This third annual State of Luxury report by Luxury Daily and Unity Marketing reveals:
- Trends measuring the pulse of the luxury business from three years of consecutive surveys among ~600 luxury insiders from the luxury goods, services/experiences sectors and companies that provide advertising, marketing, consulting and other support services to luxury companies
- How insiders feel about the state of the luxury market in general and their business, in particular
- Details about distribution challenges, Internet ecommerce strategies, social media and its surprising ineffectiveness, advertising and marketing strategies, and future trends impacting the luxury market
A feeling of confidence is buoying the spirit of luxury brands and the people who work in them and those who work alongside the luxury industry in supporting roles such as advertising and tech, according to Luxury Daily and Unity Marketing’s third annual State of Luxury survey.
This “rising tide lifts all boats” hope is propelling the luxury business forward into 2019, per the study that polled 600-plus luxury insiders.
The respondents’ optimism is palpable, including both executives who manage the companies that provide luxury goods and service experiences to luxury consumers and the businesses that provide support services to the luxury industry.
56% of luxury insiders believe business conditions are better now than a year ago
Whereas only two years ago fewer than one-third (29 percent) of the roughly 600 industry insiders surveyed believed that business conditions in the luxury market were improved over the previous year, today a sizable majority (56 percent) believe things are better now.
Looking to the future, a majority (52 percent) of those surveyed believe business conditions will improve again next year.
Trends impacting luxury business in 2019
Innovation in product and service offerings are identified by those surveyed as the trend that will be most impactful in realizing growth in the luxury marketing in 2019. On the other hand, the trend giving insiders the greatest worry is political instability and macro-economic trends.
The negative impacts of these for 2019 got an early start at the close of 2018 as rumors of trade wars with U.S. trading partners are rife, sales in the once booming China luxury market are slowing and its tourists are spending less while traveling and, most especially, the political uprising in Paris.
“Luxury brands will face a complicated balancing act in 2019 and beyond,” said Pamela N. Danziger, president of Unity Marketing
Luxury brands will be forced to navigate potential disruption coming at them from market turbulence caused by political upheaval and macro-economic trends, a rising wealth class that is retreating into their secure cocoons, impacts of digital technology on the sale and marketing of luxury, and the next generation of customers with growing financial resources who must be inspired to step up to true luxury instead of settling for poseurs or less privileged brands.
The primary battles lines for the coming year will be competitors struggling for a shrinking share of consumer spending, even while the ranks of the wealthy rise.
Luxury brands will try to take charge of the digital revolution, which is a challenge they were slow to accept. And they will work aggressively to find traction with the younger digitally-powered consumers that have come with it.
Luxury brands are going to feel the conflicting push-pull from their traditional wealthy and older customers who want one type of luxury and their younger, less financially endowed customers and potential customers who want a totally different kind of luxury. Luxury’s present fortunes hang on the one, and their future depends on the other.
“The biggest danger that the luxury business faces is irrelevance,” said Mickey Alam Khan, editor in chief of Luxury Daily, New York.
“There is no other way to sugarcoat this: the luxury business is facing an unprecedented identity crisis,” he said. “What is its product? How relevant is it to the quality-seeking consumer’s wants, needs and lifestyle? How much sunlight to let in before the brand mystique slips out the backdoor? Is the product really made – key to the authenticity credentials – where the label says it is? Do its values resonate with its target audience?”
About State of Luxury report
The report provides the results of survey among 600-plus luxury industry insiders compared with those from the past two years. It reveals the trends year-to-year and provides actionable research takeaways to power competitive and marketing strategies for 2019 and beyond.
This year’s survey was further enhanced by additional questions surrounding the luxury insiders’ marketing and advertising perspectives, with particular emphasis on digital and social media marketing.