With Article 50 about to be called any minute now everyone in the UK is understandably uncertain about what the commercial future holds. But one thing that seems to be certain is that the luxury sector is experiencing quite a bonanza year so far as a consequence of the falling pound.
Just before Christmas, London’s Oxford Street was crowded with overseas visitors who appeared to be buying up the town as inbound tourism, principally from USA, China & Japan continued to surge. Tourist spending in UK stores increased considerably over the festive season clocking in at over £24 billion in visitor spending!
The falling pound
Let’s face the facts – luxury handbags, fashion apparel, eyewear and watches are all now cheaper here in the UK with their relative affordability making this market the top destination in the world for luxury shopping. OMD’s research further shows that roughly 65% of luxury products are currently selling for less in Britain than in the US, China, Japan and France, making it easier for inbound shoppers to offset the cost of their airfare against these bumper savings!
Seducing the Chinese traveller
Despite growing talk of China moving to a more national consumption economy, Chinese male millionaires still prefer Burberry & Chanel to top Chinese brands and love the shopping experience at Harrods, which has been acclaimed as the Best London Luxury Shopping Destination for the fourth consecutive year. The fact that they have hired over 100 Chinese interpreters to offer excellent and often personalised customer service to visitors is obviously a strategy that seems to be paying off! As high-paying customers who are used to the browsing and purchasing standards of WeChat & AliPay, the Chinese luxury shopper expects the very best service, including a choice of payment options, online chat assistance pre & post purchase and delivery within 1-2 days if not immediately.
An estimated 133 million Chinese outbound travellers will spend a forecasted $322 billion in 2017 and the UK wants to ensure it gets its fair share. The secret of success here appears to be getting in earlier on the shopping consideration journey and fully leveraging the research phase via social media and messaging apps to ensure you create the right list of ‘must have’ brands to buy before you set off travelling.
Duty-free has become a luxury shopper ‘destination’ in its own right
The global duty-free market is expected to grow to $64 billion by 2020, driven by a combination of low-cost tourism and increased demand for high-end brands, particularly from Asia-Pacific. With increasing numbers of High Net Worth individuals passing through airport terminals, luxury houses have realised the importance of producing items specifically for the duty-free market only which cannot be found on the High Street. Spending 50% of my life dashing through airports myself, I can understand first-hand the importance of squeezing in that luxury purchase as a critical moment of self-gifting to reward a few days of hard slog. Why not? We are worth it!
London Heathrow’s head of e-business and CRM, Simon Chatfield, recently said that when travellers describe what’s important to them at airports, retail is one of the highest priorities after punctuality and safety. Heathrow is also increasingly leveraging its own data sources from car park bookings to terminal Wi-Fi connections to help them hone their strategy around the profile and specific needs of the millions of different people who pass through their doors every day.
In 2014 Heathrow started their personal shopping service and over one million passengers have actually used the service to date. They also have approximately 25 personal stylists who speak over 14 languages to try and boost that special pre-flight luxury purchase. The recently installed social networking mirror at Terminal 5, inspiring friends to be part of the purchase decision, will undoubtedly also help protect Heathrow’s reputation for being the World’s Best Airport for Shopping.
A fresh approach
Global economic shifts and technological disruption are clearly redefining the rules of luxury marketing. It has never been more challenging to design a path to success and link the power of brand storytelling to the commercial importance of ‘getting that sale’. The power of video is now undeniable and some of OMD’s recent work with Tubular Labs has highlighted the fact that there is a growing consumer desire to get ‘behind the scenes’ of the once rarefied world of luxury – increasing its overall accessibility but without destroying the allure of scarcity.
We are playing a huge part in challenging our global luxury clients to ‘change the marketing model’ to better align with a new breed of influencers and brand evangelists. The Instagram generation are clearly luxury ‘owners in waiting’ and are dictating exactly how they want to search, browse and buy. Satisfying their needs will undoubtedly secure a bumper sales year for luxury in the UK and beyond.
Originally published by Luxury Daily.
With Article 50 about to be called any minute now everyone in the UK is understandably uncertain about what the commercial future holds. But one thing that seems to be certain is that the luxury sector is experiencing quite a bonanza year so far as a consequence of the falling pound.
Just before Christmas, London’s Oxford Street was crowded with overseas visitors who appeared to be buying up the town as inbound tourism, principally from USA, China & Japan continued to surge. Tourist spending in UK stores increased considerably over the festive season clocking in at over £24 billion in visitor spending!
The falling pound
Let’s face the facts – luxury handbags, fashion apparel, eyewear and watches are all now cheaper here in the UK with their relative affordability making this market the top destination in the world for luxury shopping. OMD’s research further shows that roughly 65% of luxury products are currently selling for less in Britain than in the US, China, Japan and France, making it easier for inbound shoppers to offset the cost of their airfare against these bumper savings!
Seducing the Chinese traveller
Despite growing talk of China moving to a more national consumption economy, Chinese male millionaires still prefer Burberry & Chanel to top Chinese brands and love the shopping experience at Harrods, which has been acclaimed as the Best London Luxury Shopping Destination for the fourth consecutive year. The fact that they have hired over 100 Chinese interpreters to offer excellent and often personalised customer service to visitors is obviously a strategy that seems to be paying off! As high-paying customers who are used to the browsing and purchasing standards of WeChat & AliPay, the Chinese luxury shopper expects the very best service, including a choice of payment options, online chat assistance pre & post purchase and delivery within 1-2 days if not immediately.
An estimated 133 million Chinese outbound travellers will spend a forecasted $322 billion in 2017 and the UK wants to ensure it gets its fair share. The secret of success here appears to be getting in earlier on the shopping consideration journey and fully leveraging the research phase via social media and messaging apps to ensure you create the right list of ‘must have’ brands to buy before you set off travelling.
Duty-free has become a luxury shopper ‘destination’ in its own right
The global duty-free market is expected to grow to $64 billion by 2020, driven by a combination of low-cost tourism and increased demand for high-end brands, particularly from Asia-Pacific. With increasing numbers of High Net Worth individuals passing through airport terminals, luxury houses have realised the importance of producing items specifically for the duty-free market only which cannot be found on the High Street. Spending 50% of my life dashing through airports myself, I can understand first-hand the importance of squeezing in that luxury purchase as a critical moment of self-gifting to reward a few days of hard slog. Why not? We are worth it!
London Heathrow’s head of e-business and CRM, Simon Chatfield, recently said that when travellers describe what’s important to them at airports, retail is one of the highest priorities after punctuality and safety. Heathrow is also increasingly leveraging its own data sources from car park bookings to terminal Wi-Fi connections to help them hone their strategy around the profile and specific needs of the millions of different people who pass through their doors every day.
In 2014 Heathrow started their personal shopping service and over one million passengers have actually used the service to date. They also have approximately 25 personal stylists who speak over 14 languages to try and boost that special pre-flight luxury purchase. The recently installed social networking mirror at Terminal 5, inspiring friends to be part of the purchase decision, will undoubtedly also help protect Heathrow’s reputation for being the World’s Best Airport for Shopping.
A fresh approach
Global economic shifts and technological disruption are clearly redefining the rules of luxury marketing. It has never been more challenging to design a path to success and link the power of brand storytelling to the commercial importance of ‘getting that sale’. The power of video is now undeniable and some of OMD’s recent work with Tubular Labs has highlighted the fact that there is a growing consumer desire to get ‘behind the scenes’ of the once rarefied world of luxury – increasing its overall accessibility but without destroying the allure of scarcity.
We are playing a huge part in challenging our global luxury clients to ‘change the marketing model’ to better align with a new breed of influencers and brand evangelists. The Instagram generation are clearly luxury ‘owners in waiting’ and are dictating exactly how they want to search, browse and buy. Satisfying their needs will undoubtedly secure a bumper sales year for luxury in the UK and beyond.
Originally published by Luxury Daily.
Interbrand has just launched its 17th annual Best Global Brands. As it has been a pivotal year for luxury brands, we feature the expert view from Rebecca Robins, Global Director at Interbrand and co-author of the FT acclaimed book Meta-luxury. Rebecca’s luxury report, featured in Harper’s Bazaar, looks at the ongoing change within the industry. We share an extract of her luxury review here:
“Over the past 15 years of the Best Global Brands list, the brand value amassed by luxury businesses has grown from USD $25.8 billion in 2000 to USD $143.7 billion in 2015.For well over a decade, luxury brands have been ascendant. They were hailed as haloed protectorates of double-digit growth. They reinvented relevance, as per Burberry, the first British luxury brand to become a Best Global Brand in 2006. And, when the economic crisis hit, luxury brands were the most resilient in weathering the storm.
However, 2016 is the year that marks the luxury reset – a reset first signalled by recent dips in brand values that is now showing up via a cascade of marked declines. And yet, against the slow landslide in value, certain brands have quietly been asserting sustainable growth.
So, what are these brands doing differently?
- They make decisions around extension and expansion, based on the long-term protection of the brand and health of the business. This is in sharp contrast to many brands that have fallen foul by chasing the immediate gratification of fast profits at the expense of sustainable growth initiatives, leading to brand dilution and value erosion in the long term.
- Sustainable growth has deeper resonance in the wider context of sustainability. We are in a constant reevaluation of what we value and why. The sweet spot is where integrity of product meets integrity of brand experience.
- Luxury brands have always set the standard. The challenge now is to translate their stories of excellence within a knowledge and experience economy that craves experience as much as the product itself. And that raises challenging questions about the role of every micro and macro brand touchpoint. It also has radical implications for the role of flagship retail, of the runway to retail model, of managing rarity, and of levels of access and service.
As luxury businesses continue to work through the reset and evolve their growth strategies, a single quest remains constant. Everything begins and ends with driving brand value.”
Want to know more? Read Rebecca Robins’ full article at Harper’s Bazaar or contact us at [email protected].
There is a huge amount of debate in the marketing industry regarding millennials, our value, affect and the way in which we are shaping the future of the industry as we know it. However who better to ask than a millennial themselves? As a 26-year-old working in the marketing industry I decided to take a closer look at why we’re a generation to be taken seriously.
When looking at the importance of the millennial generation to advertisers I could simply say we’re important because we’re shaping the future of the world. However that in itself is a huge statement so to break that down…millennials today account for nearly 50% of the world’s population. This makes us the dominant workforce and the generation holding the majority of the globe’s spending power. A recent study by Accenture found we spend on average $600 billion each year, and therefore based on this staggering figure alone, I’d say at the very least we’re worth advertisers’ consideration! With millennials spanning an age range of 16-34, 1 in 4 of us are now parents, holding not only the spending power and purchasing decisions for ourselves, but for our families. However it’s not just about sheer numbers, although these are impressive and would make a compelling argument by themselves. For me it’s the way in which we behave that makes us such an important and interesting target audience.
As a generation of digital natives we live in a hyper-connected world that provides endless opportunities at our fingertips, fuelling a hunger to discover more. This means that our expectations have permanently changed and are constantly changing: we want more in life, to discover more and go further, and in turn we demand not only more from our lives and ourselves but also from the brands we love. By demanding more we’re challenging brands, pushing them to be more innovative and creative in order to catch our attention and create noise. If advertisers weren’t striving to break the mould would Virgin Holidays have created a campaign using Virtual Reality to sell holidays? If we weren’t a generation pushing brands to be more innovative we could still be booking our holidays on the telephone. Likewise, if Carlsberg wasn’t interested in capturing our imaginations, they would dedicate their entire media budget to TV instead of making a bar (of the booze variety!) made entirely out of chocolate!
Not only are we a generation whose demand is fuelling continuous innovation but we’re the harshest critics, and therefore the best generation for a brand to learn from in order to gain a share of voice and see real business growth. Yet it is not just about our being opinionated that is important to advertisers, but the fact that we share our views on blogs, social media, with our friends, family and colleagues. We can make or break a brand in a few keystrokes, and brands know it. With 67% of consumers using a company’s social media channel for customer service, hundreds of brands including Nike, Starbucks and Walmart have customer service teams dedicated to their social channels, ready to handle negative comments and promote praise.
By challenging brands to be continually dynamic, millennials have subsequently become a force that has changed the way advertisers use media. The way in which brands interact with a 16-year-old on Snapchat vs. how they engage with a 34-year browsing Instagram or through Stylist magazine on a Tuesday commute home is very different. There is therefore no ‘one size fits all’ strategy when looking at the channels through with to engage millennials and this again has led advertisers to view their marketing strategies through a different lens.
Whilst we cannot group millennials into a single channel or platform, I think there are inherent themes that apply to all millennials which advertisers can apply to any media channel. For example, I believe authenticity is incredibly important – and by authenticity I mean approachable authenticity: we want to see and hear from real people who we can relate to, or aspire to be like. This theme comes to life through blogs, vlogging and social media; Zoella’s YouTube channel has over seven million subscribers whilst the Kardashian sisters have a combined Instagram following of 275 million. With 50% of millennials researching products on social media, we can see what a powerful and credible tool it can be. By building their brand through social media and reality TV the Kardashians’ empire is now worth $300 million.
With millennials spending an estimated 22 hours on their phone each week it would seem an easy solution to simply target us through digital channels; however, I believe we can still be reached through traditional channels by being authentic. Notably, Dove’s Beauty Sketches campaign used real, normal women to shine a light on the differences in beauty perceptions. This campaign resonated with millennial women around the world and resulted in becoming the most viral video of all time, with over 135 million views.
Another theme that I believe can transgress all media channels is the evolution of the brand ambassador. I have already mentioned how important it is for millennials to feel like they can connect with real people and I think this is becoming particularly apparent in who advertisers now pick to front campaigns. The most successful supermodels today are no longer just visible on the catwalk and billboards, but let us into their lives. The likes of Kendall Jenner and Gigi Hadid (millennials themselves) now take us backstage at the Victoria Secret Show and on their Saturday night out with the Taylor Swift squad, opening their world to us via social media. Their influence cannot be ignored and many brands such as H&M and Balmain have chosen to embrace it.
To promote their new partnership and collection with H&M, Balmain chose Kendall, Gigi and Jourdan Dunn to front their campaign which launched exclusively on Instagram. Using their influence with the millennial audience H&M and Balmain’s collaboration went on to be their most successful, with an Instagram reach larger than the UK population and the range selling out online and in-store in a matter of hours. This demonstrates the power of brand ambassadors when attributed to the right brand.
Likewise the role of the brand ambassador can be just as influential when used on traditional media channels, if advertisers use the right person to fit their purpose. For instance, Burberry’s use of Emma Watson, a millennial we have grown up with watching Harry Potter and whose passions for issues such as gender equality we now share, led to a 23% increase in sales for the brand.
I could go on about the themes that I think are important to millennials that can be used on any media channel, but the key point I am trying to address is that millennials are changing the way advertisers address their marketing strategies. It’s not just about our sheer numbers and spending power that makes us an important audience but our behaviour and what advertisers can learn from us. By being a demanding generation and challenging brands to always be more innovative than the previous day, we are pushing them to find new ways to create noise, which means looking at how channels can be used in new ways. You just have to look at Carlsberg’s billboard including a beer tap to see how traditional channels can be using in a unique way to catch our attention. By taking note of millennials’ demands, criticism and behaviour we offer advertisers the opportunity to learn, challenge themselves and in turn become the most innovative, creative and powerful brands in the world.