Like most markets, the influx of new generations of consumers is changing the luxury industry. With their desire for mobile-first shopping experiences, these new consumers are changing the rules for marketers by demanding seamless brand and retail experiences whenever and wherever they want.
To better understand the shift, Facebook’s marketing insights team, Facebook IQ, recently published two studies to help marketers uncover how consumers think about luxury. The studies dive into the who, how and where of a new generation of shoppers and how they are discovering, researching and purchasing products and services in their increased desire for a zero-friction shopping journey.
The new luxury consumer
In the next five years, millennials alone will make up over half of the market and 130% of the growth in luxury personal goods. This new generation of luxury consumers is much more likely to spend their money on their mobile devices.
As they shop, they’re using mobile to discover, research and compare products before showing up in a store. In fact, there’s a one in three chance that they’ll visit your brand’s website during their shopping journey. While the large majority of purchases are made in stores, a staggering 80% of all luxury sales are influenced through digital, with social media being the number one source of inspiration.
As this generation gains purchasing power, luxury brands are changing what they do to earn these consumers’ loyalty. It was not that long ago that qualities like personal service, brand heritage and exclusivity were high on the list for luxury customers. Now personalization, innovation and exclusive experiences demand their attention.
Among these is an increasing desire for brands to align with their values and beliefs, including an increased emphasis on sustainability and low-impact manufacturing methods.
Underscoring this trend is the rise in the consignment market and the new circular economy that has paved the way for retailers like TheRealReal that are disrupting luxury resale/consignment.
Life in an on-demand economy
We can all admit that life moves fast these days. This is partially due to the role technology plays in bringing people and businesses together in profound ways that are changing our expectations about time.
Things that can now be done do on our smartphones—like one-click shopping, fast online check-out and free (and speedy) delivery—have created expectations that every brand we interact with will deliver when and how we want it. That, of course, includes luxury brands.
Our research reveals that one in two U.S. shoppers makes a purchase within an hour of deciding on a product. After the decision is made, they move quickly, with some 40% of people abandoning a site if it takes more than three seconds to load.
Why is this a threat to your business? Because the friction involved in finding and buying a product online (it takes an average of 22 clicks to complete a checkout on most companies’ ecommerce platforms) costs U.S. businesses over $213 billion in potential revenue, according to Baymard Institute estimates. Worse, Convey Agency reports that 84% of U.S. shoppers surveyed are unlikely to shop with a brand again after a poor experience.
The rise of experiential luxury retail
Omnichannel retail is here to stay. It stems from retail consumers moving beyond shopping for a product based on a store’s geography or prices to choosing where and how they shop based on convenience.
We’ve moved from a world where we go shopping (limited by store hours, free time, or location) to a world where we’re always shopping.
Luxury brands that understand this are innovating, stretching the bounds of what’s possible within their physical stores and retail partnerships. Their goal is to expand the scope of omnichannel experiences to meet the heightened desires of new consumers to engage with the brand directly.
A great example of this is the recent Louis Vuitton Museum pop-up in Beverly Hills, which invited consumers to be completely immersed in the story of the brand and its history. With the help of mobile AR camera effects, exhibits were brought to life (and yes, creating the perfect Instagram moment) and the brand created meaningful connections and expanded the notion of what luxury means to today’s consumers.
As head of Industry, Karin Tracy leads Facebook’s sales and account teams in the U.S. for the retail, fashion, luxury and beauty verticals. She and her teams focus on partnering with large, complex, traditional advertisers to navigate the disruptions that are shaping today’s marketing landscape.