her entire brand using 100% plant-based materials. Her brand has enjoyed great success in the luxury ready-to-wear sector. The designer uses sustainable materials such as organic cotton, forest fibers, recycled polyester and regenerated cashmere. What's more, she's even experimenting with bio-manufactured materials such as Mylo mushroom leather and laboratory-grown spider silk.
Luxury goods are not as hard hit (for the moment) by inflation as other sectors. Nevertheless, the luxury sector must continue to reinvent itself and adapt to new consumer trends to stay in touch with its clientele. The study conducted by First Insight and the Wharton School's Baker Retailing Center reveals one key figure. Three quarters of millennials put sustainability before brand names in their purchasing decisions and actions.
By Oumaima Belhoucine
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