What’s working in luxury

April 2021

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LUXURY
Takeaways
1: With travel restrictions
and retail lockdowns
impacting category
spending, Euromonitor data
indicate that luxury brands
saw unprecedented
declines in 2020, making it the
most heavily impacted
category, along with fashion.
2. Despite e-commerce sales
growing during the
pandemic, in-store retail
remains the preferred
shopping approach for most
luxury consumers. Younger
shoppers are more open to e-
commerce and shoppable
media than older shoppers.
3: Younger consumers in
particular are considering a
brand’s values in the path to
purchase, with sustainability,
ethics and equal rights now
major considerations from
luxury purchases.
4: More luxury brands are
committing to transparency
in their supply chain in
response to consumer
demand. This can be
sustainably-sourced
materials, ethical working
conditions, making a stand on
issues such as racial justice or
donating to worthy causes.
22
5: High-end packaging and
other tactile experiences
play an important role as part
of the both in-store retail
offering and e-commerce,
and, in many cases, shoppers
enjoy reusing the packaging in
their own homes.
6: Brand language and
attitude can be a key
differentiator when many
luxury brands have a similar
look and feel to their
marketing strategies.
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 What’s working in luxury

The big picture

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2021. All rights reserved.
LUXURY 44

COVID-19 hit
luxury hard

While the effects vary

across the different retail
channels and sub-
categories, the global
fashion and luxury goods
industry has been heavily
impacted by the COVID-19
pandemic.

Luxury brands saw

unprecedented
declines in spending as well
as channel shifts, making it
the most heavily impacted
category, alone with fashion.

According to data from

Euromonitor, purchases of
personal luxury goods
declined 21% in the
previous year.
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LUXURY 55

Crisis-driven changes in how consumers shop for luxury and fashion

In-store retail Luxury goods and fashion sales by retail format
remains vital

With the closure of non-

essential stores in Q1 and
Q2 2020, luxury
consumers were forced
to turn to digital
platforms to obtain
products.

For many luxury and

fashion brands and
retailers, this shift required
significant changes to
invest in more digital
channels. However, data
from Euromonitor indicates
that while e-commerce
growth continues, in-store
formats remain crucial in
this category.
SOURCE: Euromonitor International from trade sources national statistics
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LUXURY 66

The leading edge

of luxury shopping
trends

As the world’s biggest

market for luxury
shopping, Chinese
shopping habits offer
important insights for
other markets.

While in-store shopping is

preferred for higher-price
luxury purchases such as
automobiles, watches, and
jewellery, Chinese
consumers are comfortable
shopping online for lower-
priced luxury items such as
electronics or cosmetics.

This indicates that

omnichannel marketing
strategies are especially
important for less
expensive products. © Copyright WARC 2021. All rights reserved.
What’s working in luxury

Insights

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2021. All rights reserved.
LUXURY
1. The luxury category is changing
quickly
Technological developments
combined with demographic
shifts in luxury consumers are
serving to redefine what
luxury means and represents
to people, especially younger
consumers.
In 2021, three main groups of
luxury consumer are emerging:
the digitally disconnected, the
traditional luxury consumer, and
luxury advocates, according to
research from luxury digital
agency VERB. Three quarters of
those surveyed by VERB cited
intrinsic quality as defining what
luxury is today.
8
74% 38%
Four in ten (38.2%) feel it is
experience. Surprisingly, given
of ‘gamer moms’ play play PC or laptop
the aspirational appeal of luxury mobile games daily games daily
labels, less than a fifth feel
brand prestige or exclusivity
(both 18%) is a defining quality
of modern luxury.
The way people engage with
luxury brands is also changing.
Digital is much more important
than it used to be. The COVID-
33% 48%
19 pandemic and uptick in play console self-identify
digital commerce means luxury
games daily as ‘gamers’
brands will need to adapt to new
behaviours and expectations
from shoppers.
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LUXURY
Today’s luxury Three types of luxury shopper
consumer
Luxury digital agency
VERB’s research of more
than 1000 affluent
consumers revealed three
major type of luxury
shoppers.
SOURCE: VERB, ‘State of Luxe’ report, 2021
Digitally Disconnected
25% of those surveyed
don’t use social media at all.
This group of less digitally
minded prospects and
customers need to be
reached with a mix of
display or digital out-of-
home. They overwhelmingly
prefer to shop in-store.
Traditional Luxury
Consumers
This tribe embraces
timeless luxury notions of
quality, brand prestige and
higher price points as to
what defines luxury. 71% of
this group said they had
visited a brand’s website
recently.
9
Luxury Advocates
48% of those surveyed
were already following a
luxury brand on social
media, 61% of these
consumers were under 40.
They’re won’t advocate for
luxury brands that don’t fit
their ideals and sense of
identity.
LUXURY
2. Omnichannel and shoppable
retail offers opportunities
Luxury brands have, in many
cases , been slow to adopt
digital marketing and e-
commerce retail.
But online luxury sales now
account for more than 10% of
all luxury sales – with that
proportion set to hit 25% within
five years. Luxury brands will
need to embrace digital
channels and offer a truly
integrated omnichannel retail
experience.
With their overreliance on
store-based operations, and
limited e-commerce capabilities
in some markets,
10
many luxury players will need to
74% 38%
accelerate digitalisation of ‘gamer moms’ play play PC or laptop
strategies (both transactional mobile games daily games daily
and in terms of engagement).
This will be essential,
considering the far-reaching
penetration of e-commerce
post-COVID-19 and the shift of
marketing budgets to digital
platforms and social media. 33% 48%
Shoppable content is able to self-identify
achieve two objectives at the
play console
same time; brand-building and games daily as ‘gamers’
driving sales. This shortens the
purchase funnel by converting
awareness and interest into
direct sales in one interaction.
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LUXURY 1111

Shoppable media Three considerations for brands launching a shoppable

requires new media campaign
thinking

Shoppable content is 1. Audience 2. Strategy 3. Creative

able to fulfil two objectives
at the same time: brand-
How receptive will the Will existing media plans Are existing ad creatives
building and driving sales.
audience of the new suffice in a shoppable appropriate for shoppable
This effectively shortens
platform be to receiving context? The length and formats? Advertisers should
the funnel by converting
the new format? Are they frequency of an ad will carefully consider the
awareness and interest
looking to be informed or influence campaign design and layout content
into direct sales all in
entertained? credibility, and the on their chosen platforms.
the same interaction.
likelihood of investment
Brands should consider the from consumers. Should it be posed as native
As advertisers build a
shoppable campaign, context in which users will content? Or will non-native
receive the ad, as this will Determining optimal ad content convert better? The
there are three areas
impact their receptiveness specs, and selecting the visual design of a shoppable
they should consider
to shoppable content. This right platform from both ad can have a major impact
beforehand. This will help
has been a key factor in an audience and CPM on consumers’ willingness
them to determine which
Unilever’s approach to perspective, is crucial to engage and potentially
platforms best fits with
shoppable media. to maximising impact. make a purchase.
their media plans.

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LUXURY
L‘Occitane: COVID Idol
Premium beauty brand
L'Occitane appointed a virtual
idol as its spokesperson to
launch its spring collection and
connect with Gen Z consumers
when the pandemic outbreak
up-ended its original plans.
The skincare market in China is
competitive and populated by
European and American brands
and, thanks to the coronavirus
lockdown, L'Occitane needed to
find a new way to launch its
spring line of products.
With the planned KOL influencer
campaign no longer going
ahead,
12
the beauty brand drafted in
virtual idol Luo Tiyani, who
partnered with Li Jiaqui for a
shoppable livestream offering
exclusive content to Gen Z
consumers in China via Anime,
Comics, Games and Novel
(ACGN) platform Bilibili.
The campaign was the first of its
kind with a virtual host.
L’Occitane garnered over 300m
exposures while also ranking
number 1 on Weibo on the day of
the livestream, building
significant equity for the brand
among targetted Gen Z
shoppers.
© Copyright WARC 2021. All rights reserved.
LUXURY
3. Brand values are important to
younger consumers
No longer is the luxury
category just about quality or
price: a brand’s values are an
increasingly important part of
the sales proposition.
Younger consumers in
particular are considering a
brand’s values in the path to
purchase, with sustainability,
supply chain ethics and equal
rights now major
considerations.
According to research from
luxury agency VERB,
consumers are willing to pay
more for a luxury or product
service which demonstrates
13
74% 38%
it is ethical, sustainable,
charitable or committed to
of ‘gamer moms’ play play PC or laptop
equal rights. mobile games daily games daily
More luxury brands are
committing to accountability in
their supply chain in response
to consumer demand. This can
be sustainably-sourced
materials, ethical working
conditions, making a stand on
issues such as racial justice or
48%
donating to worthy causes. self-identify
Public transparency is key.
as ‘gamers’
Emergent, younger customer
will respond most strongly to
brands’ steer and values in
order to convert their
enthusiasm into sales.
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LUXURY
Selfridges: ‘Project Earth’
Luxury department store
Selfridges has set up ‘Project
Earth’, a five year sustainability
plan designed to reduce its
carbon footprint.
The retailer has launched a
number of new initiatives which
allow its customers to resell their
own products, rent items from
the store, repair their goods or
refill their beauty products, in a
bid to help to close the loop and
cut down on waste and plastic
packaging finding its way to
landfill.
As well as launching its Beauty
Booth, which offers shoppers
14
reduced-waste refillable and
packaging-free cosmetics, the
retailer set up a new “Repairs
Concierge” at its London
flagship store in 2020. This
service acts as an advisory body
to anyone looking to repair their
goods, rather than buy a
replacement item. The store also
now offers rental services.
Selfridges has also pledged to
achieve net zero carbon
emissions by 2050, reducing its
carbon, waste and water usage
to redefine responsible retailing.
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LUXURY
Farfetch: ‘Good On You’
Luxury retail platform Farfetch
places sustainability at the
heart of its business.
Farfetch is working with Good
On You, an Australian start-up
that rates brands and products
in terms of ethical and
environmental criteria at the SKU
level.
The brands Positively Conscious
initiative carries independent
ratings of brands and products
in terms of ethical and
environmental criteria at the
stock-keeping unit (SKU) level.
15
Consumers can filter products
based on those ratings to
choose a sustainable option that
meets their criteria, which
includes options for eco-friendly
materials and processes and
pre-owned products.
An algorithm allows consumers
to shop locally if a product is
available in a nearby boutique.
Farfetch also works with trusted
third parties to measure the
emissions it is responsible for
and to offset them via renewable
energy projects and a re-
forestation project.
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LUXURY 1616

4. Packaging
plays a crucial
role in luxury
74% 38%
Beautiful packaging can boost of ‘gamer moms’ play play PC or laptop
brand experience by offering mobile games daily games daily
a wow factor and covetable
design that looks good on
display.

The McKinsey Design Index

shows top quartile performers
in design produced higher
revenues (+32%) and total
shareholders returns of +56%
33% 48%
versus industry counterparts. self-identify
play console
High-end packaging and other games daily as ‘gamers’
tactile experiences play an
important role as part of the in-
store retail offering, and in
many cases shoppers may
reuse the packaging in their
own homes.
© Copyright WARC 2021. All rights reserved.
LUXURY
Fortnum & Mason: Packaging as a
luxury keepsake
Fortnum and Mason, the luxury
food retailer, took consumers
on a journey through layered,
on-pack storytelling using
beautiful illustrations, crafted
type and copy, and bold, iconic
colours.
Research by Martin Lindstrom
found that media or content that
appealed to more than three
senses at once increased brand
impact by more than 70%.
By understanding how precious
people saw Fortnum’s
Handmade Chocolates, for
example, the brand created
luxurious product packaging that
was beautiful and tactile,
17
but was also loved enough for
people to want to keep and
reuse it, storing their keepsakes
and jewellery in the boxes once
the chocolates had been eaten.
With both a sentimental and
sustainable story, this luxury
packaging design was also
effective in other ways:
Fortnum’s sold two years’ worth
of supply in the first four months
of the new packaging launch and
subsequently had to create new
jobs and employ more chocolate
makers to keep up with demand.
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LUXURY
Harvey Nichols: A British luxury
overhaul
Harvey Nichols, a luxury
department store, needed to
resurrect its home-brand food
range and arrest decline in
sales by being visually
inspiring to reach new
audiences and delight existing
customers.
The retailer embraced the British
sense of humour and off-beat
sense of creativity in its design.
In a nod to luxury brand
convention, Harvey Nichols used
the HN monogram in various
possibilities of patterns, colours,
textures and material on bold,
shiny high-gloss metallic
packaging.
18
Authentically British brand
language and attitude gives
Harvey Nichols its in-your-face
unorthodoxy and
unconventionality: Champagne
truffles become 'Boozy Balls',
ginger shortbread becomes
'Ginger Spice', and English
Breakfast teabags become 'Must
Have Bags'.
As a result of the rebrand,
Harvey Nichols' brand sales
increased from 32% to 39%,
while its brand sales value
increased by 48.7% on
harveynichols.com.
© Copyright WARC 2021. All rights reserved.
LUXURY
Next 1 2
steps Stay focused on changing
shopper behaviours.
Although the luxury goods
sector was going through a
rapid change before
COVID-19, the pandemic is
likely to have a long-lasting
impact on consumer
behaviour and spending
patterns.
As a result, luxury brands
would do well to increase
brand affinity with cause
marketing, while staying
focused on high-end brand
experiences.
Invest in omnichannel
retail experiences.
While in-store retails
remains crucially important
for many shoppers in the
luxury category, younger
consumers are more open
to shopping online.
Brands should consider
omnichannel retail
experiences which blend
the best of high-end store
experience with
e-commerce platforms and
shoppable media.
1919
3
Offer a beautiful,
premium packaging
experience.
Packaging is a crucial part
of the luxury brand
experience in both store-
based and online retail
formats. Poorly designed
or cheap packaging can
undermine a premium
price point or product
quality.
Brands should aim to use
packaging which elevates
their luxury perception
and that shoppers want to
keep after the product is
used.
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LUXURY 20

Contact us

David Tiltman Lena Roland Alex Brownsell

London New York VP Content, WARC Managing Editor, Senior Media Editor
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