Titled “Luxury 3.0,” the second installment of Boston Consulting Group and Highsnobiety luxury research report, experts continued to look at the future of luxury fashion and what matters most to the consumer.
Similar to findings in the companies’ first report, a key takeaway from the white paper is the ongoing importance of cultural credibility. Noting that cultural credibility has democratized the space, the authors of the report said, “The days when a brand would cater to just one consumer segment are long gone” and the idea of a “brand category” has been effectively obliterated.
“Our report reiterates that today, luxury is about belonging and identity more than ever,” Sarah Willersdorf, global head of luxury at Boston Consulting Group. “Brand communities allow like-minded fans to share knowledge, exchange ideas and network with each other. The brand exists as more than just a distributor of physical goods, but a meeting point for different fan groups to meet and interact. Cultural credibility for the new luxury consumer is driven by stories, lore, belonging and community.”
David Fischer, founder and chief executive officer of Highsnobiety, said what he found interesting about this report was how few surprises there were.
“All the key new luxury themes we’ve been reporting on for years have only become more important and pronounced,” Fischer said. “Though one surprise was seeing how, when it comes to how people shop, older generations have caught up with younger generations. They are spending more time in the inspiration phase of the purchase journey. In the report, we say that ‘everyone is Gen Z now.’”
The approach, Luxury 3.0, is named to mirror the internet’s evolution into Web3.0. Much like Web3.0, which is characterized by decentralization away from traditional sources of authority, Luxury 3.0 is similarly designed to represent a profound shift where individuals and communities have more control over the narrative than ever before.
“Luxury 3.0 is the natural evolution of the key principles we explored in our last report, Culture Culture Culture, a paradigm where the intangible aspects of luxury are growing in importance,” Willersdorf said. “This phenomenon is now occurring in a context where there is less trust of governments and companies, more macroeconomic uncertainty and an elevated increase on environmental and societal issues.”
According to the research, more than 90 percent of luxury consumers from younger generations are highly engaged and active in online communities. Those communities are fragmented across different platforms — for example, resale groups on Facebook, Discord servers for popular fashion bloggers and official brand accounts on Instagram.
“The conventional model of brand communities is evolving into a new framework, the metacommunity,” Willersdorf said. “Metacommunities are fluid, dynamic and fragmented. Instead of speaking to a single archetype or demographic, they are an overlapping ecosystem of many different subgroups of fans, consumers, detractors and commentators. Strong metacommunities cut across multiple phases of the consumer experience, serving as sources of inspiration pre-purchase, as well as a place for shoppers to share their new buys post-purchase.”
Looking at Luxury 3.0, which the research paper defines as being characterized by an increasing decentralization in the consumer landscape and journey, Willersdorf told WWD, “The brands that will win tomorrow are those that invite their audiences in to contribute and play active roles within these metacommunities.” Moreover, she noted this is “especially true for younger consumers (and Gen Z and Millennials will make up 75 percent of luxury spending by 2025). Online communities are no longer just adjacent to the luxury experience: they are its powerful multipliers.”
With knowledge becoming a crucial part of the luxury experience that drives cultural credibility, the authors of the report noted that “knowing is the new owning.”
“Substantial knowledge of a brand is increasingly critical to its value proposition,” Willersdorf explained. “Such knowledge of a brand’s lore, icon status, etc., drives cultural credibility amongst consumers. Our survey data shows that customers are spending more time gathering knowledge on brands than ever before. There is a strong desire to be part of the story, part of a brand’s community.”
“’Knowing is the new owning’ speaks to the idea that you can fully participate (and become a stakeholder) in the world of a luxury brand without having actually bought anything from it,” Fischer said. “The way a more culturally engaged customer stands out is through cultural fluency — the knowledge they acquire and pass on; product archive; brand lore; the creative team behind the brand.”
For marketers, Willersdorf said, the takeaway is that “knowledge and belonging have become the product. Luxury 3.0 shoppers want a longer-term sense of brand purpose and a deeper narrative of what a brand is all about. And they want that purpose to be more relevant and applicable to their own cultural contexts and affiliations. Winning brands today still need to be anchored around quality and product design, but consumers also want to understand and participate in the stories, lore and experiences to be part of a brand’s broader world.”
FOR MORE WWD BUSINESS NEWS: