Bain & Co has released its spring luxury update and things are looking good for the luxury market at last – or are they? For although it’s predicting a return to growth this year, with a 2 to 4 percent rise expected in 2017 for the global luxury goods market, there’s a catch.
Yes, it’s those tricky millennials again. “As the gap between winners and losers continues to widen, brands must rethink their strategies and adapt to a millennial state of mind, which will be a key driver to push the market to €290 billion in sales by 2020,” reads Bain’s press release.
Indeed, millennials and Gen Z are expected to account for 45 percent of luxury sales by 2025, so this isn’t just a nice-to-have but an essential for anyone who wants to be ranked among those ‘winners’.
Arguably, cosmetics is one step ahead of the curve – we’ve not suffered the same doldrums as the fashion industry here in the beauty sphere. But that doesn’t mean we can rest on our laurels.
“Brands need to be customer obsessed and millennial minded,” says Bain Partner and Co-Author of the report, Federica Levato. “Buying a luxury good is not just walking into a store. It has become a journey of engagement through multiple touchpoints well before the point of sale.”
Bain is advising a wholesale reimagining of the customer journey, with story-telling and engagement at the forefront of communications across all platforms in advance of any purchase. This is crucial, as Karen Grant, Global Beauty Industry Analyst for The NPD Group told Racked, “Most purchases are planned, I would say that the buyer goes in knowing what she wants at least 70 percent of the time.”
Once you’ve caught their attention, you need to give your clients a reason to visit the store in person; with online shopping the competition, stores need to be a social space, encouraging trial and interaction with the product – something, despite AR’s best efforts, a screen just can’t deliver. This generation is famed for its choice of experience over product, brands must now be ‘facilitators of luxury moments,’ as ODD Founder Nick Strickland puts it. Luckily, the cosmetics world has caught on early – with several standalone, experiential stores popping up in the last year – see Lauder’s Estée Edit and Dior’s beauty-only boutiques.
And once you get a client in store? It’s all about the one-on-one relationship – the one-click generation will just default to their gadgets if you don’t engage with them in person. And that goes for the product too, personalization is a must from build-your-own palettes to layering for a customized finish.
Finally, brands will need to take a holistic approach to distribution – the watchwords here are flexible and fast. Amazon, Asos et al have created an expectation of now – and luxury brands need to live up to, if not exceed, it.
You have been warned.