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Despite the economic uncertainty facing consumers, the luxury industry remains incredibly resilient. In China, which has faced ongoing challenges with lockdowns and travel restrictions, two-thirds (66 per cent) of luxury consumers say they won’t be spending less on luxury if prices increase. The US follows closely behind, indicating that this is not just felt by emerging markets where the demand for luxury is not always matched by supply. What’s more, our luxury consumer sentiment survey indicates a reversal of the fragmented brand awareness that we saw in the Winter 2022/23 edition of the Index. Now, awareness has bounced back, with the average score (combining both aided and unaided awareness) at its highest level since winter 2021.
Driving this leap in awareness of brands is engagement, as consumers are taking more of an interest in gleaning information directly from brands. The number of consumers relying on a brand’s direct-to-consumer e-commerce site for inspiration and information has risen from 29 per cent last winter to over 35 per cent in the latest Index. Meanwhile, engagement on TikTok has been included in the Vogue Business Index for the first time. While Dior retains its seat of digital leadership, Hugo Boss emerged as the strongest brand for engagement on TikTok, having also improved its score across all other platforms since the last edition. Hugo Boss and Dior are part of a cohort — which also includes Prada, Gucci and Louis Vuitton — that dominates engagement across the digital landscape. These five brands account for more views than all of the other Index brands combined, indicating the sustained difficulty brands have cutting through the noise on social media.
One of the biggest trends you’ll see referenced frequently is the “quiet luxury” trend, which is impacting everything from product assortment to marketing campaigns. While brand awareness has risen on average, average consumer ratings for elements like innovative design, good cut and fit have declined slightly. At a time when quiet luxury sees shoppers investing in high-quality, understated staples, these are attributes that brands cannot afford to slip up on.
The brand to watch in this Index is Saint Laurent, which has overtaken Chanel to claim fourth position. The brand’s ventures into jewellery and film have enabled it to significantly increase its score for iconic status. Although it still slightly trails Index leaders Louis Vuitton, Dior and Gucci for purchase intent and brand perception, it nevertheless has the potential to displace these brands that have long had a stronghold over the top three spots.
While affluent luxury consumers show no signs of slowing down, brands are still investing in the future, increasing headcounts alongside monobrand store footprints. Some are also developing ultra-exclusive spaces for private clients, which is putting pressure on brands to create ever-more immersive and unique experiences for luxury clients. Among the top ten brands for revenue per store, leader Chanel is leagues ahead of rivals, with an average revenue of $54 million per store, compared to the $12 million per store that 10th contender Celine generates. Although Chanel’s scale is undeniable, this is still a hugely impressive result, especially in light of the brand’s resistance to e-commerce, which most rivals are using proactively.
We also see more and more brands prioritising direct-to-consumer channels, with OTB’s Marni and Margiela experiencing the biggest increases in store count over the last year. Sixteen per cent of luxury consumers say they discover new products from brands at monobrand stores — which is ahead of shopping malls but behind multi-brand luxury e-tailers like Farfetch, showing that multi-brand e-commerce plays an important role in discovery and inspiration, if not the final sale.
When it comes to progress on ESG, we still see brands lagging for social impact metrics compared to environmental metrics, with high levels of inflation particularly affecting the economic welfare of supply chain workers. While 45 per cent of brands in the Index are reporting on the gender pay gap, 96 per cent of brands do not disclose the share of workers being paid a living wage. Considering 66 per cent of luxury consumers say this is an important factor when considering luxury purchases, it is clear there is work to be done here. What’s more, environmental metrics such as reduced carbon footprints are increasingly becoming table stakes rather than a way to differentiate.
Standing out, it seems, is through the lens of innovation, with tech-enabled traceability and high-profile gaming collaborations, helping brands like Chloé and Burberry to gain attention. We also see a continuous blurring of physical and digital worlds, and brands seek to offer more dynamic experiences, with Kenzo, for example, offering fans in the metaverse to win tickets to its Paris Fashion Show by competing in a virtual adventure. Not only do these experiences blur the boundaries between reality and fantasy, but they also take luxury beyond the bounds of fashion shopping and deeper into cultural territory. It looks increasingly like the key to differentiating successfully is no longer purely through product or customer experience but by tapping into the total lifestyle needs of the luxury consumer, not just their wardrobe desires.
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