The post-COVID luxury landscape: Gen Z, digital

couture and retail-tainment

Emily Safian-Demers
Source: WARC Exclusive, October 2021
Downloaded from WARC

The luxury market, like so many other industries, took a hit in the wake of the COVID-19 pandemic.

Now, as the industry begins to recover, a new roadmap is emerging for luxury brands and
consumers.
Luxury is no longer defined purely by label, material or craftsmanship—it is defined by the impact
that the product or brand has on individuals, society and the environment.
The global market for pre-owned luxury goods is worth between $30 and $40 billion and is
expected to grow by 15% to 20% annually over the next five years, according to research from
Boston Consulting Group.
Sixty-two percent of luxury customers worldwide say they would be more inclined to buy from a
high-end brand that offers resale, luxury brands and retailers are introducing their own resale
platforms.

Why it matters
Gen Z and Millennials are set to represent more than 60% of the luxury market by 2025, according to Boston
Consulting Group. This demographic shift will require luxury brands to rethink their strategies to connect with
younger buyers.

Takeaways
Luxury consumers are no longer investing purely in a label or final product; they’re investing in the ethical
and sustainable process of creating that product.
With second-hand shopping on the rise, luxury brands have an opportunity to own the second life of their
products.
 Gen Z are driving the next wave of ethical consumption – proving that values-based practices are not just
the right thing to do, but are also good for business.
Prestige brands should consider how they can cue luxury in the virtual realm and what digital artisanship
and craftsmanship looks like.

The luxury market, like so many other industries, took a hit in the wake of the COVID-19 pandemic. Now, as the
industry begins to recover, a new roadmap is emerging for luxury brands and consumers. What are the trends
that will define the next era of luxury?

Conscious consumption
Luxury is no longer defined purely by label, material or craftsmanship—it is defined by the impact that the
product or brand has on individuals, society and the environment. “We’ve seen many decades of luxury as
status goods,” James Glasscock, founder of LA-based GoodHuman, an ethical and sustainable online
marketplace that launched in October 2020, told Vogue Business. “Now ethical is a status good.”

Seventy-one percent of American, British and Chinese consumers say they are more likely to buy from a brand
that has made strong commitments to equality and social justice, and 75% say they are more likely to buy from
businesses that pledge to eliminate their carbon footprint, according to February 2021 research from
Wunderman Thompson Intelligence, collected by Wunderman Thompson Data.

Barron’s dubs the emerging era of ethical luxury consumerism the “next luxury,” defining it as “a new form of
high-end consumerism that promises to not just help us look good but do good.”

Vogue points to 2020 as the year “ethics went mainstream” in the luxury fashion industry. Chanel hired Agathe
Derain as its first-ever head of human rights in September 2020. At the end of 2020, Burberry raised $300
million in the luxury fashion industry’s first sustainable bond, whose proceeds are being put towards financing
sustainable projects. Chloe introduced the world’s first fair trade-verified luxury bag collection in partnership with
the World Fair Trade Organization in April 2021.

In January 2021, Kering cofounded the Regenerative Fund for Nature and LVMH is fostering regenerative
practices with the launch of Maison/0 in April. “There is no champagne without grapes, no ready-to-wear without
silk and cotton, no perfume without flowers,” said Antoine Arnault, head of LVMH image, communications and
environment at the IUCN World Conservation Congress in September 2021. “It’s our role to give back what we
borrow from nature. We see protecting and regenerating biodiversity as offering a creative opportunity rather
than new constraints.”

Key Takeaway: Luxury consumers are no longer investing purely in a label or final product; they’re investing in
the ethical and sustainable process of creating that product.

Circular luxury
The global market for pre-owned luxury goods is worth between $30 and $40 billion and is expected to grow by
15% to 20% annually over the next five years, according to research from Boston Consulting Group.

Luxury second-hand shopping platforms are raking in funding hand over fist. Luxury resale platform Vestiaire
Collective hit a valuation of $1.7 billion in September 2021, thanks to a new round of backing from SoftBank.
This latest round of funding comes hot on the heels of luxury behemoth Kering’s $215 million investment in
March 2021. Vestiaire reported that orders rose by more than 90% globally from September 2020 to September
2021 and have doubled in the US, its biggest market.

Tradesy, an online marketplace selling high-end second-hand goods, raised $67 million in funding in September
2021. And Vinted, Europe’s largest second-hand fashion marketplace, raised $293 million in May, bringing the
start-up’s valuation to a total of $4.26 billion.

With 62% of luxury customers worldwide saying they would be more inclined to buy from a high-end brand that
offers resale, luxury brands and retailers are introducing their own resale platforms. Gucci launched an exclusive
partnership with luxury reseller The RealReal in October 2020. Neiman Marcus introduced Fashionphile, a
handbag resale service handled by the retailer’s personal stylists, in April 2021.

“Pre-owned luxury is now a real and deeply rooted trend, especially among younger customers,” said François-
Henri Pinault, Chairman and CEO of Kering. “Rather than ignoring it, our wish is to seize this opportunity to
enhance the value we offer our customers and influence the future of our industry towards more innovative and
more sustainable practices.”

Key Takeaway: With second-hand shopping on the rise, luxury brands have an opportunity to own the second
life of their products.

Connecting with Gen Z

Gen Z and millennials are set to represent more than 60% of the luxury market by 2025, according to Boston
Consulting Group.

In an effort to engage the rising generation, LVMH—the largest seller of luxury goods globally—has announced
plans to hire 25,000 people under the age of 30 by the end of 2022.

However, connecting with Gen Z requires a much deeper commitment than inviting them to collaborate on a
brand. Eight-five percent of Gen Zers believe that brands should be about something more than profit, and 80%
believe that brands should help make people’s lives better, according to Wunderman Thompson
Intelligence’s findings, collected by Wunderman Thompson Data in October 2020.

Boston Consulting Group’s research found that this attitude holds true for luxury brands. “Our research found
that, while traditional markers of luxury remain critical, – superior quality, attentive design and an elevated
narrative – these are no longer sufficient to drive passion for Generation Z and younger millennials,” Sarah
Willersdorf, Boston Consulting Group’s global head of luxury, told WWD. Purpose and ethics are taking the
place of product quality and design; BCG’s research suggests that Gen Z spends 50% of their purchase journey
on seeking inspiration and inspiring others post-purchase.

Key Takeaway: Gen Z are driving the next wave of ethical consumption – proving that values-based practices
are not just the right thing to do, but are also good for business.

Digital couture
Luxury brands are embracing digital-only couture and ready-to-wear collections.

Luxury consumers look favorably on brands playing in the gaming sphere. Over half of luxury consumers say
that their perception of a brand is positively impacted when that brand takes part in online gaming experiences,
according to Boston Consulting Group’s True-Luxury Global Consumer Insights survey, Willersdorf told WWD.
Of those, 34% say this is because they can better discover new luxury collections and experiences from their
favorite brands, and 30% say online gaming and digital personas allow them to better express themselves and
their style.

Simultaneously, digital goods are being assigned high values. Consumers would be willing to pay nearly $3,000
for a digital designer handbag, according to Wunderman Thompson Intelligence’s July 2021 research,
collected by Wunderman Thompson Data.

To build on the growing momentum of digital fashion and engage with the next generation of luxury consumers,
high fashion houses are releasing digital-only designs.

Balenciaga launched a clothing and accessories collection on Fortnite in September 2021, making the French
luxury house the first to bring high-fashion skins to Fortnite. Ralph Lauren released a digital collection on virtual
platform Zepeto in August 2021. The collection, which includes over 50 pieces, marks the brand’s first entrance
into digital fashion. Gucci created a virtual world on gaming platform Roblox in May 2021, where users could
browse, try on and purchase digital Gucci designs. Earlier in the year, Gucci released digital garments in
Pokémon.

Key Takeaway: The gaming boom that exploded in the wake of the COVID-19 pandemic and ensuing
lockdowns is making its way into the luxury market. When moving into this space, prestige brands should
consider how they can cue luxury in the virtual realm and what digital artisanship and craftsmanship looks like.

Retail-tainment 2.0
Luxury retail-tainment gets a boost from livestream channels.

Livestream shopping events generated an estimated $5.6 billion in sales in 2020 – and that number is projected
to double to $11 billion in 2021 and more than quadruple to nearly $26 billion by 2023, according to retail
analytics firm Coresight Research, the Washington Post reported.

Of the 46% of luxury consumers who are aware of livestream shopping sessions, 70% have purchased during or
immediately after the livestream, according to Boston Consulting Group’s annual True-Luxury Global
Consumer Insights survey.

Goldman Sachs and Kering invested $50 million in NTWRK, a livestream shopping platform modernising the
QVC model. “Our vision is to become the biggest, most culturally relevant, livestream shopping marketplace for
Gen-Z and millennial audiences who are obsessed with pop culture,” said NTWRK CEO Aaron Levant in a
statement.

High-end department stores are merging personal shopping and video content with shoppable livestreamed
events. Galeries Lafayette launched livestreamed personal shopping in 2020. In June 2021, curated e-tailer
Verishop unveiled an in-house livestream shopping program. Net-a-porter took to Instagram to host shoppable
livestreams and Moda Operandi launched Moda Live, a series of exclusive livestreamed shopping events, in
July 2020.

Prestige brands like Gucci and Chanel are livestreaming their fashion shows, turning them from elite red-carpet
events into high-brow entertainment.

Key Takeaway: The white glove treatment that defines the luxury shopping experience is migrating onto
screens, offering consumers a unique blend of concierge service and entertainment.

About the author

Emily Safian-Demers
Editor, Wunderman Thompson Intelligence

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