Luxury company executives and those who work alongside them supporting advertising and marketing overwhelmingly believe that the luxury market is headed for a reset.
Some 56% of the 400+ luxury insiders surveyed expect business conditions in the luxury market to get worse in 2023 and even more troubling, nearly three-fourths believe their companies are only somewhat or poorly prepared for a potential recession.
This according to the State of Luxury 2023 report just released by Unity Marketing in association with Luxury Daily and The Home Trust International.
“While the Wall Street Journal runs headlines like ‘The world is volatile but luxury brands look serene,’ based on reports that LVMH revenues grew 17% and Hermès was up 23% year over year in the first quarter 2023, under the surface, luxury companies face growing headwinds from the banking crisis and the mounting consensus that a global recession is just around the corner,” Pamela Danziger, Unity Marketing president and lead research said.
“Luxury insiders can’t let their innate cognitive biases convince them that all is well in the luxury market and the affluent consumers will keep spending come what may. The Wall Street Journal is right on one score: the world is volatile and things can change on a dime, if they haven’t already.”
Indeed, some 43% of insiders surveyed said that business conditions have already worsened for their companies. One clear-eyed insider interviewed said, “I feel it will get slower before it gets better. We have not hit bottom yet.”
The State of Luxury 2023 report will help luxury companies prepare for what’s ahead in 2023 with actionable takeaways drawn from the survey results, including:
- How to add the exponential power of word-of-mouth marketing into luxury company’s advertising mix. This is especially important since social media gets near failing grades, with only 8% of companies reporting it as very effective. Even the most effective channel, Instagram, is very effective for 24% of the insiders’ companies.
- With a slowdown expected in companies’ revenues, budget cuts are likely. This study will help managers make judicious decisions to cut the fat and preserve the lean in their operations.
- How to keep from being blindsided by the cognitive biases every human is prone to.
- How the luxury customer journey is changing and ways for luxury companies to stay on their path.
- How to inspire greater brand loyalty with research into the affluent consumers’ brand loyalty equation. And how to keep the virtuous circle of brand reputation and brand loyalty working for your luxury company.
- How to find the deeper meaning in your brand and communicate it effectively to affluent consumers.
- How to stay in front as affluent’s wealth in under threat.
The 130-page report in easy-to-read and digest Powerpoint format includes trend tracking from 2020 through 2023 to show how insider’s views of the luxury market, its challenges and opportunties have changed over that time period. All told, the survey sample includes 43% of respondents working in the luxury goods sector, 30% in the luxury services and experiential sector and 20% that provide support services to luxury companies in advertising, marketing and media.