Luxury has a new face, one that’s dedicated to creating long-lasting memories. And the sector continues to grow with expectations of further evolution running through 2030.
That message was heard loud and clear from the Fashion Institute of Technology’s Cosmetics and Fragrance Marketing and Management master’s degree graduates during their Capstone Research presentations titled “The Future of Luxury: Global Research Insights, Emerging Trends, and New Business Models for 2030.”
Sponsored by LVMH and research partner The Boston Consulting Group, the commencement event was held on June 3 at the Morris W. and Fannie B. Haft Auditorium and identified that lasting memories, “centers of creation” flagship stores, and like-minded cities will drive future sales in the luxury market. The graduates concentrated on three fundamental topics: new luxury consumer values, new luxury platforms and new epicenters of luxury.
The evening’s keynote speaker, Pamela Baxter, president and chief executive officer of LVMH perfumes & cosmetics, North America, and president at Christian Dior Couture Inc., explained how LVMH would utilize the graduates’ findings in the future.
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“From all aspects [we’ll use the information],” said Baxter. “Whether it’s from the consumer insights or whether it’s our retail stores or how the consumer is going to react, there was so much information here that was so new and the thinking was so new that I can’t wait to get the presentations on paper.”
The first presentation focused on new luxury consumer values and how future brands will no longer be able to compete on products alone. Companies will need to compete on consumers both in attracting them and keeping them.
“The number of consumers entering into the world of luxury continues to rise,” said Corey Moran, the group leader. “In 1995 there were 90 million global luxury consumers. By 2030, that number is expected to be 500 million. Five hundred million people are choosing to interact with our brands and experiences, but with the new definition of luxury as varied as it is, how can we as brands continue to satisfy consumers’ new wants and needs?”
Moran gave the example of chef Paul Pairet’s concept restaurant called Ultraviolet in Shanghai and how it’s taking experiential dining to the next level.
“Stimuli is adjusted based solely on foods served,” explained Moran. “If the meal is fish and chips, expect a British flag as your tablecloth and to see the rain on the windows, while listening to the Beatles in the background.”
Meanwhile, the second group, who zeroed in on new luxury platforms, stressed that there are two points the audience should take away from their presentation: 1. The customer is spending 5.4 hours per day on social media and 2. Millennials, 72 percent of them, would rather spend their money on experiences versus products.
To that end, the team identified four key pillars — assortment, service, navigation and product — that should be transformed into four new elements: discovery, relationship, journey and experience.
“In a digital age where the customer has access to a wealth of information 24/7, truly surprising the customer has become a challenge,” said Amanda Bopp, the group leader. “Therefore we need to be that much more creative in the offline world to provide her with an experience that can’t be replicated online. After all, as Wendy Liebmann so elegantly put it, “People love what they can’t Google.”
Finally, the third group spoke about new epicenters of luxury and how global economic growth will become increasingly concentrated in cities. They noted it’s crucial to rethink traditional market borders historically determined by country and region and that businesses need to restructure, relocate and reallocate to enhance the way luxury businesses operate and position themselves for 2030.
“This is not to say we should focus on massive retail expansion, but rather consider city expansions that might actually be overlooked,” said Thomas Reedman, the group’s leader. “We recommend Mumbai and Istanbul as cities to be considered based on their luxury growth potential. Reallocating resources will enable these megacities to reach their full potential. According to BCG, 60 megacities will account for 25 percent of global GDP by 2030. Now is the time to reallocate resources to win in these cities.”
Professor Stephan Kanlian, chairperson of FIT’s master’s program, has championed this platform from the start and recently added courses in digital and social media, and global supply chain management. He is also looking to explore global partnerships and different formats beyond the master’s degree and continue to work with partners like BCG to field original research.
Kanlian noted, “For the first time this year, our students cited previous Capstone research in their current Capstone research. This is an example of how we can utilize the findings to continue evolving past research, and serving as an education partner to the industry about best practices in important disciplines like luxury management.”