Luxury Institute’s trends for 2012:
The luxury industry players are asking the same question: How much will last the relative growth registered in 2011? Luxury Institute, after an actionable research with wealthy consumers, presented its annually report on trends that all luxury brands should follow the next year:
1. The Annual Luxury Brand Check-Up Emerges
Expect many more luxury brands to implement this type of exercise in 2012 as they realize an ounce of prevention is really worth a pound of cure when it comes to customer experience.
2. Luxury Brand Strategy Becomes Institutionalized
While some argue that luxury brands do not need a positioning strategy, many luxury CEOs and Boards realize that depending solely on an arbitrary communications plan misses the holistic nature of a luxury brand and creates inconsistency in today’s increasingly competitive luxury world.
3. Less is More Again: concentrating on heritage line, eliminating mass products;
Many luxury executives realize that part of their survival and recovery success was in paring back product lines and eliminating mass products that eroded brand equity and alienated their best customers.
4. Renewed Emphasis on the Store as the Key to Relationship Building
While online sales are critical for multi-channel luxury retail brands, they are likely to account for only 20% of sales, at most, over time.
Luxury executives now fully recognize the obvious: the true humanization and relationship-building aspects of brand-building depend on the individuals who interact physically with their customers. Look for a massive emphasis on relationship-building in 2012 as luxury brand executives shift investment back into people.
5. The Fascination with Social Media ends in 2011
There is no evidence that having all those millions of fans on Facebook, most of whom are purely aspirational, has helped luxury brands in acquiring new customers, creating better relationships and increasing sales and profits significantly. In focus groups and quantitative surveys that the Luxury Institute has conducted, significant percentages of younger and older luxury consumers alike do not place much importance on the social media presence of a luxury brand, with some even reacting negatively to a brand’s association with these mass market channels. Many see Facebook, Twitter, and other platforms as strictly social and they resent the commercialization of social media. Look for luxury brands to demand that their agencies and social media partners prove empirically that they can deliver sales and profits in 2012, without damaging brand equity.
6. Luxury Mobile Applications Become Relevant, but Commoditized
In 2012, look for luxury brands to focus on what mobile applications do to build a customer relationship because most really great apps will quickly become commodities.
7. The End of Soulless Algorithms from Luxury Flash Sites
Luxury online-only retailers that deliver discounted products and hold flash sales have had great sales growth up to now. Profitability is elusive for most companies as there are too many similar players in an industry where differentiation is critical. Look for most of these brands to try to establish personalized, customer-centric cultures in 2012.