The study found that luxury purchases are shifting from “having” to “being”
‘Experience’ the key to luxury jewellery sales
3.6 k views | Posted February 18, 2014 |
By Jonathan Green
A new report into luxury spending has found that consumers are
increasingly seeking experiences rather than possessions; indicating the
importance for retailers, including those in the jewellery industry, to
assess their service offering.
The extensive report from Boston Consulting Group (BCG) titled, Shock of the New Chic: Dealing with New Complexity in the Business of Luxury stated that the luxury market continues to buck the slow- and no-growth trends of other industries with a staggering US$1.8 trillion (AU$1.99 t) spent in the sector in 2012.
However, the study found that luxury purchases are shifting from “having” to “being” with nearly US$1 trillion (AU$1.1 t) of the total figure attributed to experiences such as exotic holidays and five-star restaurants, rather than physical possessions.
BCG partner and co-author of the report, Jean-Marc Bellaiche, told Jeweller that this movement can largely be attributed to two groups: baby boomers who have all the possessions they want and a high level of disposable income; and wealthy twenty-somethings who have grown up with everything they need. In both cases, they are now looking for something a little less tangible.
“Luxury experiences are by far the most powerful driver of luxury spending everywhere. Collectively, they make up nearly $1 trillion of the annual global total,” he said.
“As older consumers realise that they have all the 'things' they want – and as younger people favour experiences they can share with their friends – consumers are spending more on experiences.”
Finding jewellery retail opportunities
While a retailer or brand may see this as concerning, the report suggested that it did open opportunities for progressive companies – particularly in the ever-growing world of online sales. It went on to add that businesses that make the effort to understand and fully appreciate their customers – and then create an experience that is attractive to that customer – are likely to do well in the current market.
Bellaiche cites the initiatives by Louis Vuitton as examples of a brand and retail outlet that has captured the attention and spirit of the luxury buying market. He said in the Shanghai “maison” (super luxe shop), “customers can have their hair styled while an artist designs personalised bags for them”.
Bellaiche explained it made the process of purchasing a Louis Vuitton bag a memorable experience and created a sense of theatre that would be attached to the brand.
The BCG report refers to such strategies as “retailtainment”, where events like art installations and fashion shows have been used to offer the customer something that cannot be purchased elsewhere.
Bellaiche did however warn that this level of experience is so personal that a business needs to make every effort to understand its specific audience or the time and cost could be wasted. As a result, he suggested localising the experience offering into specific areas or regions.
“We believe that the global store is dead. Brands can be both more localised and globally very consistent,” said Bellaiche.
“Luxury players can offer some specific events or products in, for example, the New York City store versus their Shanghai store, while still being consistent with specific events or products that are fully aligned with the brand DNA.
“It is about understanding the specific audience in the market and offering something that appeals to their senses.”
While this may sound complicated, Bellaiche was quick to add that it was really just an extension of any good sales plan – understanding what motivates a consumer to buy.
The report can be accessed here.