Previous cost of living crises have shown that luxury retail tends to remain unaffected due to the clientele being more able to withstand rising prices. With the ‘treat yourself’ trend prevailing throughout the 2020s, wealthier consumers will continue to invest in luxury goods. However, we have seen these luxury spends morph into smaller, more carefully considered purchases. Shoppers want to ensure value for money more than ever and, therefore, retailers must be innovative with the new products and experiences they offer.
Sustainable Relaunches
We found that nearly half of adults will shop around to find the best price before they purchase a premium BPC product that they haven’t previously tried. This has intensified as a result of continued inflation and decreased discretionary spending. In consequence, luxury brands must work harder to stand out, with many consumers expecting proof of product effectiveness before they are won over. Many brands are focusing on marketing their tried and true products that have a pre-existing customer base. This is often achieved by reviving beloved classics with added environmentally friendly features.
Glossier announced that they would be reformulating their wildly successful lip product, Balm DotCom into a vegan-friendly option. They also gave the packaging a makeover with a more accessible application and swapped out non-renewable Petrolatum for Castor Jelly. Similarly, make-up brand Hourglass has released new vegan lipsticks in their iconic shades – such as Red 0, which originally would have been carmine, a pigment made from crushed insects. Making responsible and sustainable changes enhances brand image and attracts new customers, who prioritise sustainability in their luxury BPC shopping.
Appealing to Gen Z
In our Consumer Attitudes Towards Luxury report, we found that Gen Z consumers show the most interest in luxury brands. However, because this demographic generally has less disposable income, brands must innovate ways to appeal to them and their budgets.
One method of appealing to younger consumers that has proven successful is by utilising more accessible product collaborations. In May 2023, H&M launched a collection with luxury clothing brand Mugler which was a resounding success, with items quickly selling out. Similarly, for the Spring/Summer 2023 season, New Balance continued its collaboration with Miu Miu on some incredibly popular distressed denim trainers. These mixes of familiar, attainable brands and coveted luxury labels are tempting for potential consumers, and, by offering starter products at more affordable prices, brands cultivate their future loyal customers.
Another effective approach to engaging is to incorporate customisation into the purchase process. With two-thirds of Gen Z identifying as creative, the appeal of personalisation that caters to a customer’s individuality is on the rise. In 2022, GUCCI unveiled its personalisation stations, allowing customers to go home with their luxury creations. By engaging customers more deeply in the shopping experience, they build a deep connection with the brand and are more likely to return.
Experiential Dining
Many consumers, particularly those of younger generations, with a taste for luxury but constrained budgets, have gravitated towards high-end dining experiences. They are looking for unique and interesting ways to get a taste of luxury without spending thousands on a designer product. Many establishments have responded to this growing market with experiential dining. Experiential dining can include a manner of unique events like dining in the dark or enjoying menus curated around movies and theatre productions. Through these experiences, customers can feel they are getting the five-star treatment with a fun twist. Often, these are ticketed occasions so even when the price is high, there is a clear idea of the end cost.
A growing number of high-end restaurants offer guest chef appearances for a limited time to create a sense of dynamism and excitement. 180 Corner in London invites chefs from diverse culinary backgrounds to create luxury dining experiences. These events usually run over a few days and almost always sell out, which speaks to the market’s desire for bespoke and exclusive experiences.
Looking Ahead with Mintel
The cost of living crisis has affected many shoppers’ spending habits but luxury retailing has remained resilient due to their customers being better insulated against rising prices. As a result, where high street shoppers have placed value on sustainability, luxury shoppers still consider it a priority. Brands need to be innovative with eco-friendly formulas and materials for continued customer retention.
Additionally, luxury brands must look to appeal to emerging markets early to establish long-term customer loyalty. While Gen Z lacks funds, we’ve found they are the most enthusiastic when it comes to luxury purchases; therefore they’re a promising demographic for brands to target.
Take advantage of Mintel’s in-depth market research to sharpen your strategies and align with the latest trends in consumer behaviour. Explore our extensive Retail Market Research today.
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