The New

Shape of Luxury
How brands can navigate the changing market
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Report Author:
Fran Cassidy, International Marketing and Research Consultant

Project Contributors:
Janet Hull, Director of Marketing Strategy, IPA
Dorota Gwilliam, Global Director - Luxury and Weekend Portfolio,
Financial Times
Lizzie Cooper, Commercial Marketing - Financial Times
Enzo Diliberto, Global Insight Director - Financial Times
David Buttle, Global Director - Policy, Platforms & Commercial Marketing
- Financial Times
Mette Bergoe, Senior Insights Manager - Financial Times
Niall Flynn, Lead Designer - Financial Times

Foreword
Dorota Gwilliam,
Global Director - Luxury and Weekend Portfolio,
Financial Times
Throughout tumultuous times, The Financial Times has
remained close to its readers, regularly engaging with them
to understand how they have been impacted by the ever
changing landscape. The insight that we gain helps to shape
our content and provide valuable audience data.
Our partnership with the IPA has strengthened that insight,
allowing us to look at the luxury sector through not only our
own audience’s eyes, but through those of key experts in the
industry.
This report aims to shed light on the extraordinary changes
to the luxury sector so that we can continue to make sense
of what has been happening amongst brands and customers.
The findings come from a global survey of our readers
and insights from interviews with luxury brand executives,
academics and leading industry commentators - all of whom
we would like to thank sincerely for contributing to the project.
Our hope is that these findings provide guidance for those
looking to understand this elusive audience as they navigate
the complexities of the luxury market.
If you would like to talk with us about future partnerships or
to further understand this research please get in touch via
ftcommercial@ft.com
FT COMMERCIAL
Janet Hull,
Director of Marketing Strategy,
IPA
As the representative organisation of UK-based advertising
and marketing services agencies, the IPA serves the needs
of over 300 member companies who, in turn, work with over
3000 leading brand owners both in the UK and internationally.
The IPA is delighted to partner with the Financial Times
and bring this insightful report to life. The report strives to
exemplify brand-building at its best; with a permanent focus
on the sustainable added values of quality, authenticity,
special experiences and creative differentiation.
Like every sector, the luxury market has been forced to
adapt and flex in response to unprecedented recent events
and an acceleration in societal and economic challenges. Who
better than the IPA and Financial Times to provide a global
perspective of these dynamics, and provide the context for
businesses and brands to reset their course for growth in the
years ahead.
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Contents
01 Why we produced this report

02 Key recommendations for luxury brand owners

03 What’s driving growth in personal luxury

04 ESG: the new essential

05 How the customer journey changed

06 How successful brands are reacting

07 Conclusion

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01
Why we produced
this report
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Why we produced
this report
Segmentation Attitudes
After the record high of €281bn (Bain & Co) spent on person-
al luxury goods in 2019, it was difficult to imagine how that
figure could rise further, given the physical and economic
constraints of the pandemic and its aftermath.
However, the final figure for 2021 is €283bn – and this is fore-
cast to rise dramatically to €360-380bn by 2025 (Bain & Co).
Many of the leading maisons and brand owners across the
sector are recording extraordinary growth, with profits and
share prices to match.
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Buying
Behaviour
In order to provide the industry with insights, and inform its
planning and messaging, the FT and IPA set out to analyse:
1. The factors that have driven this growth
2. How the attitudes and behaviours of luxury consumers
have shifted over the last two years
Given the issues still affecting ‘experience-based’ services as
the pandemic recedes, the report focuses on goods, which
are often considered the core of the sector. This was also the
first part of the luxury market to recover to 2019 levels, as the
easing of Covid restrictions had a more immediate effect.
Our findings are both quantitative and qualitative. They are
derived from a global survey of 646 FT readers and insights
from interviews with luxury brand executives, academics and
leading industry commentators.
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We have more and more consumers. We are growing everywhere.

Past double digits in every single country.
Bruno Pavlovsky, President of Fashion, Chanel

ESG and
Brand Power Sustainability

The FT reader survey examined:

• Segmentation: How to segment a luxury audience. • Brand Power: New entrants vs the classics and how luxu-
ry brands are evolving.
• Attitudes: How attitudes to owning and purchasing luxu-
ry goods have evolved. • ESG and Sustainability: The customer view and how it
affects purchasing decisions.
• Buying Behaviour: From Covid-19 to the impact of online,
how buying behaviour has changed in the last 12 months.

Fig 1.1 The value of our respondents

75% 65% 45%

Enjoy owning and buying Remained in the luxury market Can be classed as ‘heavy buyers’ - buying
luxury products. over the last 24 months. more or the same over 2020/21.

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02
Key recommendations
for luxury brand
owners
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Seven audience
segments defined

1.
As our questionnaire included attitudinal and behavioural The Seasoned Connoisseur
questions, we can analyse the data using behavioural seg-
mentation as well as by normal demographics. This enables • Mature profile and most likely to be retired
us to group our respondents into distinct audience segments, • High enjoyment in owning luxury brands
according to their beliefs and claimed behaviour. This is a • Keen gifters
useful device for brand owners and marketers as they devel- • Buy for investment
op their strategies and communication approaches.
• Feel the pandemic has left them with more money to
spend
These are the seven segments we’ve identified:
• Sustainability becoming increasingly important

2. 3.
The New Guard The Luxury Loyalist
• Youngest age profile, with 40% under-35 • Aged between 45-64
• Online purchasers • Highest earners
• Just as likely to buy experiences as well as goods • Purchase more than any other segment
• Keen on second-hand market, but little interest in • Have favourite products or brands they are ‘loyal’ to
renting goods • Have purchased online
• Sustainability is highly important • Believe sustainability inextricably linked to quality
• Classic luxury brands are special to them, but they also
enjoy discovering the new

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4. 5.
The Convenience Seeker The Memory Maker
• Purchasing has increased in the last 2 years • Heavy users of online channel
• Buy online for convenience • Prefer experiences over goods
• Least likely to discover new brands • Seven in ten decide against purchase due to
• Over half have purchased second-hand environmental impact
• Keen gifters • Believe luxury brands can only survive if they become
• Take comfort in purchasing luxury goods more sustainable

6. 7.
The Cost-Conscious Shopper The Gift Giver
• Have a high interest in luxury, but the least active of the • Buy products from luxury sector as gifts or treats
segments • Mature profile
• Broad age range • Least likely to buy online
• Tend to save for special items • Least interested in second-hand purchase
• Four times more likely to be interested in renting • Half of this segment believe sustainability is essential in
• Over half have bought second-hand items the luxury market
• Can find buying luxury brands intimidating or awkward

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Ten key
takeaways
From the quantitative survey of FT readers we can summa-
rise the attitude towards luxury brands, the purchase drivers,
and the transactional trends:
1. The personal luxury sector is thriving and the last couple
of years have not dimmed the attraction and potency of
the brands within it. The survey shows that seven in ten
luxury respondents across the globe continue to enjoy
buying, using and owning luxury brands.
2. Although much media commentary has focused on the
size of the new luxury markets being formed among the
Under-35s, our study demonstrates there is still growth
to be found among broader age groups for both new and
well-known brands.
3. Luxury items are still recognised and acknowledged as
status symbols by seven in ten respondents. This ex-
ternal signalling is emphatically expressed among the
younger groups. In addition, seven in ten of the younger
groups state that luxury brands “express how they would
like to be seen by others”.
4. Luxury products have internal as well as external signal-
ling values. These internal values are directly linked to
their psychological state. For many people over the last
two years, their sense of self was under threat due to the
isolation, fear and uncertainty caused by the pandemic.
There was also a levelling of status and certainly a lot
less public signalling. This could have a direct impact on
wellness among certain groups. Our experts suggest that
luxury purchases could help to overcome some of the
isolation and the need for personal affirmation. And the
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speed of the luxury market’s return most likely demon-
strates not only pent-up demand, but a desire to regain
that sense of self.
5. Not surprisingly therefore, the top purchase drivers over
this period were not only rational but also emotional.
Gifting or Treating was cited by 48%, while 37% cited
“emotional wellness” (such as comfort, deserving or a
need to feel better).
6. The top reason for not purchasing luxury items was
reduction in travel (39% across the sample). Shops be-
ing closed was not a major factor, indicating the level of
awareness of online options. However, among the Un-
der-35s, 32% stated they “couldn’t find what they want-
ed” as a reason for lack of purchase. This suggests that a
market gap continues to exist for this audience. Certain
groups also exhibit a level of “discomfort” or a feeling of
“inappropriateness”.
7. Strong ESG credentials are now a prerequisite for the
majority of luxury buyers. Our study found that not only
is it part of the new cultural currency, it also regularly af-
fects claimed purchase behaviour. Over 60% of respond-
ents claimed they had decided against a luxury purchase
for social or environmental reasons. This increases to
70% for both Under-35s and for those favouring luxury
experiences over products. Even accounting for an ele-
ment of overclaim due to virtue signalling, the impact on
purchasing decisions in key groups is evident, either now
or in the medium term. Over a third of our total buyer
sample have bought second-hand luxury items. While
over 80% are interested in repair, fewer than 10% are in-
terested in renting.
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8. Two-thirds of luxury buyers have started to notice the 10. Online channels are firmly in both the transactional and
sustainability efforts of luxury brands and 42% agree that the communication mix for luxury brands, but as part of
luxury brands are becoming more sustainable. The new- the luxury consideration and purchase ecosystem. In the
er luxury buying market – which we have labelled The survey, six in ten of our sample missed the brick-and-
New Guard – is particularly vocal here, with 83% believ- mortar experience when shops were closed. This was
ing that luxury companies’ survival relies on them being higher among heavier buyers. However, online purchas-
able to deliver sustainability. This is twice as many than ing does tend to drive higher volumes, with those who
in some of the other audience segments. tended to buy online 70% more likely to have stayed in
the market over the last couple of years.
9. From a list of words given to our sample of FT readers,
“Distinctive” is the word most associated with luxury
products: an important point for brands to consider in
their messaging. Among heavier buyers words like “dis-
cerning” and “pleasure” were prominent, while younger
audiences were more likely to choose words like “attrac-
tive” “extravagant” and “confident”. “Pleasure” was the
top choice among women. This may help brands frame
messages for different target audiences.

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Five recommendations
for luxury brand owners
Now more than ever, luxury goods brands need the strategic
skills of CMOs to balance the increasing demands of brand
health, customer insight, channel management, data analytics
and partner selection with their existing portfolio of respon-
sibilities.
From analysing our qualitative interviews, we have summa-
rised five key recommendations:
1. Luxury brands will always need a global presence, but
the importance of local audiences for some brands is on
the rise. The reduction in the tourist market has created
a greater focus on local, non-tourist customers, meaning
an increase in regional marketing plans and the need to
understand and connect more deeply with local, more
diverse audiences.
2. Emotional connection to a wider age group needs great-
er focus on “cultural credibility”. This entails walking a
tightrope of being culturally connected and keeping or
evolving the brand DNA. As a result, brand owners now
need to focus on more (and probably more frequent)
customer-centric research than has been usual in the
luxury market. What is beautiful and important does not
always emanate from a brand’s HQ any more, but will
include the customer community itself – especially for
brands targeting younger luxury buyers.
3. E-commerce investment has accelerated and luxury
brands have started to invest more in performance-based
media, which they used to eschew due to scale and con-
text issues and the need for brand safety. Although they
are now re-evaluating this, they accept that emotional
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connection for brands is still the critical pillar which drives
distinction and premium pricing. Brands are seeing great
return from doubling down on investment in the top end
of the funnel.
4. For certain sectors, physical stores are becoming more
like “brand temples” rather than “shops”, with fundamen-
tal changes to the retail experience – sometimes with
the additional need to fulfil online purchases. There is a
focus on creating an overall experience, just as much as
(or even more than) product sales. Brands should bear
in mind that most customers still expect a high level of
customer service when interacting with a luxury brand –
though as well as being delivered in person, brands are
offering personal contact through text-based apps and
online consultants. The segments who value speed and
convenience expect them to be on tap.
5. The right partners are central to the luxury experience,
both online and offline. This applies to media owners as
well as retailers. How you show up and who you show up
with frames perception; this is especially the case online,
where transparency is less certain. Customers are already
expressing concern that they find it difficult to know if a
brand represents true luxury from how they look online.
At the same time, more and more brands are becoming
content machines to deliver all the creative assets now re-
quired. But quality, authenticity and credibility are key, and
it is critical for brands to understand the increasing com-
plexity of customer journeys. Creative and media agencies
can make transformative partners for luxury brand own-
ers, helping them leverage the remarkable opportunities
now available across the global luxury landscape.
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03
What’s driving growth
in personal luxury
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What’s driving growth

in personal luxury
Analysis of the data from the quantitative study and our Fig 2.1. Awareness of new brands
academic specialists has revealed how respondents feel
about buying luxury products; what they are looking for from
their purchases and the potential reasons behind the rise in
demand.

Consumer attitudes towards the sector

This is a vibrant market. The awareness and desire for personal
luxury products is still strong and consumers are aware of the
emergence of new brands across the sector. That awareness
70% 50%
Under-35s Total sample
and desire is even greater among under-35s. Particularly
interesting is their awareness of new luxury brands.

As seen in Fig 2.2, 70% of the sample perceive luxury as a

status symbol and over half feel that luxury is a projection of
how we wish to be perceived in the world and by the people
around us. Respondents were less ready to agree that brands
deliver a sense of belonging, although this does increase to
nearly half in The New Guard segment and among under-35s.
Fig 2.2 Attitudes towards luxury goods
I recognise luxury brands are a status symbol:
71%
Luxury brands reveal how we would like to be seen by others:
54%

I enjoy the sense of belonging that luxury brands create:

34%

Fig 2.3 The New Guard

Luxury brands reveal how we would like to be seen by others:
72%
I enjoy the sense of belonging that luxury brands create:
44%

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The New Guard audience also differ in their attitude towards

luxury in general. The benefits and associations with the sec-
tor are much more ‘externally biased’. They admit their needs Other words also saw differences between
from personal luxury are more about overt external signalling audience segments:
to others: see Fig 2.3.
Guilty
When asked to choose words that “could be associated with • The Seasoned Connoisseur - 2%
the idea of owning luxury brands”, we see interesting differ- • The Luxury Loyalist - 0%
ences between the segments and demographic groups. This • The New Guard - 32%
reveals additional insight into what they are expecting from
This is likely to be a reflection of their greater need to see
their purchases, and into the marketing messages and tactics more ESG values among the brands they choose: there is
which are likely to be most effective. Across the total sample, more on this in Section 4.
the word “distinctive” emerged highest out of a group of 22
words. As “distinctiveness” remains one of the leading indi-
cators of successful brands, it is helpful to have consumers
Pleasure
remind brands of the continuing need to ensure this in their • Women - 58%
communication. • Under-35s - 23%
Pleasure was the top choice of word for women by a con-
The word least associated with luxury was “shrewd”, suggest- siderable margin, whereas it scores much lower among the
ing luxury is not specifically linked to being astute. But there younger groups.
were notable differences across demographic sub-groups,
and within the cluster analysis, in the words themselves and Extravagance
their order - see Fig 2.4.
• Under-35s - 44%
• The Seasoned Connoisseur - 6%
The difference in attitudes towards extravagance between
the segments is probably due to discretionary income levels.

I worked all my life to afford Status

luxury goods. A luxury good • Under-35s - 40%
• The Luxury Loyalist - 16%
makes me feel “I made it.” This difference suggests that for older audiences, the status
factor is not what defines their relationship with luxury goods.
FT reader, US

Fig 2.4 Top 5 Words associated with owning luxury brands

Under-35s: The Seasoned Connoisseur:
Attractive 50% Distinctive 57%
Confident 45% Plesaure 36%
Extravagant 44% Attractive 35%
Status 40% Special 30%
Distinctive 35% Discerning 29%
The New Guard: The Luxury Loyalist
Confident 39% Discerning 48%
Extravagant 38% Distinctive 47%
Attractive 35% Pleasure 43%
Discerning 34% Confident 36%
Pleasure 33% Exclusive 34%

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The psychology of luxury purchases: the

impact of the pandemic?
The psychological effects of the pandemic were deep and
widespread across most markets. Feelings of isolation, fear,
Human beings are hierarchical
uncertainty and monotony (to name just a few) were felt
across most social groups to some degree. For many people
creatures, it’s as simple as that.
their “sense of self” was under threat, or at least more fragile. And luxury goods are one of
However, the reality is that our social groups rely on a sense the tools we use to signal our
of hierarchy, delivered by various signals. Owning and dis-
playing luxury goods to others performs a signalling function position in the hierarchy.
for internal and external social structure. As the author and
psychology professor Geoffrey Beattie explained: Professor Geoffrey Beattie

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We are signalling to ourselves and/or signalling to others.

And we now know how important the sense of self is to
maintain “wellness”. During the pandemic, lockdowns meant
there was less public signalling, less need for it, and much
greater isolation.

However, luxury products also provide at least some protec-

tion to that “sense of self”, providing a level of affirmation to
the individual: a personal signalling message. Beattie added :

A lot of us didn’t want to be the people we became during Covid.

We wanted life to be different. And many people probably wanted
themselves to be different within their life as well. You could argue
that buying some form of luxury allowed them to overcome at least
some of the isolation, boredom, loss of sense of self and anxiety.
Professor Geoffrey Beattie

As shops closed, the shift to online purchasing across the

sector over the last two years could be a sign of that need
for personal affirmation. And the speed of the luxury market’s
return probably demonstrates that desire for the sense of self
to return.

A final psychological factor is that as individuals we crave rec-

ognition – and the purchase of luxury goods makes us antic-
ipate recognition and respect.

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The reasons for purchasing tended to fall into four categories:
Emotional Wellness
Respondents refer to emotional reasons relating to “comfort”
“feeling better” and “deserving”, reflecting some of the
psychological factors above. The mentions are particularly
high among The Luxury Loyalist and The New Guard
segments, both of which are more likely to be working full
time. The references to making oneself “feel better” are
around three times higher (at 28% and 24% respectively) than
in The Seasoned Connoisseur segment (9%), who are slightly
older and more likely to be retired or semi-retired.
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More Time Available for Online Browsing
(For Some)
16% of the overall sample gave this as a reason, but
(unsurprisingly) there were differences between the working
groups and the more retired groups. Time is not an issue
for The Seasoned Connoisseur audiences, but it is much
more important for other audiences, who discovered online
convenience. There is more on this in Section 5.
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Gifting and Treating Existing Income Levels

Gifting is the top reason across all segments – particularly high Only 19% of the sample cited “more money” as a reason for
among The Luxury Loyalist and The Seasoned Connoisseur purchasing. This did not increase significantly higher in any
groups. It was chosen by more than a third of all respondents. audience group, which suggests that the increase in the
market has come from existing discretionary spend.

The four main reasons against purchasing were both It is also important to note the generally low level
practical and emotional: reporting of “shops being closed” as a reason for not
buying luxury products – again, particularly among
1. Reduction in travel – cited by 39% of the audience. younger audiences where it barely registered at all
This was similar across all audience segments apart (4%). However, it should be also noted that respondents
from the Under-35s, where it was cited by only 13%. perceived the closure of stores as temporary, and shops
2. Concern for “materialism” and excess – 29% had already reopened at the time of the questionnaire.
of the audience agreed with the statement that
“material goods matter less to me”.
3. Affordability – particularly among the younger
groups.
4. Access – Approximately a quarter stated they
couldn’t find what they were looking for. This was
the key issue for Under-35s, alongside affordability.

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04
ESG:
The new essential
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ESG:
The new essential
Strong ESG credentials are now considered a necessity
across the sector. However, our analysis reveals interesting
differences between audiences in how important this is for
both perception and claimed purchasing behaviour.
purchase behaviour. Over 60% of respondents claimed
they had decided against a luxury purchase for social or
environmental reasons. Figure 3.1 shows the difference
between the segments.

Effect of ESG on purchase behaviour

Our study found that not only is ESG part of the new cultural
currency among buyers: it also regularly affects claimed

Fig 3.1. Percentage of respondents deciding

against a luxury purchase due to ESG concerns

Regularly
58% Regularly

51% 17% Never

The Memory Maker

23%
62%
The Seasoned Connoisseur Never
Regularly
The New Guard

4% Never

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Sustainability is becoming
a concern for me in every
purchase. It has not become the
primary driver, but it is getting
higher as time goes by.
FT reader
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Among our segments, purchasing is most affected in those

who favour luxury “experiences” over “goods”, with 62% claim-
ing their concerns “regularly” prevent them from making lux-
ury item purchases, followed closely by The New Guard and
The Seasoned Connoisseur segments. So this is not only an
Brand names will have to
age-related issue. It is interesting to note that The New Guard work harder to keep a loyal
segment is more concerned about environmental issues than
social issues. Over two-thirds claim they regularly decide base. One way they can do this
against a purchase for environmental reasons, compared with
just under half for social reasons. A possible reason for this is by being more transparent
could be the transparency of environmental issues when con-
sidering purchasing luxury goods, compared with social: for about where/how/by whom
example, it is easier to get clarity on a product’s use of leather
than on fairness in supply chains or social justice.
these goods are made.
FT reader
The least affected are The Luxury Loyalist audience. How-
ever, it is clear that outside this segment (including buyers
just coming into the category), these are real concerns. Even
accounting for an element of overclaim due to virtue signal-
ling, the impact on purchasing decisions among some groups
is evident.

Buyers’ awareness of ESG actions by

luxury organisations
What is helpful, however, is that around two-thirds of luxury
buyers have started to notice the sustainability efforts of
organisations in the sector as a whole, with 42% agreeing
that luxury brands are becoming more sustainable. The New
Guard audience are again particularly vocal here, with 83%
believing that the survival of luxury companies relies on their
ability to deliver sustainability.

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Although a lot more work needs to be done, the innovations
and changes across the sector have been widespread. Some
brands such as Stella McCartney and Vivienne Westwood
have been running on a sustainable proposition for many
years, but now the majority of the maisons are following suit.
Product innovations include Gucci’s lab-grown leather re-
placement and Prada’s regenerated nylon made from waste.
just behind demand – was exacerbated by factories closing
and supply chain issues, driving up both prices and interest
in general. But it also reflects the increase in the number of
players entering the market. However, while over a third of our
respondents said they had bought second-hand luxury items,
there was also a high interest in repair (85% total interest)
and very little in rental (10%).

There have also been developments in supply chains, with In fact, repair requests to Hermes grew from 100,000 in 2019
greater auditing, transparency and restructuring, and more to 123,000 in 2020. They employ 78 repair specialists at 14
proximity production favoured over worldwide outsourcing. ateliers in Europe, Asia and the US. This interest in repair
goes up to 94% among those who regularly decide not to
purchase for ESG reasons.
Pre-loved, rental and repair - alternatives
to new
There has been extensive comment on the rise of the second-
hand, vintage, pre-loved market. Bain & Co reports that the
second-hand market grew to €33bn in 2021, up 65% from
2017. Second-hand luxury handbags now outperform both
art and classic cars in investment return. There is no doubt
that the scarcity of new products– which brands already
managed by creating limited editions and manufacturing

Fig 3.2. Perception and importance of level of

sustainability of luxury companies

Long Lasting luxury goods are inherently more sustainable: Luxury companies will only survive if they become more sustainable
78% 60%
91% 83%
82% 56%
87% 41%

I have noticed that luxury companies are trying to become more sustainable:
64% Total
74%
The New Guard
70%
72% The Seasoned Connoisseur

The Luxury Loyalist

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05
How the customer
journey changed
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How the customer

journey changed
Over the last three years, luxury goods companies have start-
ed to increase their focus on online channels, particularly so-
cial networks. App creation and development also became a
real focus. Industry sources suggest a 35% increase in app
downloads from the sector and brand owners saw an increase
of up to 40% in watch time of luxury content on YouTube.
The closure of brick-and-mortar stores was bound to affect
the customer journey in spring 2020 and force brands to re-
assess the use of digital channels. Figure 4.1 shows the in-
crease in first use by a range of luxury brands in a group of
social channels across 2019 and 2020. Note the increase in
April 2020.

Tom
Fig 4.1. Increase in use of broader range of social Ford

channels by luxury brands 2019 - 2020 Cartier

Source : PWC / Public Data Moncler

Tiffany
Tik Tok

RED (Xiaohongshu)
Lanvin

Bilibili
SK-II Givenchy

Shiseido Bally Dunhill

Louis Roger Furla

La Mer Burberry
Vuitton Vivier

Estee Michael Jimmy Max Saint

YSL Prada MCM L’Occitane Gucci Balmain
Lauder Kors Choo Mara Laurent

Shu Tory Salvatore Louis

Fendi Coach Omega Burberry Loewe Balenciaga Armani Rado Longiness Gucci Dior
Uemura Burch Ferragamo Vuitton

2019 2020
JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG

Our study allows us to see how customers themselves have
perceived changes to their buying journey. Interestingly, we
found that over half of our buyers claimed that they had not
“changed the way they buy luxury items” over the last two
years. Drilling down into this, we do see differences across
audience segments.
We will focus on four dimensions of the customer journey as
reported on by our global respondents. These are:
1. Attraction and evolution of brick-and-mortar stores, which
remain key
2. E-commerce transactions firmly part of the sales channel
ecosystem
3. Use of online as a discovery channel for existing and new
brands, which is deepening
4. Respondents’ views on the effectiveness of promotional
channels

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Attraction and evolution of brick-and- We should remember that not only is brick-and-mortar retail
a central pillar of the brand experience, it is the community
mortar stores
aspect of the shopping experience that fuels so many of
Nearly two-thirds of our respondents have missed the store the luxury purchase’s benefits. Although e-commerce is
experience. 64% of FT luxury consumers have missed “being increasing, elements of the in-store purchase will always be
able to see, feel and touch real things” and half are back missing. One leading commentator said:
in the stores – in the high street and in airports. Physical
stores remain key, and for many customers are part of the
definition of the luxury customer journey; we see this across
all audiences. That confidence in retail by the major luxury
brands is evident in the number of retail openings.

Unlike many other retailers, many of the major luxury brands You might argue that the
are making huge bets on the in-store experience, which
will also be used for click-and-mortar purchases. Versace is equivalent of the ‘rope-handled
opening 100 new stores over the next year and 50% of the
rest of the Capri Group (Jimmy Choo, Michael Kors) will be
bag’ is missing from the online
renovated and expanded. Ralph Lauren will open 90 new
stores and Thom Browne will launch 100 new stores by 2023.
experience and the other thing
that’s missing of course, is
The luxury retail experience is also evolving. In May 2021,
Anya Hindmarch launched not one store but five, with her the social proof. When you’re
creation of “The Village” on Pont St in London’s Chelsea. It
includes a Village Hall, a Café and a pop-up Fruit and Veg shopping, you’re surrounded by
Store. As she stated:
other people who are shopping,
which normalises the act of
buying the products
Leading brand commentator and author
With the trend for online
shopping obviously set to
continue, there must be
multiple reasons to visit and
engage with a brand physically
– ease, enjoyment, experience
all come into consideration.
Anya Hindmarch, CBE, CEO, Fashion Designer

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I think it’s an enormous loss buying things online. It’s almost like a
rite of passage when you feel that you can go into shops for luxury
brands and be treated with due deference by the staff as a serious
customer…And when you leave the shop you expect to be treated
differently by other people. You are changed by it and you think
slightly differently about yourself.
Professor Geoffrey Beattie
This shift to brand experience rather than pure transaction
focus is happening across luxury sectors.
For example, Wedgwood has created a Michelin-style
restaurant called Lunar, amplifying the heritage of the brand for
all its diners and tableware users. It is named after The Lunar
Society, a dining and debating club from the 18th century.
Josiah Wedgwood was one of the founding members of this
society, together with others such as James Watt: its members
were the pioneers of science and social change that would
ignite the industrial revolution. This is an excellent example of
the increase in importance of “provenance” in the sector.
Further north, the eight-floor Johnnie Walker Experience
opened in Edinburgh in September 2021, offering visitors
a “Journey of Flavour Tour”. Visitors’ personal flavour
preferences are mapped, with drinks tailored to their palate.
One commentator we spoke to described developments like
these as ‘the creation of brand temples”.
36
Online transactions are firmly part of the
sales channel ecosystem
61% of our audience have bought luxury online. Furthermore,
those who buy online buy more. 54% of those who buy online
bought “the same”, “slightly more” or “a lot more” luxury items
over the last two years, compared with 31% of those who do
not use online. Not surprisingly, this means that respondents
who bought luxury online were over 70% more likely to have
kept spending over the last two years.
But it is part of the ecosystem, not a replacement for brick-
and-mortar. 59% of our buyers use both, and alongside click-
and-mortar and social commerce, this is now the new normal.
Online channels are now firmly part of the transactional mix,
as well as the brand communication mix – particularly for
time-pressed people such as The Luxury Loyalist group. It
is this segment that has changed behaviour most; indeed,
22% of them admit that they buy more items now that
they use online purchasing too. This is in contrast to The
Seasoned Connoisseur segment, 80% of whom claim not to
have changed their buying behaviour. This group joins The
New Guard segment in saying that their volume of purchase
has not changed as a result of online access. However, their
reasons are likely to be different: The Seasoned Connoisseur
consumers are likely to have less inclination, while the younger
group are more likely to lack funds.
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Fig 4.2. How have customers changed the way they purchase luxury items

I haven’t changed the way I buy luxury items: I do a mixture of buying in the shops and buying online:
55% 59%
43% 61%
82% 40%
55% 76%

I have missed being able to see, feel and touch real things Now that I can get them online I buy more luxury
and want to do that more: brands than before:
64% 10%
67% 5%
72% 7%
58% 22%

Total The New Guard The Seasoned Connoisseur The Luxury Loyalist

Use of online as a discovery channel for
existing and new brands is increasing
Our data clearly shows that brands can use online channels
to reach core luxury buyer groups and many buyers are
receptive to discovering new brands items this way. Search
traffic did not significantly drop when stores reopened and
brands are now examining how online experiences drive store
traffic, beyond pick-up of online purchases.
Figure 4.2 and 4.3 demonstrate that the lure of the speed and
convenience afforded by online has driven increased volume
and purchase of a wider range of brands within The Luxury
Loyalist and The Memory Maker segments. Nearly six in ten
of the former have found new luxury brands online; so have
nearly half of those who favour experience-based services, as
well as Under-35.

Fig 4.3 Extent of use of online as a discovery

for new brands
Total
34%
The New Guard
26%
The Seasoned Connoisseur
19%
The Luxury Loyalist
65%
The Gift Giver
16%
The Convenience Seeker
25%
The Memory Maker
48%
The Cost-Conscious Shopper
36%

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Interestingly, those who are using online primarily for
convenience are less likely to use online platforms for luxury
discovery. This includes older audiences like The Seasoned
Connoisseur segment, and those who reserve luxury for
special occasions.
So brands looking for growth from those audiences need
to ensure a wider range of promotional channels. We would
also recommend this for brands looking to attract the newer
luxury buyers, as this group is less likely to find the emerging
brands in the marketplace online.
Among those already buying online, over a third claim they
have clicked on an ad which has led to a purchase. Heavier
Fig 4.4. Extent of claimed purchase from luxury
online advertising
Total
33%
The Luxury Loyalist
57%
The Convenience Seeker
17%
The Memory Maker
37%
buyers in The Luxury Loyalist are very active in this respect,
with over half claiming to have done so, while those using
online mainly for convenience tend to forgo this opportunity.
These types of data help to underline the attention needed in
planning communications, messages and channels according
to the position of the buyer in customer journey.
Strategists may also be interested in responses to the idea of
“online only” brands. It suggests that without a wider presence,
the distinctiveness and uniqueness of luxury brands – the
“special” factor – would be lessened. We found that two-thirds
of under-35s and nearly three-quarters of The New Guard
segment feel this way.
Respondents’ views on the effectiveness of
promotional channels
The importance of an online presence was also included
in questions to our global sample about the most effective
promotional methods. The results in Fig 4.5 demonstrate not
only the broad views, but also some interesting differences by
demographic and lifestyle cluster.

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Fig 4.5. Perception of most effective promotional channel

Newspapers & Magazine: Videos: Online or TV:
63% 34%
58% 60%
71% 29%
76% 46%
67% 34%
45% 36%

Sponsored events: Influencers:

59% 26%
75% 33%
52% 26%
66% 45%
53% 31%
67% 26%
In-store appointment service: Social Content:
59% 19%
62% 27%
64% 25%
73% 32%
68% 21%
64% 16%
Collaborations with artists or bands: Mobile Games:
47% 14%
66% 39%
58% 9%
62% 23%
58% 12%
33% 26%

Total Under-35s Female The Memory Maker The Luxury Loyalist The New Guard

Not surprisingly given the sample base, newspapers and
magazines came out strongly: six out of ten respondents
stated that advertising in newspapers and magazines would
be effective. Both events and face-to-face appointments
achieved the same score. Interestingly, five out of ten
respondents chose collaborations with artists or bands.
Respondents perceived social platform content and mobile
gaming as less strong.
Across the demographic groups, women favoured newspapers
and magazines, collaborations and in-store experiences more
than the rest of the sample. Under-35s favoured a broader
range of channels including events, collaborations and video,
and mobile games were felt effective by nearly four in ten.
As well as newspapers and magazines, The Memory Maker
segment favoured physical events and “in store” services,
reflecting their preference for more social, in person activities.
They were also more likely to rank social and influencer
content more favourably than the rest of the sample. Events
were also ranked highly by the newer market audiences and
the heavy buyers of The Luxury Loyalist segment.
Outside these groups, an interesting finding was that The
Convenience Seeker segment did not actually favour online
messaging as a whole. They ranked among the lowest for
channels such as influencer (19%), social content (11%) and
mobile games 10%), reflecting not only their demographic
profile but their specific “convenience only” use of the online
platform. They ranked newspaper, events and in-store
experiences higher for effective promotion.

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06
How successful
brands are reacting
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How are successful

brands reacting
Over the last few years, the structural changes to the luxury
marketplace have meant the CMO is now assuming a more
strategic function – particularly in the understanding of the
customer and buying journeys, partnership selection and
data analytics. We believe the shifts taking place, whether
accelerated by the pandemic or through fear about survival,
are nothing short of tectonic. Many of them became clear
during discussions with our industry leaders, which this
section will now explore.
Product quality, design and creativity are still critical of
course, but are being supplemented by additional datasets
and insights.
As we have seen in the quantitative data, there is a strong
market among younger audiences as well as the 45+ groups.
Indeed, Bain forecasts that Millennials will deliver 50% of
the personal luxury market by 2025. In 2021 Francois Henri
Pinault, Chairman & CEO of Kering, said:

Deeper connection to a wider and more

local audience
As in the majority of other commercial sectors, luxury brands
are doing much more widespread research to understand
customers’ wants and needs, as well as brand health and
equity status. They also conduct regular social listening that
feeds into decision-making. And there is far more data on
actual behaviour.

As the marketplace has broadened and become younger,

there is more of a need to have “cultural credibility”, or as
one global brand director said:

We are recognising the need to be ‘culturally vibrant’. And you

can’t measure that once a year, six months after you finish your
activity: you have to do it in the moment.
Global Brand Director

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The share of the young generations in the total business is

increasing. So there is a very strong and structural rebalancing
between people from 40 years old and above and people from
40 years and below. I do really believe they expect very different
things than the previous generations in terms of commitment, in
terms of sense of purpose. It’s not just about beautiful products
that are relevant in the moment. It’s much more than that.
Francois Henri Pinault, Chairman & CEO of Kering

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Further data to support this comes from an investor study in

the US, conducted by the Spectrem group. It found that since
2014, the average age of US investors with $25 million or
more dropped by 11 years, to 47. As one agency head stated
Collaborations
“You don’t have to grow up to be a customer any more.”

One of the most visible demonstrations of the targeting of luxury

towards younger groups is the trend in brand collaborations Smaller & Larger Brands
in the fashion market. For some of our interviewees, they are
defining luxury fashion, a sector which is looked to across the
marketing world for inspiration and trends.

Collaborations not only provide theatre and spectacle; they

can also enrich creativity, reframe brand image, and attract
different audiences for brand trial and even for culture
exchange. Having started in 2004 with Karl Lagerfeld and
H&M, collaborations are reaching new heights: one of our
experts stated “collaborations are now on steroids”.

Different Markets

Fashion & Entertainment

Fashion & Homeware

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One other key change in audience targeting is the shift to local

audiences. With the tourist market still recovering from Covid
restrictions, brands are focusing on their local (i.e. non-tourist)
customers, who Bain & Co forecast will grow from 50% to 65%
or 70% of the market by 2025. A good example of this local
There is a reinvestment
focus is Gucci’s pop up “Circolo” – a branded space including happening at the top of the
lounge, library, work space and café for local customers. Such
spaces were created in Milan, Berlin and London: the press funnel. That inspiration phase.
called the latter “the chicest hangout in London”.
The continued importance
To some degree, this wider targeting by luxury brands has
increased the democratisation of the category and fostered of broader campaigns and
a greater sense of inclusion. This is aided by the growth
in the second-hand market, which widens trial and brand
beautiful experiences, that
ownership. Multi-brand e-tailers such as FARFETCH and
NET-A-PORTER are also important in this trend; an example
reflect the purpose and
would be placing a £249 quilted jacket from a smaller brand meaning of the brand - there is
like DÔEN on the same page as a Chloė silk jacket for £5,705.
almost a doubling down on this
Doubling down investment in brand Global Brand Director
advertising
While investment in digital channels has been a major press
headline over the last couple of years, respondents spoke of
the continued critical role of investment in brand advertising.
In the first months of lockdown in 2020, brand investment
was on pause across many sectors: however, our respondents
told us it was back by Quarter 1 in 2021. Brands understood
that consumers were looking for a different kind of emotional
engagement. That investment has remained high into 2022,
fuelled by both the considerable growth in the market and
intense competition.

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The need for brand connection has never been greater.

Successful luxury brands have always relied on resonating
emotionally with customers. But customers now expect more
from their corporate behaviour which needs to be reflected in
Shift in Luxury Concepts
brand stories and actions. The FT reader survey showed that
buyers want to see more action and transparency, particularly Exclusive Inclusive
relating to ESG factors. This is particularly the case among
the newer luxury audiences.

Valuable Valued

Abundance Responsible
We’re still seeing a bit of
a lag between intent and Now Forever
behaviour on sustainability.
But we strongly believe what
we’re seeing from an ‘intent’
perspective. It is completely
central to luxury propositions
to be really transparent and
have a sustainable proposition
Global Brand Director

Besides the reputational and ethical imperatives of progress

in this area, there are now expectations from financial
markets. Gartner (2021) reported that 85% of investors in
2020 considered ESG factors in their investments.

If the changes that the consumer wants to see are delivered,

over the next few years we are likely to see an evolution
in the words and images associated with the concept of
luxury. The list we used for this study may change. Beauty,
creativity, quality, service will still form the bedrock for many
luxury items and services, but a focus on “wealth” “status” and
“achievement” may recede.

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Luxury can still deliver the recognition, respect and personal However, this was not simply due to industry lethargy. Given
affirmation expected, but perhaps for a group of slightly the enormous value inherent in brand perception in luxury,
different values that are likely to be part of a new cultural and the obsession with consistency, context and exclusivity,
currency. some organisations had real concerns about the sheer access
and availability issues of promoting a brand online.
Sales channel innovation - e-commerce,
social commerce, live commerce
E-commerce
One respondent referred to the investment into e-commerce
as an “explosion”. Brands had seen consumers comfortable
with spending larger sums online “provided the brand Luxury was very slow to digital
experience delivered”, and resourced accordingly.
commerce and actually some
Not only is online retail a core element of sales for many
brands, but in the larger companies investors are also keen
of that slowness was to really
to understand their progress. Richemont, owner of Cartier, is think ‘How do we create an
now one of many who report the channel as a separate line in
reports and accounts; in 2021, 21% of their sales were online. online experience that matches
It also specifies how much comes from its online retailer
partners, such as FARFETCH and MR PORTER. the brand?’ … there was
Until 2020, investment in digital channels (either for promotion tremendous thought about how
or transactions) was sporadic rather than strategic for many
luxury brands, except for some of the major maisons. This
it would impact the brand.
was despite the fact that the online channel influenced 85% of Global Brand Consultant
global luxury transactions in 2020 and 75% in 2019 (Bain & Co).

However, this delay did allow new brands at that stage to

get a foothold in the market. Naturally, there was a spectrum
of starting-points. For some, it was a huge acceleration of
an existing strategy. With much of the high street and most
airports closed, one organisation refocused the efforts of
an entire division of its marketing team into investigating a
DTC strategy. For marketers who tended to focus on product
development and marketing communications, the need for
the creation of “back ends, online customer support, payment
systems and technical infrastructure” was entirely new.

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Of course, not all luxury organisations had the scale, resource

or will to invest before the pandemic. In 2020, it was more of
a “nothing to lose” mentality and a good opportunity to find
out what it could deliver.

E-commerce didn’t have

full board support before,
as it wasn’t singing for its
supper. We were happy with
the status quo… selling from
our shops then building the
client relationships through
traditional methods such as
entertaining and events. But
the penny started to drop
when sales volumes picked
up during lockdowns and the
average transaction value
increased significantly. We saw
an opportunity and started to
build an effective team
Commercial Director, Boodles

For retailers, there was a realisation that there were fewer

discounting issues and low overheads. For those who were
used to welcoming customers in store, the need to develop
strategies to cope with online customers was also new.
Those at the high end of luxury made every effort to convert
the new online relationships into physical ones. Colleagues
would jump in a car, cab, train or even plane and deliver
products personally.

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Even in this data-driven world,

we need human connection.
Otherwise the personal service,
the customer relationship, will
be lost
Commercial Director, Boodles

Across high-end luxury the level of expenditure that

consumers are prepared to spend online increased over the
pandemic. Agencies spoke of the real benefits of improving
the simplicity and ease of the transaction. There were different
views on the need for speed; some felt there was a need to
ensure there was a meaningful brand interaction during the
process (sometimes referred to as “brand friction”), while
others felt this can slow the process down too much.

Social commerce
We are seeing more brands utilising social platforms to
manage customer relations, rather than their own website.
Consumers can ask questions and get responses immediately
with auto-fill forms and text, while products can be purchased
inside the app without customers being sent to the brand’s
site. Brands still possess the data, but the customer is serviced
more quickly. Homes for £5m+ are being sold via Facetime
and Instagram.

Threads Styling, the luxury chat-based platform, was created

for Gen Y and Z consumers over ten years ago, and offers a
personal shopping experience entirely over social media and
text. It now has clients in over 100 countries, servicing their
shopping needs over their preferred social platform: TikTok,
WeChat, WhatsApp, Instagram etc. Their average basket size
currently (Feb 2022) is $3,200. They have just launched a
new platform with 600 luxury brand partners.

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Live commerce
Live video shopping, or “live commerce”, originated in China.
There, total live commerce is forecast to reach $423bn in
2022. It combines instant purchasing of a featured product
on screen during a live event and audience participation
If you don’t have the right
through a chat function or reaction buttons, helping the partner as well as the right
viewer to understand the popularity of what is being shown.
It is claimed to accelerate customer journeys, and conversion creativity, it’s hard to break
rates are reported to be approaching 30% – at least ten times
higher than conventional ecommerce. Over a third is driven through – particularly for
by fashion and apparel.
smaller brands. Creativity
Luxury brands are moving in. Tommy Hilfiger extended
its livestream programme to Europe and North America
can’t exist alone.
following successes in China. One event, or “show” reportedly Global Brand Consultant
attracted an audience of 14m and sold 1300 hoodies in two
minutes. Shows often include influencers or celebrities. In
September, Hilfiger fans could “shop with Brand Ambassador
Lewis Hamilton”.

For many successful brands, the attitude across this space is

of continued learning and trial as opportunities arise.

Evolution of media and strategic

partnerships
Critically, for the majority of brands and advisors we spoke
to, explorations into alternative customer engagement
and infrastructure are not replacing brand advertising
expenditure or events, but are in addition to them. Indeed,
the focus for brands in the luxury space now is how they can
create a seamless omnichannel experience that incorporates
emotional connection.

Given the volume of platform and promotional opportunities,

brands think more often in terms of “ecosystems” or
“touchpoints” than “campaigns”. Just like many other sectors,
they’re now trying to connect the dots in the ecosystem to
understand customer decision-making. These ecosystems
are led by media agencies. Channel choice across paid, owned
and earned channels is an essential part of how a brand
conveys luxury online. It’s about where you show up, how you
show up and the company you keep.

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For some luxury brands, media channel choice is now where

they begin when constructing their communications plan.
This is a major shift. The role and relationship between media
agencies and luxury brands has therefore become crucial.
Media owners alongside them become critical partners to
Everything starts with a media
enable brands to understand the role and strength of their connections plan, a view on
own touchpoint.
how that media ecosystem
comes together…We talk about
connections, moments for
consumers, which isn’t a new
concept but has risen back to
the top of the funnel
Global Brand Director

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Another reason that media agencies are said to have become

a core strategic partner for luxury brands is that investment
in performance marketing has dramatically increased. As one
media agency leader stated:

Conversion activity was a

hard conversation to have pre-
pandemic – there were brand
safety issues. The industry
relies so heavily on the brand
image and the aesthetic.
Programmatic was a dirty word
for luxury brands. It was about
scale and reaching audiences
across different platforms.
It just didn’t resonate. But
then performance marketing
became a lifeboat.
Director, Global Media Agency

This was a considerable leap for many luxury brands. But the
investment levels have been either maintained or increased,
as has investment across social and search.

However, reaching any touchpoint is pointless unless it

supports the emotional resonance and strength of the brand.
And that means content – a lot of it. Luxury brands need to

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become content machines. The volume of content needed

across the digital landscape is huge and the turnaround
window is very short: one consultant spoke of the need
to create 20-40% of content in a 24 to 36-hour window.
Particularly with the current focus on local audiences,
focusing on the quality of the content is still crucial to
maintain brand equity.

While many of the larger maisons create much of their content

in-house, they and other brands sometimes need help with
maximising the use of different channels and devices (such
as shooting for mobile) and with how to maximise existing
assets for that channel.

There are still gaps in the content needed. These are being
served by influencers and by social commerce platforms,
who feel that brands are not creating the right content for
their audiences. There is enormous talent across the agency
sector: creating a perception of luxury needs exceptional
photographic skills, specialist software and excellent art
direction. This is already an issue for FT readers: 60% of
Under-35s stated that they “couldn’t tell whether a brand is
in the luxury market from how they look online.” In the light of
this demand, could ad agencies and indeed media owners not
play a larger role here?

Of course, for some luxury brands (especially outside fashion),

advertising and media agencies do play a vital role:

I think it’s the job of the ad agency to deliver the strategic thinking
on the emotional connection with the brand and the overall look
and brand feel e.g. long and short pieces of film. In my view there
will always be a need for beautiful pieces of film that connect with
the customer
Global Brand Director

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When thinking about “online partnerships”, specialist and
department stores are now referenced alongside, or above,
media owners and platforms. How a brand works with luxury
stores like Harrods, Selfridges or Saks Fifth Avenue is changing,
moving from a wholesale to a concession model. But these
retailers can provide a partnership, context and even content
like a media owner, but with an ecommerce factor.
Given the volume and size of retailer promotional budgets,
and the increase in brands’ focus on direct-to-customer, could
media owners not begin to compete for that budget? Could a
budget allocated to a Harrods experience possibly move to a
relevant media owner with broader reach – especially if linked
to a brand’s strong ecommerce ecosystem? Our interviewees
thought it could.
Some of the most commented-on digital investment strategies
in luxury marcoms are those in NFTs, Augmented Reality
and the Metaverse. From our discussions, the investment in
these areas (mostly by the maisons and fashion sector) is still
considered “experimental”.
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However, some brand owners are investing hugely. Kering,
the owner of Gucci, believes there are three opportunities in
the Metaverse:
1. NFTs* linked to physical products
2. Virtual products that then become physical - which is al-
ready happening for some brands
3. Smart contracts on virtual products (i.e. if you resell a vir-
tual good, the brand will take a percentage)
Given the relationship with art, it should be no surprise that
luxury brands are exploring this area, which enables them to
collaborate with artists and digital designers and provide in-
spiration and new experiences for customers.
*Non Fungible Tokens are digital tokens that are linked to the
blockchain and provide certain ownership rights to an asset –
usually a digital one, such as a digital work of art
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07
Conclusion
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Conclusion
The objective of this report is to shed light on the extraordinary
changes and recovery of the luxury sector, and on what has
driven the market forward during this exceptional period.
With the combination of quantitative data and qualitative
witness from across the industry, we believe we can begin
to make sense of what has been happening among brands
and customers.

From the extent of the responses by successful brands, it’s

clear that the influence of the Chief Marketing Officer (or their
equivalent) should be front and centre in strategic, commercial
and investment decisions, as well as in communications.
Relationships with marketing communications partners
need to be both stronger and deeper than at any other
time, to allow the greatest understanding of the changing
marketplace. Only then can these powerful brands leverage
their remarkable potency.

It is certainly a dynamic, charismatic and alluring market. And

it also has at least one extraordinary thing in its favour, as
one of our respondents noted:

One client told me once –

‘The thing is - you never regret
your extravagances’
Leading Brand Commentator and Author

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