What’s Better than Luxury Products? Luxury Experiences.
No one is immune to disruption, not even the luxury business.
In decades past, the luxury sector had distanced itself from the bells and whistles of the experiential marketing practices that non-luxury brands used to garner attention. Now, they are rethinking that strategy.
In the January 2019 issue of the Harvard Business Review, Roger Martin, director of the Martin Prosperity Institute, makes a remarkable claim that digital disruption and globalization is actually making the wealthiest individuals and companies even stronger. Echoing that sentiment, the stocks of French multinational luxury goods conglomerate LVMH and international luxury group Kering have performed better than average over the past six months.
Yet the S&P Global Luxury Index fell 12% over that same time period—suggesting that business isn’t easy for everyone in the sector. Apparently, the affluent, having more money to spend, are expecting even more from their beloved brands—and not all brands are keeping up with their expectations.
So what is setting these brands apart from the others? What are they offering that the others aren’t?
These brands have elevated their efforts to provide luxury experiences over luxury products. To maintain their relevance and their competitive edge, other luxury brands need to do the same. They need to become much more than simply suppliers of lavish services and consumer goods. They need to embrace a higher calling as lifestyle visionaries and fantasy makers through their experiential offerings.
Luxury consumers are demonstrating they’re not all that interested in passive experiences. They are seeking out transformative experiences. They are more attracted to experiences that feed their hunger to learn, make meaningful connections, and see their lives and themselves differently. This may seem like a heavy ask from this sector, but those that can deliver on It will end up taking the lead and setting themselves apart.
While they are not the first to close the gap along the product and experience journey, LVMH’s recent purchase of Belmond—the owner of the Orient-Express and Hotel Cipriani—provides a clear articulation of the conglomerate’s strategy: they are adding hospitality experiences to their products and retail environments. This is a prime example of how these global luxury conglomerates are working to own this sector of the market.
With their new app, Whispers, Rolls Royce is attempting to “define a new era of modern luxury” by offering their customers access to a unique set of rare life-style experiences and the ability to connect socially through the platform.
This is transformational for at least two reasons.
First, the curated content of the app is not focused on conventional luxury tourism. It offers once-in-a-lifetime opportunities that include such unique adventures as scientific exploration and camping in the Antarctic.
Second, while traditional brand innovation is still very much in play, the select few that are able to effectively transform their customers’ lives will continue to lead the growth in the luxury sector.
The shift in focus will require brands to go beyond a superficial level of product customization or generic brand activation to a deeper dive into experiential offerings.
For example, more and more brands are looking to bioscience integrations that provide immersive experiences that are unique to each person’s biochemistry. Think blood type, genomic needs and suggested health preferences. Engaging people based on the needs they don’t even know they have but can benefit from and enjoy.
By transforming and deepening your consumers’ interactions with their environment, you’re creating an even more compelling daily experience through your existing products.