Provide an engaging digital luxury experience to keep up with trends
Luxury brands have been improving the shopping experience for their customers through their digital presence. Thanks to e-commerce and social media, more luxury brands are now breaking down the physical boundaries of new emerging markets, with some of the largest online growth of sales seen in the U.S. and China.
China has frequently been one of the biggest consumers of luxury goods, despite the weakness in their macro-economy. For many luxury brands, e-sales account for over a quarter of total sales, including purchases in the homeland and those traveling abroad.” In the estimates of the Italian organization Altagamma, China contributes to more than a quarter of the consumption of luxury goods.
As for the United States which is home to 442 billionaires (about four times those in the People’s Republic), some European brands scarcely present in the States recently reported rates of double-digit growth, thanks to luxury goods consumption spending. Sales to tourists from emerging markets, especially those from Brazil have also had a great contribution to the growth pace of the U.S. luxury market.
With the economy in Italy still struggling, many Italian luxury brands are looking to increase their presence online and across the ocean to the American market. Several are starting with small steps of simply tapping into social media visibility.
As well as being the world biggest luxury goods market, the USA boasts the largest high-income population in the world with 21.3 million people with an annual gross income over US$150,000 in 2016. This is significantly ahead of other top 5 countries with the largest high-income populations (China with 2.9 million; Japan and Germany with 2.5 million each; and France and the United Kingdom with 1.9 million each).
Analysts at Credit Suisse indicate that the online sales will be the main growth driver for luxury brands by 2018. This is mainly for the brands which have invested in their own web store and in the mobile applications. While online transactions represent a small percent of the total luxury goods market, they’re growing twice as fast as the luxury retail sector as a whole.
For a growing segment of luxury shoppers, online experiences drive real-world decision making. Research shows that more than 45 percent of luxury purchases are influenced by what shoppers find in the digital universe via websites, social media or apps.
Many shoppers remain reluctant to purchase more expensive and custom products online, preferring to see them and touch them first, but many will compare product features and prices online before settling on one to buy and choosing a retailer. In other words, by the time many shoppers have reached a bricks-and-mortar luxury store, they’re likely to have a good understanding of all the products in the category, including features and prices. Most consumers choose stores based on proximity, of course, but today in the years ahead, online ratings and opinions will help drive more decisions about where to make purchases online as the need for convenience grows.
The US market for luxury goods is expected to continue growing in the short to medium term, building momentum in conjunction with the slowly improving economy. Growth will be driven by increases in disposable incomes from both domestic as well as international consumers.
Foreign luxury retailers will increasingly look to the US as a source of growth, and the increasing competition will benefit shoppers. In addition, online options will allow consumers to compare product selections across outlets, and retailers will be forced to compete on price
Today’s affluent shopper is more mobile than ever, and luxury brands are realizing the power of a digital presence is critical in today’s market for growth and stability.