Marketing (changing) luxury in 2025
The luxury market’s hysterical growth spurt post covid has slowed down. Plenty of other industries would be happy with single digit growth, but Luxe almost tripled its profit margins between 2019 and 2024. After that level of concerted money-making, anything less is going to hurt.
The ‘economic headwinds’ (reality) that Luxury is facing aren’t going to be tackled using the playbook of the past few years. Emerging markets such as the Middle East, India and Asia Pacific are not going to balance out the stagnation and, in some cases, decline of the US, Europe or China. And that’s not even where the previous growth came from: 80% of it was simply down to raising prices. That strategy has reached its inevitable conclusion and the industry finds itself in need of new customers rather than ever more profit margin.
Diverse & discerning
Rather than new markets, expansion into new audiences could offer an avenue for growth. The gene pool of consumers is already more diverse than it was, that needs to increase. Varied cultural backgrounds and age groups, those with less of a historical relationship with Luxury, can be more pragmatic and want something more than an object and its perceived value.
A look at the success of one end of the luxury market shows how new consumers can be attracted. Bicester Village has progressed from an upmarket outlet mall to spawning multiple luxury locations around the world. Yes, they offer lower prices, but 15-20% of the floorspace is also given over to full price purchases. So as the 7.3m tourists flow past enjoying the quaint Ye Olde English ambiance, billionaires sit in a personal shopping suite and have the season’s best sellers from multiple brands brought before them. It can be back in their hotel room before they are. Even at this end of the luxury spectrum, shopping is transformed into an ‘experience’.
Divest & diversify
The rise of luxury experiences, possibly at the expense of luxury goods, looks set to continue. Some consumers seek out luxury experiences over objects because their budget dictates one or the other. For others it is a genuine preference for soul-enriching sensory luxury and the accompanying Reels they can squeeze out of it.
At the macro level, the industry might need to start adapting to this and experiment with alternative businesses that could flourish under their luxury brand umbrella. A Hermes Birkin Bag Goodwood weekend, the Macallan Whiskey river cruise, a Tiffany’s Holistic Spa. As well as being a worthy introduction to the brand, they can also shift a few units in the process. ‘If you host them, they will purchase.’
If the business doesn’t diversify, its marketing department can. A way to test the waters is for the brand’s PR or marketing dept to begin a collaboration with a like-minded luxury producer or experience. Offer relevant options to your purchasing database and gauge the results. If all goes well, promote the hell out of it and see your brand transcend mere product and evolve into an aspirational lifestyle.
Conclusion
One day soon a Cartier consumer will like a reel about a new luxury watch. AI Remarketing suggests to them that they test the diamond encrusted dual timezone dial at a Cartier retreat in Cannes during the film festival. They are then offered an Orient Express ride to the flagship showroom launch party in Paris where they can rub shoulders with the hosts Beyonce & JayZ. Transform consumers of your brand to inhabitants of it.
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