Firms will have to respond
The move from luxury goods to premium experiences is a challenge for all premium consumer companies. For instance, luxury hotel chains will need to ensure they do more than just provide comfortable rooms and efficient service. They’ll also need to focus on offering a unique all-round experience to their guests, including tailor-made excursions, facilitating sports and providing added value, such as lectures and other cultural events – while also ensuring they remain socially responsible and environmentally friendly.
But it is the luxury goods brands that face the biggest challenge. Consumer enthusiasm for prestige brands fades as they become more widely available.
How do companies in the premium brand sector adapt? They need to become more bespoke... They need to be able to personalise their goods, offer experiences unrelated to what people are buying.
So how do companies in the premium brand sector adapt to a world where people favour individualisation and experience? They need to become more bespoke. They need to create loyalty programmes, communities and clubs, and a sense of belonging. They need to be able to personalise their goods, offer private shopping, concierge services, even experiences unrelated to what people are buying – a night at the opera, for instance, or a special concert. All the brands right now are having to move in this direction, even the most powerful ones.
For example, some of the top car makers have racetracks where drivers can legally push their high performance road cars to their limits. Nike offers a playlist for runners designed to match their heart-rate while Louis Vuitton has VIP apartments available to premium customers where they can shop privately or just relax while their goods are being personalised.
At the same time, premium brands are being confronted by the growing influence of social media. Instagram, Twitter and Facebook stars are becoming ever more important as sources of information and arbiters of taste. These “influencers” are particularly effective in China. It’s not uncommon for their livestreaming sites to have integrated payment systems so that their followers can buy the product being discussed in real time with the touch of a single button.
The nature of luxury is changing. Premium goods no longer represent the pinnacle. Consumers increasingly demand premium experiences. Industry needs to adapt to these new needs.
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