In order to create designs that capture the fundamental requirements of meeting the needs of the target, understanding of their personage is imperative. This means gathering knowledge on the geographic, demographic and psychographic contributing factors that allow for specialised strategic engagement.
In recent times it is reported that the luxury industry has perhaps lost some of its lustre, with 2014 seeing Prada’s third-quarter profits down by 44% and LVMH (French multinational luxury goods conglomerate responsible for Louis Vuitton, Christian Dior, Givenchy and many others) sales growth having slowed down considerably. While there are several potential contributing factors to this, one in particular is more responsible for the sectors recent short-comings: the luxury consumer base has changed. Once a market claimed by the older lady, the sector now serves a more youthful cohort of affluence, bringing tremendous growth opportunity for luxury brands to evolve with the changing market.
The New Luxury Consumer
The key to understanding the luxury consumer is undoubtedly becoming more complex, as where there was once only one typical luxury consumer, there are now many different types - each wanting unique things from luxury brands to satisfy their individual desires. The new luxury consumer is defined by the following factors:
1. Income - The luxury consumer sector was previously dominated by the super-rich elite of societies, and while this demographic still represent an integral sector and the majority of luxury consumers, they are no longer the only market for such goods - with consumers from the middle classes now making up a significant and rapidly growing segment of the market.
While these aspirational consumers may not have the funds to afford a £10,000 bag, they can afford a £300 purse for example. As a result, luxury brands are now identifying the importance in catering to these less wealthy but more ubiquitous consumers with one set of products, whilst also providing more exclusive, limited-edition products for the super-rich.
2. Age - The luxury market, once pioneered by relatively older consumers, is now opening up to younger, more aspirational personage. While the more mature following are still very much in the picture, younger consumers, especially Millennials, are becoming an increasingly large share of the luxury market. These millennial consumer has developed strong social justice values, and are extremely online and social media savvy, resulting in alternate expectations regarding their brand relationships - expectant of a seamless experience between online and offline consumption and of an ongoing dialogue with their most favoured providers of luxury.
3. Gender - The luxury consumer of past times was more than likely female, however, rapid growth in male apparel and grooming categories are beginning to provide balance to market.
4. Geography - Luxury consumers were previously typically more exclusive to America and Western Europe, though is now a truly global market, with some of the biggest growth coming from emerging markets in Asia - creating new distribution demands for luxury brands. This has led brands to expand their global presence in motives for optimal market yield, with Louis Vuitton opening stores in countries as far ranging as Mongolia and Nepal for example.
Closer to home, the luxury consumer was most typically found in the south of the country, close to the epicentre of fashion and design - London - and while this is still the case for most as a result of this part of the country's acclaimed concentration of stores, brands are beginning to identify opportunities to gain presence further north.
5. Trends - Luxury consumers crave fashion discovery and finding the next big brand. While luxury used to be synonymous with exclusively classic pieces, it is now often positioned as modern and trendy while still offering classic looks. For example, Burberry, which has made a concerted effort to push into a more fashion-forward space in recent years, still relies on its classic trench for much of its revenue.
6. Value - Luxury goods are most typically valued because of their emphasis on craftsmanship and the intrinsic value of the brand, and while this intrinsic value continues to play an important role -especially to Millennials - there is an emergence of consumers (mostly in emerging markets) that prefer theatrics of glamour over classic craftsmanship.
In the wake of these changes in market and consumer variants, luxury brands have a choice to make -either to pick one sector of the market and serve it exceptionally well or adjust the strategy and business model to serve multiple targets of the market simultaneously. The expectation is that many companies will choose the latter as it provides the most seamless path to continued growth, however this route also comes with additional complexity. This requires different products at different price points in different geographies.
Though this emerging complexity may challenging for the luxury sector, it also provides luxury brands with the opportunity to reinvent and extend their practices. Primarily, it will be these brands that differentiate themselves from competitors by engaging and providing for all their key consumers, which is ultimately what separates luxury brands from the rest - this being the ability to personalise and customise to fulfil the niche desires of this target.
Target Personas
01 - Henry (British)
Henry, 25, lives in Clapham, London with his middle-class parents who funded all educational expenditure, from boarding school to university, and has therefore avoided student debt. As an established graduate - now working in the city in the field of investment banking - he has strong career prospects and aspirations with an already higher income than is typical for a man of his age. This, in addition to having no rent to pay-out, means Henry has disposable income. Though not enough to buy a house, his disposable income allows him to save while still being able to splash out on the luxuries his lifestyle requires, all of which can be found on London's famous shopping streets - such as Regent Street, Bond Street etc. A conservative young man, Henry takes interest in world economics, high-end consumption and politics. In his free time he plays polo, continuing his sportsmanship from education, and also enjoys weekends away skiing in the French Alps with his small circle of friends.
02 - Anastasiya (Russian)
Anastasiya, 30, is the wife of an extremely wealthy Russian oligarch, living in a Knightsbridge (London) townhouse - when not residing in any of their other properties around the world or alternatively, yachting. Residence within this exclusive postcode puts her within close proximity to perhaps the highest density of haute couture stores in the world - Bond Street - allowing for heavy consumption within the one of the world's largest fashion and design capitals. A lady of leisure thanks to a generous allowance from her husband, Anastasiya enjoys lunching with a very exclusive group of 'girlfriends,' pampering sessions, socialising and entertaining amongst other high-cultural activities. Above all she is interested in luxury products and services, from fashion to interiors, only available to the super-rich elite in a perpetual endeavour to own what others cannot. Anastasiya nor her husband have an affiliation to any UK political party.
03 - Deborah (British)
Deborah, 55, is a driven, ambitious and financially independent middle-class business woman based in Harrogate, North Yorkshire. Divorced and with all children having now left home, she is now at a point in life that has allowed for her to become more selfish - indulging in more luxurious products and services which she could only at one time aspire to. Having come from humble working-class beginnings, she is now mortgage free thanks to her job as a prosperous interior designer. Deborah struggles politically as her family have always been strong labour supporters, however she believes her successes have been enabled as a result of conservative policies - and therefore finds herself becoming more privy to this political standing. Much of Deborah's social life consists of networking and engaging with interior design clients, though she does find time to lunch with friends and her children, spend time with grandchildren and potter around the garden with her dog. She also enjoys shopping, naturally.
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