It is evident that the future of luxury will depend upon responsible consumption and that luxury brands will have to educate themselves on how to reinvent their dreams within these new boundaries.
With the growing changes in today’s world, people have learned to adapt to different lifestyles. New and innovative strategies, product aesthetics, and features can create consumer loyalty, build brand value, and increase sales and engagement between brand and consumer. Innovation drives the interest and attention of the clients, attracting them to the store or a digital channel.
Today's chaotic life has made people realise that online platforms can be as reliable as brick-and-mortar stores to access everything they need—from a safety pin to a luxurious handbag. There is no comparison to the personal touch and experience that one gets when they visit a real store, but online retailers are also providing a unique experience in their way, which helps in saving resources as well as time and effort.
With Gen Z operating technology at a lightning speed, the new mantra for luxury brands is to harness the power of digital and make it as real and engaging as possible to cater to the needs of future consumers who prefer buying and selling online than in physical form. Luxury brands will have to adapt to the phygital world by giving consumers an everlasting virtual experience that can eventually lead their way to a new era.
One aspect of that is making physical stores more digital. The staff should be able to gauge as much information about the customers as they can to make the shopping experiences more personal. Artificial intelligence and predictive algorithms are going to transform how the staff will work and what products will be available at certain stores at different times of the day.
Digitalisation has also made it compulsory for all luxury brands to venture out of their comfort zone and compete in a very contrasting way. For example, the luxury watch domain is facing immense competition from the new-age digital watches that are massively affecting revenues and profits as more people are drifting towards the smartwatch market and timeless pieces are losing their value.
Along with the luxury watch industry, the automobile industry is seeing a huge transformation. Internal combustion engine cars are being replaced by electric cars for better utilisation of resources, reduction in pollution, and controlling global warming, which is forcing all the top-end car manufacturers to revise their business models as a lot of customization will be needed to suit different continents.
Gen Z customers are more curious to know and explore the story behind the brands before they invest in their products and services. Artificial intelligence will provide the apt amalgamation of innovation, uniqueness, and story-telling all at the same time to answer all their queries and ensure top-level customer satisfaction.Also read: India is a very powerful luxury market: LladrÃ³
The challenge, which all these companies face along with the luxury industry, is the lack of knowledge among internal and external stakeholders. They will have to provide adequate training to bring everyone on the same page where they are comfortable dealing with their interest groups personally as well as virtually and are open to all the opportunities that this new-age technology is here to offer. The competition will have to be handled more efficiently to coexist in these fast-changing times.
Nowadays, a lot of online makeup apps are using technology that allows customers to try how their preferred shade of lipstick is looking on their lips, and how the nail paint looks on their hands before making a purchase. It allows them to try on products without having to physically visit the store, thus saving time and effort. From the brands' end, it saves resources for manufacturing testers which requires a huge investment otherwise. Post-pandemic, it has also helped maintain hygiene as customers were apprehensive about using testers already used by others.
Today, brands no longer rely solely on hypotheses and experience to create successful marketing strategies. Instead, analytics and big data have become a huge part of determining brand strategies to target relevant potential customers.
Humans are always in a rush for the next big thing—especially in retail and fashion. So, brands must keep outshining the competition to drive growth. Redefining the retail experience and elevating your customer's brand journey can achieve desired growth. With technology advancing at an exponential rate, we are seeing constant new developments around. Every industry has been improved for the better. Technology has had both tangible and intangible benefits for all kinds of businesses, regardless of size. It has helped businesses to increase their revenue and produce the results their customer demands.
In today's increasingly competitive marketplace, providing a personalised customer experience has also become an expectation. Creating a powerful personalised experience entails the usage of the audience and data analytics to meet the individual needs of a consumer. The key here to knowing your customer is data. Once it is set, the technology can begin trying to predict and meet their needs at any point to ultimately build a long-term engagement. It has been said that big data is one of the world's most valuable assets a company can maintain. Creating a delightful experience via data analytics has now become a powerful competitive advantage.
Also, sustainability has reached a tipping point. With the increase in consumer knowledge and their changing mindset towards social causes, they are now seeking products and brands that align with their values. They are making sure that the brands are seeking new ways of becoming sustainable. Be it by using upcycled materials and engaging in fabric innovation or by rethinking the value of the fashion show and the lavish salon.
Luxury brands must have a purpose-driven approach. This essentially means defining the social and/or environmental pain points the company wants to solve. Sustainability must be part of this but should never be confused with brand purpose. It gets easier for the brand to define its precise targets once there is clarity between the two. Part of this work involves realigning priorities. Brands must also ensure that the development does not take place at the stake of harming the planet and environment and should continuously monitor that. This will enable them to deal with the issues at the grassroots level and avoid heavy consequences and reduce any impact on their growth and profitability in the long run.
Luxury brands must educate all their employees to align all their actions to ensure sustainability. This will ensure that the overall outlook of the company remains the same throughout the transition process and everyone is on the same page. It’s noted that customers gravitate towards brands saying they care about sustainability and social responsibility, but at most times, their actions don’t match their words. For example, when consumers order goods online and receive them in packages, they are not always mindful about discarding the packing in the right way, which directly pollutes the environment. Luxury can be the leader in educating customers about the sustainability strategy.
The most powerful way for making people aware of responsible consumption would be by encouraging them to consume less. The question is, how would the luxury sector continue to grow then? And the answer is quite simple. This sector has to start branching into more circular business models, such as second-hand/pre-loved clothing. These make the customers realise the number of resources they can save by reusing used iconic products and only investing when necessary.Also read: In Dubai, a new cultural revolution redefining art, fashion, food
Virtual luxury goods in the metaverse will also reduce the need for manufacturing. But as of now, the impact of the metaverse is unsustainable concerning energy consumption. Even its social impact could be negative. It is evident that the future of luxury will depend upon responsible consumption and that luxury brands will have to educate themselves on how to reinvent their dreams within these new boundaries.
All our resources and energy need to be redirected to saving the planet and making it a better place to live for future generations. Otherwise, despite all the high-end technology and progress, we will destroy the only habitable planet in the universe for us. We must reduce our carbon footprints and use advanced technology and resources to save the existing human race along with growth and profitability. Only this can be termed as a true luxury in a sustainable way in the long run.Ms. Smita Jain, Director – MGLUXM, S P Jain School of Global Management.