Will 2017 turn out to be a bonanza year for luxury in the UK?
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.