By Vittoria Passoni
Luxury is, at its best, timeless and constant. That is one of the appeals of this market. But luxury must also be current, engaging and innovative, that is what makes it special and gives it its longevity.
Last week, I attended the Altagamma Consumer and Retail Insight event in Milan. The top news from this gathering of the Italian luxury industry is good; appetite for luxury shopping is high and almost half of true luxury shoppers (40%) expect to increase their spend in the future. From a regional standpoint, it will come as no surprise to many that China and the US are leading growth, while the market in Europe is cooler.
In fact, it seems that in many respects, China and the Middle East are the markets where luxury brands and retailers would do well to direct their attention, but they are very different prospects. The Middle Eastern personal luxury market is booming and the region hold great potential. The value of the market in the Middle East is set to grow from €15 billion this year to up to €35 billion in 2030. This is being driven by local development, increased demand and high-end tourism. There is, clearly, a lot of untapped opportunity in the Middle East and as the luxury sector looks for growth opportunities, this is one which should not be missed. The Middle East is also not just an exciting market, but a vital demographic as these luxury shoppers can and will travel, creating a global market to tap into.
Meanwhile, China remains equal parts opportunity and challenge. It was interesting to note that many experts think the market is unlikely to return to 2019 levels, with real shifts having taken place in the country, most notably a real increase in demand for local products and brands. The shift to digital is also more marked in this sector, and among these shoppers, with a real opportunity to create innovative engagement. But the Chinese shoppers are not a simple, single demographic; alongside the traditional big spenders, younger shoppers and those from Tier 3 cities are coming into the market and creating a new group of consumers to learn about and engage.
How we are engaging all consumers was also a key issue; despite the onset and importance of digital, the need for brands to invest in strong, physical retail spaces is greater than ever. Brands must create exciting, immersive stores which can create something different to the digital offer and give shoppers a reason to visit. But, at the moment, many are not doing so. Brands such as Dolce&Gabbana, Moncler and Gucci are leading the way in opening new stores, and it is no surprise to me that they are also often named as real leaders and innovators in the market. Far too many brands are closing stores rather than investing in this important part of the retail ecosystem.
The form of physical stores is the key thing. Flagship stores, event spaces, pop-ups and exhibitions which can bring together the brand DNA and the location are how to make something special for shoppers and that is what we need: something special. Making living spaces is a challenge for smaller brands, and this was noted at the event, so creativity is needed to ensure they can make an impact.
Finally, no one can build a new market alone and it was really interesting to hear from Etro CEO Fabrizio Cardinali, Ginori 1735 Chairman and CEO Alain Prost, Vhernier Head of Design and Research & Development Isabella Traglio and American Express Director & Head of Client Management Maria Pina Carai highlighting the important role of collaboration today. Real and innovative partnership can create new interactions with existing shoppers and break new ground too; and that is something every industry needs.
The future is definitely bright for the luxury sector, but it seems to me that we must never be afraid to innovate, build and work together to make it even brighter.