Today’s luxury buyer wants it all

It’s the “give a dog a bone” strategy: dangle something tasty in front of the customer and they’ll come running. Except that today’s luxury buyer is a more complex creature. As the Boston Consulting Group and the Centre du luxe et de la création confirm in their report on luxury, sustainability and ethics, titled Nouvelles valeurs du luxe – Le temps de l’engagement (in association with the Paris-based Centre du luxe et de la création), customers want the whole kit and caboodle: “They expect the brand experience to cover every base. They want to be surprised by luxury but also be a part of it; they want luxury that is state-of-the-art and digitally savvy, but they also want it to be handcrafted and respectful of people, both in production and service. The question being, how do we reconcile luxury’s new paradoxes”.

Talk the talk, walk the walk

The consulting firm goes on to list some of the “axiological contradictions” and preconceptions that continue to surround luxury goods, such as accusations of overexploiting rare natural resources. Another obstacle in luxury’s path goes back to Jean-Jacques Rousseau, for whom luxury and “rectitude of morals” were diametrically opposed. China’s anti-graft laws appear to confirm this belief that luxury goods are the root of all evil. For the Boston Consulting Group, there is only one solution: “Luxury, which highlights social inequalities, must be as ethical as possible and, because of the link that now exists between ethics and environmental and social responsibility, irreproachable with regard to all aspects of ESR.” Empty messages and promises don’t cut it. Customers expect brands to take action, lead by example, and provide evidence of what they have achieved.

Ethical and sustainable commitment must now be “tangible and demonstrable,” notes the Boston Consulting Group: “Competition between luxury groups is played out in part through their conception of sustainable development.” Chopard, which began its Journey to Sustainable Luxury in 2013, is one brand putting words into action. The report quotes other examples such as Kering, whose Environmental Profit & Loss measures the environmental impacts of various of its products and gives it a monetary value. The “Petit h” initiative from Hermès transforms production leftovers into one-of-a-kind objects. But, will luxury brands go as far as to propose artificial silk made out of oranges, “leather” made from pineapple fibres or lab-grown from animal cells, or aboveground diamonds such as the ones by Diamond Foundry, so perfect it’s almost impossible to tell them apart from natural diamonds (cultured pearls, widely accepted as an alternative to the “real thing”, spring to mind).

Price versus value

Repurposed, recycled and respectful are just one side of what customers want from luxury brands. Made-to-measure is also high on their list of expectations or, at the very least, customisation, made possible by data analytics and flexible production methods that are no longer as dependent on economies of scale and can therefore manufacture small series profitably. The Boston Consulting Group links this trend to the “growing desire for individuality; to be what you are, not what you own.” Characteristic of this, customers are increasingly inclined to rent rather than buy the luxury item of their dreams. For a small amount of cash, we can enjoy the pleasure of luxury without necessarily owning it, but like Cinderella, the magic only lasts until midnight when it’s back to the pumpkin.

At the same time as the luxury rental market is taking off, buying pre-owned continues to gain ground. Watches are a good example, with the recent arrival of WatchBox as a serious contender to Chrono24, or Richemont’s acquisition of Watchfinder, to give just two examples. A final point raised by the Boston Consulting Group in its report is the “coherency between price and perceived value”. According to the consultancy firm, luxury brands need to optimise the perceived value of their products. It gives the example of “iconic” handbags whose average price shot up by 55% between 2010 and 2016 when inflation for the same period was just 3% on average (18% over the six years). According to the study, 50%+ of luxury buyers think that value no longer justifies price, and this inconsistency is causing them to “fall out of love” with luxury. Can the ethical, responsible, sustainable behaviour customers want to see bridge this gap? The Boston Consulting Group concludes that ethics and sustainable development “are taking a decisive role in the value of luxury goods” and could perhaps influence perceived value sufficiently to justify price increases.