Who are the new luxury customers? What do they consume?

Mercedes Erra, founder of Maison BETC, an agency specializing in brand strategy consulting, and Clément Boisseau, co-founder and CEO of strategy, conducted a study to understand who the customers are that have driven luxury figures up during the Covid crisis. And, by extension and post-Covid, what relationship do these new consumers, initiated or not, have with luxury?

Why did you carry out a study on new relationships with luxury?

Mercedes Erra: We believe that brands must provide a service to people and therefore reach out to them. To do this, we must address fundamental issues, the relationship with luxury is one of them, insofar as it allows us to position the brands we support. We need to know the most cutting-edge ideas. Hence this study including prosumers.

Clément Boisseau: Prosumers are the most proactive and predictive consumers of future consumer or societal trends. We identify them via twelve questions, asked prior to all quantitative studies. These are carried out online by a panelist based in New York.

We identify prosumers through their ability to influence others with statements such as: “My friends often ask me what I think about a subject”, “I am interested in innovation and creation”, “I think that companies have a role to play in improving the world”, “My posts on social networks are often reshared or liked”.

Mercedes Erra: The quality of the study lies in the questions that force us to decide. At the same time, we select a mainstream sample (general public, editor's note) that allows us to analyze what the population thinks, in general. The difference allows us to know whether the consumption trend will continue to rise or whether it will stabilize.

Clément Boisseau: This study represents a sample of 1,800 people: Gen Z (18/25 years old), Millennials (25/35 years old) and Boomers (50 years old and over), including 20 percent of prosumers. We added a filter: these people had to have spent at least two thousand euros on luxury goods per year, over the last two years.

Why were you interested in the relationship that people have with the world of luxury?

Clément Boisseau: This study was carried out in nine countries, which are the biggest luxury consumer countries: China, Japan, South Korea, Saudi Arabia, United Arab Emirates, France, Germany, UK, USA.

Mercedes Erra: These countries fascinate LVMH, which has understood that luxury consumption is there. We work with almost all the major luxury groups (LVMH, Kering, Chanel, Richemont, L'Oréal, etc.). In fact, it is in our interest to be in step with the evolution of the market.

In luxury, 5 percent of people buy 40 percent of the items. These rich or very rich people represent a very particular audience. After Covid, this niche has not really changed, it is just growing a little because there are more and more rich people (see the fortunes made thanks to the Internet).

What made the difference post-Covid, a period during which luxury sales exploded, was this wealthy part of the population who spent money on luxury products. Today, this population has a little less disposable money and must decide between a trip or a luxury item. We looked at this broader fringe that created the luxury surge.

When you talk about luxury, what types of products are you talking about?

Mercedes Erra: We include all luxury products, but the price level of clothing makes their trade very difficult. The most balanced luxury brand, in terms of fashion, is Chanel. The two brands that are doing very well at LVMH are Loro Piana and Sephora (+7 when the rest of the group is at +2).

What all luxury brands sell the most are bags and perfumes. Beauty products are competed by specialized brands like Lancôme. It is harder to demonstrate their know-how.

What is the main finding of this study?

Clément Boisseau: Before the Covid crisis, there was this idea of ​​"luxury shame". When people bought a lot of luxury, they hid. Since then, we have observed the rise of desirability, the "yes, I accept buying luxury", "yes, I admire people who wear it" side.

For example, we asked the question "why do I buy luxury?", the first answer is "to please myself". After three years of restrictions, we have entered a phase where people can save for eight to ten months to afford a Chanel bag for 11,000 euros.

Another telling fact is the positive responses to the statement: "I admire people who have the ability to buy luxury products."

Mercedes Erra: Previously, people looked for arguments to justify their consumption. For example, they could say "I buy a Rolex watch because it is an investment, it lasts a very long time, I will be able to pass it on to my children", this is no longer the case at all. A paradox in a world of supposedly controlled consumption.

Clément Boisseau: In France, we don't really claim our taste for luxury. This is not the case in the USA, in South Korea and even less in Saudi Arabia.

100 percent of Gen Z, 73 percent of Millennials and 53 percent of Boomers responded positively to the statement “Luxury products are essential because they make me dream”. This is confirmed on social networks where young people, internationally, almost only follow luxury brands.

Mercedes Erra: Luxury fills a void with dreams and a value of sustainability. This explains its success and why luxury brands become media. They tell the world their historical or future stories. Soon Paris will be LVMH.

Clément Boisseau: This helps us understand the success of the Jacquemus brand. Who really went to his pop-up in Seoul? On the other hand, everyone saw it on social media.

We are seeing a drop in consumption in China, will this affect the world of luxury?

Mercedes Erra: For now, everything is fine. These attitudes are slow to change. We are not on color trends. Then, there are always what I call the "themes of order" and the "themes of disorder".

The themes of the order justify the purchase of a luxury item. You can't tell someone "I just made it in five minutes and it's luxury". This is part of the history of the house, marked by craftsmanship, know-how, and artistic professions. For example, "Les Journées Particulières de Louis Vuitton" allows you to visit the workshop located in Asnières and the Trunk Museum. In addition, Louis Vuitton publishes books that tell the legend of this leather goods maker. This is also a fundamental trend at Hermès and Rolex.

On the other hand, brands create bases of excitement, very often carried by fashion designers. When the leaders of Louis Vuitton call on Marc Jacobs, the first to launch fashion at Vuitton, he impertinently tags the Monogram canvas.

The desire for luxury rises from the friction of these two themes that need to be balanced. Take Gucci, the brand strategy is not balanced because it left the hand to the artistic directors: first Tom Ford, who played on the sexy side, then Alessandro Michele who is more baroque. Gucci does not have a couturier imagination. Chanel and Dior are doing well because, originally, the founders were couturiers.

Luxury brands will hold and resume a normal evolution, in particular thanks to the Russians who are increasingly numerous and very rich. When you want to go beyond the banality that social networks have brought, luxury is there.

Beyond the dream conveyed by luxury, what are the purchasing motivations?

Clément Boisseau: the desirability of the product and, for the youngest, the influence exerted on social networks. To the question "why do you buy luxury?", the answer is "first and foremost for the product". To the statement "I buy luxury products when I see them a lot on social networks, on influencers or on celebrities", 75 percent of Gen Z and 73 percent of Millennials answered yes, compared to only 27 percent of Boomers, who are more sensitive to the product, transmission or know-how.

Mercedes Erra: Today, the fashion show is no longer there to sell clothes, but to be filmed. Brands invest large sums to be visible. In this game, celebrities have a key role.

Does the relationship with luxury products extend to lifestyle?

Clément Boisseau: the expectation begins with the product, but to the statement "I expect luxury brands to offer me more than a product, but a real lifestyle", the answer is "yes" at 88 percent for prosumers and 72 percent for mainstreams.

Luxury brands have a cultural footprint. Houses like Saint Laurent or Louis Vuitton are opening entertainment departments to go beyond "which celebrity is carrying my bag?". For example, Saint Laurent has produced three films that were presented at the Cannes Film Festival. They are a bit like the new Medicis.

Mercedes Erra: Luxury is an art of living. Its powerful imagination allows it to extend into several sectors of activity. In luxury, there is the idea of ​​benefiting from an experience: enjoying a moment, being in a luxury hotel, sunbathing on a luxury beach, etc. In a way, they have become mass-market brands. Everyone is watching, everyone is interested.

So, isn't luxury losing its rarity?

Mercedes Erra: It is the extension of the luxury domain, to paraphrase Michel Houellebecq. However, the more you open up, the more you have to accentuate the anchors, otherwise the brand loses meaning.

Is Paris the capital of luxury?

Clément Boisseau: to the question "In your opinion, where is the epicenter of luxury?" Paris comes first at 47 percent for prosumers, 42 percent for mainstreamers. Next come New York, Milan, London, Tokyo and Shanghai.

Paris remains the capital of luxury, we are credited with creativity. However, to know if "French luxury is conservative?", the answer is yes for 50 percent of the youngest and 22 percent of boomers. This can explain, for example, the arrival of Pharrell Williams at Louis Vuitton.

What about environmental awareness in relation to luxury?

Clément Boisseau: To the statement "I think that the luxury industry must be, more than others, accountable for the effects of climate change", the answer is "yes" for 70 percent of prosumers and 62 percent of main streams. This is a topic in France, but also in Saudi Arabia since the country is promoting a new model of society.

To the statement "I think luxury brands are doing enough to prevent climate change", the answer is positive for 65 percent of prosumers and 57 percent of main streams. Why? Because luxury is sustainable. Even the youngest capitalize. On social networks, they say "I'm going to buy this Celine bag for 4,000 euros, but I'm going to resell it for 2,000, so it only costs me 2,000".

Mercedes Erra: In addition, they are in an investment logic thanks to second-hand goods. They do not yet question how the items are manufactured.

This article was originally published on FashionUnited.FR, translated and edited to English.