New trends affecting luxury fashion

New trends affecting luxury fashion

As I am writing my thesis about luxury fashion, I have focused one of my thesis analysis part on the new trends affecting the luxury fashion market. Thus, I decided to publish an article about it as it is a trending topic.

“Fashion is not something that exists in dresses only. Fashion is in the sky, in the street; fashion has to do with ideas, the way we live, what is happening.” Coco Chanel. 

This quote of Coco-Chanel couldn’t be more relevant about the luxury fashion industry in our society. Indeed, after a slow start luxury fashion is taking place in the digital market. Brands are now interacting more and more with consumers through their own branded online store and on multi-brand e-tailers. This new trend is due to the fact that it’s easier for brands to target a larger portion of the growth in online luxury fashion, as single-brand sites have more limited growth potential. According to Jennifer Smith 2015, by 2018, “global digital sales for women’s luxury fashion are expected to grow from a current 3 percent of the total market to 17 percent, for a total market size of $12 billion”.

As we can see in the following chart, the European market is the major consumer of fashion luxury products. According to a study run by Deloitte in 2018, France was the best-performing country in terms of sales growth and also contributed the largest share to the Top 100 luxury goods sales in 2018.

The Luxury Goods Sales by Top 10 leading markets 2018.

Currently worth €260 billion, representing 6% growth (2% at current exchange rates) (Luxury goods worldwide market study, Fall-Winter 2018, Bain & Company) the luxury goods market is expected to increase by 3% to 5% through 2025, with the market for personal luxury goods reaching €320 billion to €365 billion.  

The luxury fashion market saw retail value growth exponentially from the last past years, and this retail growth is mainly explained by the increase of online selling.  In 2019, we encounter more than 4.39 billion internet users, with an increase of 366 million users. There are 3.48 billion social media users in 2019, with the worldwide total growing by 288 million (9 percent) since this time last year (see figure below).

Global Digital Overview January 2019 DataReportal

Figure : https://datareportal.com/reports/digital-2019-global-digital-overview 

To face this increase of online users where nearly “half of luxury goods buying decisions are already influenced by what consumers hear or see online” (Jennifer Schmidt, 2015), luxury fashion brands are adapting. Luxury fashion brands are highly investing to increase their presence in internet retailing to provide a smooth shopping experience to consumers.

For example department stores like Barneys New York and Nordstrom are offering special services to consumers. They offer same-day deliveries, buy online/pick-up in store capabilities and easy exchange/return policies for products sold through their website in select US locations (Fllur Roberts, 2017).  Thanks to department stores online retail, luxury fashion brands can target a wider range of consumers because it offers the opportunity to consumers who don’t have time to shop in-stores or on different mono-brand websites to shop their products.

According to Bain & Company (Luxury Goods Worldwide Market Study, Fall–Winter 2018) by 2025, 25% of the market’s value will be made through the online channel, up from 10% today and almost all luxury purchases will be influenced by online communication or interaction. Reports also show that half of all luxury purchases will be digitally enabled resulting from the implementation of new technologies along the value chain, such as augmented reality, virtual reality or mobile payments.

Emergence of new technologies like advanced analytics, augmented and virtual reality, artificial intelligence and mobile internet are gonna disrupt fashion. These new technologies are helping brands to provide a personalized consumer experience online and offline. 

“Today’s luxury consumer wants the personalization of the human interaction mixed with the efficiency and speed of technology,” Andrukonis says.

Brands like Gucci or Chanel are early adopters of the use of new technologies in their user centric strategy to provide a better consumer experience. For example, Gucci has recently opened a 25,000-square-foot call center staffed by 150 highly-trained service professionals where consumers can interact with “call-center assistants by phone, email or live chat and those assistants are encouraged to develop personal relationships with shoppers, just like a personal store assistant would”.

Chanel has imagined a flagship store “Atelier Beauté” in Soho Manhattan, where consumers only need their phones to beneficiate from a personalized shopping experience. When consumers enter the store they can leave their belongings into lockers and take their phones in the Chanel flagship to enjoy a full mobile shopping experience. According to Forbes.com, thanks to Chanel’s web-enabled app consumers can “get product information, application tips and save their favorite products for shopping later”. Chanel’s web app offers consumer personalized shopping experience thanks to the new consumer location technology “Ibeacon”. 

Ibeacon works with bluetooth low energy, the app listens for signals from beacons located in the store and react accordingly with personalized messages based on consumers location and profile (see Ibeacon process in Figure bellow).

Figure : Ibeacon Technology Process – Personal Elaboration

Through this service, consumers can beneficiate from an immediate, efficient and personalized shopping experience. For Pamela N. Danziger 2019, “the new mobile-enabled access gives in-store customers more personalized service options if in-store staff are unavailable or they desire information or products beyond what the store carries.”

Thanks to artificial intelligence and machine learning, we can track on-site and customer data points in real time to offer a personalized consumer experience. Data can be collected at different collection points that permits specific consumer shopping personalization (Kunle Campbell, 2019):

  • Traffic.
  • On-site interactions (category and product page visits).
  • Email.
  • Personal Data.
  • Paid Media Pixels (both social and search).
  • Purchases.
  • Search.
  • Pricing.

After consumer data collection, brands can create a personalization strategy for their consumers based on their business size and needs. Brands personalization strategy will depend on tools used (see example of Ibeacon below), store sales volume and the size of brands’ consumer base.

Another trend that is going to impact the global fashion market is the emergence of multiple goods offer company. As we can see on the Figure 7, all products categories sales are performing well in 2017, but multiple luxury goods are the most performing companies. Multiple goods brands represent companies with sales in more than one of the following luxury goods product sectors : 

 • Clothing and footwear

• Bags and accessories

• Cosmetics and fragrances

• Jewelry and watches

• Multiple luxury goods

We count multiple examples of brands performing efficiently in the multiple goods offer but we can cite the most successful ones such as Tapestry, Kering, LVMH, and Chanel. Based on the Year to Year sales growth, the multiple goods sector ranked as the second fastest growth and performing sector after the one of cosmetic and fragrances in 2019. 

Thus, luxury fashion brands looking to increase their sales revenue and touch multiple buyers should widen their product offer with multiple goods.

Figure : Performance by product sector, FY2017. Source: Deloitte Touche Tohmatsu Limited. Global Powers of Luxury Goods 2019.

One of the next trends that luxury fashion companies will face in the following years is the increasing demand for fashion luxury in emerging countries. According to McKinsey Global Fashion study, by 2018, more than half of apparel and footwear sales will originate outside of Europe and North America. Growing cities in emerging markets now represent important growth centers for the fashion industry, and consumers from emerging countries have different needs and wants than Western consumers.

Figure 7: Chinese consumers are driving annual luxury growth 2018

Furthermore, another important trend that is affecting fashion luxury is the adoption of a sustainable behavior. Thanks to globalization and the increase of information access, consumers are more and more aware of the environmental impact of fashion.

As the fashion industry is the second polluting industry, it comes with an urgent need to place environmental, social, and ethical improvements on management’s agenda.

Indeed, luxury fashion used to be associated with abondance, high costs and consumerism, but as new consumers are taking over the market with their new values, consumer’s expectation of luxury fashion brands are evolving. 

A new consumer segment is emerging which is going to impact significantly the fashion luxury market in the future. This new consumer range is the HENRYs (High-Earners-Not–Rich-Yet). 

This class of consumer earns between US$100,000 and US$250,000 according to Equifax’s. This consumers are aged between 20 to 43 years old. Millennials HENRY’s are highly concerned by sustainability and brands values and ethic. 

These generation of consumers is indeed taking various elements into consideration when buying products such as labor practices, sustainability, animal welfare or positive impact on communities. 

Thus, as we evolve in a society where brands are highly influenced and impacted by consumers behavior, luxury fashion brands must value transparency, integrate a sustainable approach into their global strategy and offer seamless personalized  shopping experience.

About the Author:

Global Citizen ???????? Grad student/ MBA Digital #Marketing & Business #MBADMB - Online & Marketing Supplies Junior at @HP - Addicted to #interiordesign

Leave A Comment

Oops...
If you want to use the PHP function "add_revslider" in your code please make sure to activate "Include RevSlider libraries globally" and/or add the current page to the "Pages to include RevSlider libraries" option in the "Global Settings" of Slider Revolution.