The Evolution of The Luxury Fashion Market

The Evolution of The Luxury Fashion Market

Written by AnnaJune 8, 2018

The Evolution of The Luxury Fashion Market

The luxury market is in for a demographic transition.

As consumer behaviours are shifting towards a more digital and experiential trend, emerging and established luxury brands are realising the need to reinvent themselves constantly. Just a mere decade ago, the premium market was dominated by baby boomer and Gen X consumers – those born after the World War through to 1980.

Fast forward today, the market is now dominated by the notorious millennial generation who have intertwined their purchasing decisions with a set of values. Growing up in the Internet era, their social patterns and influences are imminent across various digital platforms.

No doubt, millennials are already growing in the premium consumer market, accounting for approximately 30% of luxury buyers, a number that will rise to approximately 45% by 2025, according to Bain’s Luxury Report. Hence, the need for high-end brands to recognise and find ways to connect their products and services to the younger affluent crowd is inevitable.

Taking The Social Leap

It is this connection that many luxury brands are slowly gaining a foothold in, despite not being fervent adopters of social media. Today, most top players have mastered the art of the digital arena with a strong presence across main channels – Facebook, Twitter, Instagram, Twitter – in content, particularly video generation. But none came close to the influence of one brand: Chanel.

The French brand, inspired by famed fashion designer Coco Chanel, currently boasts more than 57 million social followers globally, a close second to Louis Vuitton at around 20 million. How did their social success surpass an average growth of 50% in a short span of one year?

By becoming a master of online videos.

Youtube, in particular, has given a voice to the brand, featuring narrative-led, behind-the-scenes content. Their “Inside Chanel” series, which was crafted to showcase the brand’s century-long history and vision, has amassed millions of views to date.

Source: Chanel YouTube channel

Most of the time it’s not just about the content, but the frequency of which it is published on social media that makes a difference. Chanel exceeded the industry average when it comes to posting videos on YouTube.

chanel video activity evolution of luxury market omnilytics retail data blog

Data source: Luxury Social Video Index July 2017

While posting on social media is something that most brands do today, Chanel went the extra mile by crafting content solely for a certain platform, such as this one on Instagram.

kristen stewart video on Chanel Instagram omnilytics retail data blog

Source: Instagram.   Kristen Stewart video on Chanel Instagram

The effort of optimising and re-using their content punctuated with the voice of trusted influencers according to each platform differentiates the brand from other players in the luxury market. And it’s this “rawness” in brand personality and core values that appeals the most to millennials and Chanel has ticked all the boxes with their expertise in digital communication.

The opening of social channels also triggered something else – peer recommendations. In a previous article on millennials calling the shots in fashion, it’s stated that millennials will spend if they find value in a product and have the power to compare prices instantly, saving on almost anything they purchase. When compared with regular consumers who used the Internet, luxury buyers exceeded expectations, especially consumers in the millennial age group as shown below.

omnilytics retail data Bain luxury market statistics blog

Source: Bain Luxury Goods Worldwide Market Study

With all this attention on e-commerce, retailers have only one question on their minds:

Are Physical Stores Dead?

Display windows are filled with mannequins sporting the latest styles and malls are still teeming with avid shoppers, so it seems retail stores have not been rendered obsolete. They still continue playing a key role, accounting for 75% of forecast sales in 2025.

omnilytics retail data Bain luxury market study statistics blog

Source: Bain Luxury Goods Worldwide Market Study

As digital continues to rise, luxury brands are shifting the approach of their brick-and-mortar  stores, opting for flagship outlets instead. These stores, focusing on the experience, feature display showrooms to drive online sales rather than compete against it.

Branding studio Base Design partner Geoff Cook said, “It is more important than ever to have fewer physical stores that offer heightened experiences that can be shared,” he said. “Millennials are more focused on experiences which inherently incorporate what they value: sharing time together, transparency or realness, and perhaps learning something or doing good along the way.”

Hermès is a good example of experiential retailing. The brand behind the iconic Birkin bag created an in-store experience akin to a museum visit in 2016, opening a slew of pop-up stores in four international cities–Strasbourg, Amsterdam, Munich, and Kyoto. At these laundromat-themed stores, customers are able to dip dye their own scarves or opt for limited edition ones designed specially for that particular pop-up.

Speaking of experiences, millennials are not just looking for quality. That’s a given. What they want from a brand is authenticity and ethical impact.

Luxury and The Ecosystem

Generations ago, high-end brands have only one purpose: Create a superior and exclusive product to maintain the status quo of the rich and famous. Today, it’s a whole new different story.

“[Millennials are] the first generation with radically different behaviours and attitudes towards all consumption and lifestyle to the generation before,” co-author of the Bain study Federica Levato stated.

According to a recent Deloitte study on millennial luxury buying habits, 89% of U.S. millennials always or sometimes consider whether a brand is ‘sustainable and ethical’ before making a purchasing decision. In addition, a Nielsen study revealed that 81% of millennials expect the brands that they buy into to be transparent in their marketing and actively talk about their sustainability impact.

So how should high-end brands respond to this change and build a more sustainable brand story? By showing authenticity.

Stella McCartney, Founder of namesake sustainable luxury fashion label, can relate to being authentic as a brand. “We started authenticity,” she said. “We don’t fake it, we don’t pay people. The design process is so heartfelt at Stella McCartney. I don’t have to try too hard, I think people believe when it’s honest and know when it’s not.”

Renowned luxury jewellery and specialty retailer, Tiffany & Co, is one of the first in the industry to source metals and diamonds from responsible mining companies. They also created a foundation working on reef conservation and supporting mining communities.

Andy Hart, Head of Diamond Supply, describes his reasoning for the shift in a more trustworthy brand: “I just ask myself, if I had to pull back the curtain on our factories, would I want our customers to see what’s there?”

omnilytics retail data tiffany & co foundation website sustainable luxury blog

Source: Tiffany & Co Foundation

Recognising the brand value connection, the Kering group, umbrella for high-end labels such as Gucci and Balenciaga, is progressively adopting the use of renewable raw materials in response to sustainability.

Marie-Claire Daveu, Kering’s Chief Sustainability Officer said, “Our ambition is to redefine luxury to help influence and drive these positive changes.”

And they certainly walk the walk, with at least one of their labels influencing the way high fashion should be marketed to the younger generation.

The Age of Gucci

Since millennials generally have a lower disposable income than their predecessors, many luxury brands chose to segment them as less important targets. But not Gucci.

Their greatest success was the appointment of Chief Executive Marco Bizzarri, which led to a rise in revenue by 49% in 2017. Bizzarri believes that achieving long-term success means creating a brand that millennials can relate to. “Our approach, both in terms of product and visual campaigns, is to do something that is unique,” he said. “The point is that if you are able to spontaneously and genuinely talk to millennials in a way that they can see really comes from the heart, you are talking their language.”

Gucci’s high fashion style has always been youthful and edgy, embracing gender fluidity and Instagram-exclusive celebrity interviews. According to online behaviour analytics company, Hitwise, Gucci consumers fall towards the younger millennial age group between ages 18 – 34, as shown below.

omnilytics retail data blog gucci age index age range millennial customers

Source: Hitwise

So how did Gucci really do so far this year, sellout wise? Let’s take a closer look at how this luxury brand compare with other high fashion powerhouses, zooming in particularly on the category that this Italian fashion house is famous for – Bags.

omnilytics reail data blog salvatore ferragamo, gucci, saint laurent, luxury bags performance

For such high price points, garnering 30% sellouts over the past five months surely bode well for Gucci. Not to mention, their comparatively-high replenishment rate only meant one thing: People kept buying what they were selling. Compared to Salvatore Ferragamo and Saint Laurent, whose bags are equally coveted by fashionistas worldwide, Gucci’s offerings seemed to have stood the test of time.

So which bags stole the show this year?

omnilytics retail data gucci handbags collection luxury brand

Stepping away from the reputable bold stripes, floral patterns and embroidery, Gucci has introduced some fresh new looks to their repertoire. The #GucciSylvie shoulder bag on the left is part of the pre-fall 2018 collection and has been out-of-stock since April and recently replenished in June. The #GucciOphidia collection received over 150,000 likes on Instagram, boasting the signature GG motif and inlaid House Web stripe, has been out-of-stock since April. The wicker shoulder bag infused a feel of summer and emboldened with a simple emblem of over 90 years of history, was recently replenished on May 25 and immediately went out-of-stock.

What Does This Mean For Luxury?

The problem we’re facing now is not about the lack of data but the overwhelming amount of it. From social mentions, browsing history, purchasing trends, and spending habits, luxury brands can discover what their young consumers are buying, when they choose to buy and what they might buy next. With the wave of next generation luxury buyers hitting the market right now, high fashion cannot afford to be left behind.

*Millennials are defined by those born in between 1980 – 1995

*Data shown was extracted from the following retailers: Farfetch, Netaporter, Matchesfashion, Selfridges, Harrods

Interested in using data to build a strategy for your luxury brand? Drop us an email at and we’ll be in touch!

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