As online global luxury sales are pegged to grow between 6 percent and 8 percent this year — garnering more than $313 billion in sales, according to Bain & Co. — the latest report from PMX Agency shows brands are “now generating a wave of new tactics for customer growth, community building and collaborative storytelling.”
In its annual report, researchers at PMX said these tactics include keying into Millennials’ shopping preferences to inform and shape how products and services are being presented in the luxury market. Meanwhile, Michael Kors and Ralph Lauren continued to fight for the number-one position in online market share in the U.S. luxury market.
PMX Agency said its research showed that Michael Kors took the top spot with U.S. market share of 15.9 percent, “edging out” Ralph Lauren this year with 13.7 percent. Louis Vuitton captured 11.9 percent, while Coach and Gucci had 11.6 percent and 9.6 percent, respectively.
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Regarding the influence of Millennials, researchers at PMX said luxury brands are now catering to a “Millennial mind-set,” which is part of an ongoing transformation of the high-end market. “Winning the Millennial generation has been a priority in the luxury sector since at least the Aughts,” authors of the report said. “Their influence, behavior and values continue to drive luxe positioning, product development and strategy.”
But the agency said new this year is a Millennial mind-set that “no longer narrowly describes consumers born within a particular bracket of years, but is one with broad appeal and shared benefits.”
“Millennially inclined service becomes ever-more personalized and convenient, while the stories luxury brands tell are no longer based solely on the aspirational lifestyle, but are equally grounded in authenticity and social responsibility,” researchers said.
The research also revealed a rise in the popularity of streetwear with “hoodie” and “sweatshirt” being new to luxury search terms this year. And social media continues to play an essential role. “Across Instagram, Facebook and Twitter, luxury follower growth is up 20 percent year-over-year to 677 million followers across those three platforms [up from 564 million last year],” noted a spokeswoman. “Instagram still takes the cake, and engagement actions are up on the platform.”
“Streetwear is having a major moment in the luxury space, in large part driven by young consumers’ desire to define a version of luxury built on style and comfort,” authors of the report said. “From the Supreme collaboration to the appointment of Virgil Abloh as artistic director for men’s wear, Louis Vuitton has taken a major stake in the streetwear game, and in turn, made a major statement about the traditional luxury space as we know it.”
PMX also noted significant milestones in the luxury market this year, including Gucci.
“Gucci, under its equally game-changing creative director Alessandro Michele, drove Kering to its most profitable year ever in 2017 – and so far 2018 is also sliding into a very good year with impressive growth in reported revenue, site traffic, and market share,” PMX said, adding that social audiences and engagements “have likewise swelled.”
Gucci’s site traffic rose 72 percent year-over-year, PMX said, adding that the brand’s YouTube, Instagram and Facebook views and followers showed year-over-year gains of 62 percent, 54 percent and 25 percent, respectively.
The gains in social are also being experienced across the luxury segment. PMX said the total number of social followers rose 20 percent year-over-year, due to robust gains in Facebook and Instagram. “Many luxury brands are seeing similar sized or larger fan bases on Instagram compared to Facebook,” PMX added. “Broadly speaking, fashion shows, behind-the-scenes videos and celebrity photos are the most popular and engaging social media content options for luxury brands.”
PMX researchers said that whether the industry is “ready or not, disruption has come to the luxury market, as evolving consumer perceptions of the very concept of luxury have forced the reimagining of brand identity, product design and positioning; indeed, the entire experience.”
The firm said similar to what occurred with “Balmain a few years ago, Gucci and Louis Vuitton have mixed it up with unexpected, of-the-moment youthful designers and creative directors at the helm. As brands explore deeper connections with consumers, digital media is reviving the sense of excitement.”