According to the ninth edition of BCG’s ‘True-Luxury Global Consumer Insight’ survey, the luxury industry is faced with two scenarios in 2023. The first, more prudent scenario forecasts a growth of approximately 7-9%, with China’s recovery proceeding at a slower pace and Western consumers’ confidence still weak. However, the authors of the survey, which focused on the tip of the iceberg, in other words the world’s top luxury consumers, who spend approximately €39,000 a year in luxury goods, are leaning towards a more optimistic scenario, with growth forecast at 11-13%. This scenario expects US consumer confidence to improve and the Chinese market to bounce back strongly. Local demand in China is expected to increase significantly and to account for 82% of total expenditure, although overseas purchases by Chinese consumers aren’t expected to return to pre-pandemic levels, plateauing at 45% of their total spend.

Within this scenario, the luxury industry must be ready for its younger audience to broaden considerably. “In the short term, 75% of luxury goods sales will be generated by the younger generations. Luxury goods expenditure by Millennial and Gen Z consumers, currently worth €210 million a year, is expected to double in 2026,” said Guia Ricci, managing director and partner at BCG in Milan. She urged luxury houses to revise their strategies “in order to capture these new opportunities, boosting their young customers’ loyalty but without neglecting older customers, who still account for nearly half of luxury goods purchases.” 

Bifocal strategic approach

The advice for the luxury industry is to adopt a “bifocal approach” for the next 10 years in terms of marketing, product development and communication, considering the specificities of these two audiences. Very young luxury consumers are notably more willing to spend compared to previous generations, and have a more positive vision of the futureคำพูดจาก เกมสล็อตทดลองเล่น. Also, their approach to luxury is markedly different from that of traditional consumers in terms of adopting new technology, tapping new ownership models such as the second-hand market, and paying attention to sustainability. One of the major obstacles faced by luxury labels is that they have been slow to digitalise, especially with regards to e-tail. “Consumers, especially younger ones, are basically unhappy. Omni-channel operations have been talked about for 10 years, but very little has actually been done. Less than half of luxury goods consumers said they are satisfied with the digital performance of luxury labels,” said Filippo Bianchi, one of the BCG survey’s authors. “Only in the case of four labels, one of them a small one, just over 50% of interviewees said they were satisfied with their online experience,” he added. 

In-store customer satisfaction for luxury brands is very high, twice as high as the level reported for mass-market retailers. But, as the study showed, this divide isn’t as sharp in the e-tail channel. The level of customer satisfaction reported for luxury e-shops is just 0.8 times higher than that reported for the e-shops of mass-market chains.   This “digital dissatisfaction” is especially felt by the younger generations, and chiefly in Europe. One in five luxury Gen Z customers is unhappy about their online experience, compared to one Baby Boomer in 10. Geographically speaking, 28% of Italian customers said they are dissatisfied, 24% of British ones did, and 22% of French ones too, while average dissatisfaction levels were lower in the USA and China, notably because of the use of more advanced technology. This cuts across all product categories. The main, most frequently mentioned weaknesses were purchasing and payment security, access speed and product availability, clear size indications, and products’ benefits and features. “All of these elements are easy to correct. Beyond this, it’s a matter of approach. Labels must stop thinking that an online purchase is just another transaction. They must look further. [Labels] are so far only geared to measuring their e-tail performance. But in consumers’ heads, e-tail isn’t a different channel. They keep switching from physical to virtual,” said Bianchi. “Luxury customers are super-pampered in-store, where their experience is exceptional, but this element is dramatically missing online,” he added. Indeed, the digital experience offered by luxury houses is not on par with their customers’ expectations. Labels have an obsolete, simplistic view of touchpoints, and tend to underestimate the customer journey’s complexity. In order to improve, they ought to increase from four-five touchpoints, as in the past, to 20-500 touchpoints today, according to the study. 
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Luxury labels are also unable to provide satisfactory human interaction during the online experience, when “40% of customers are actually keen on human guidance, they want to be reassured and to receive greater attention by labels, both offline and online, while younger customers reportedly prefer to have more interactions with other consumers, and fewer ones with sales assistants,” according to the study. The authors have advised labels to design more inspirational online journeys for their customers, and to segment their targets with more granularity. “Many online customers want the in-store experience they find in the most prestigious luxury shopping streets, the fluidity they find in Netflix, the assortment they find in supermarkets, all at Amazon speed! But this isn’t actually so simple to achieve,” said Fabrizio Cardinali, CEO of Etro, who attended the Altagamma conference on Wednesday. He aptly summarised the complexity that luxury industry executives are now facing, and perhaps also their dismay at the size of the investment needed. “We try to take all these elements into account. But we need to handle a luxury label’s codes, and they must be compatible with the whole physical-digital retail ecosystem, from directly operated stores to offline and online retailers. In the absence of a vertical business organisation, this becomes extremely complicated,” he concluded.