Divyanshu Srivastava’s Post

One of the most common misconceptions about luxury is with regard to its cost. In a press interaction, American designer and brand owner Calvin Klein said, “The price tag doesn’t have to be steep for something to qualify as a luxury product”, debunking the common myth that luxury, by its very definition, has to be expensive. (article attached for full read) In today’s times, millennials hustle through their lives wanting to be able to experience an elevated lifestyle. There is a growing understanding that world class quality, design and craftsmanship comes at a price but it need not be sickeningly expensive. Value for money is no longer defined by cheap or discounted products but “price worthiness”. Brands and marketers are therefore striving to offer consumers the best of functionality, quality and design for a lot less making luxury more achievable. Other segments including SUV cars, premium two-wheeler motor bikes, beauty and skin care products, Health food and such others are witnessing better quality products being offered at a premium but achievable price. In this dynamic market, the challenge for brands will be adjusting their marketing strategies to align with evolving patterns of consumer engagement. We will see more brands enter the affordable luxury space either through brand extensions by incumbent luxury brands, international brand entrants or new home grown D2C brands creating waves in the affordable luxury space. The economic indicators support the trade up and premiumisation that is being witnessed in several categories. There is a need gap in this growing segment of aspiring customers who want to experience the best things in life, and want to do so Now! https://lnkd.in/gTEvhE97

The Transformation of Luxury: From Exclusivity to Mass Production Over the past two decades, the luxury sector has undergone a metamorphosis that has redefined the very concept of "luxury". What was once synonymous with exclusivity and craftsmanship has, in many cases, become a mass-market product. Luxury brands have skillfully crafted an image of exclusivity while embarking on a frenzied race towards commercialization, fueling an ever-hungry market for accessibility. This strategy led to the introduction of entry-level products, such as small leather goods and perfumes, allowing a wide range of consumers to enter the world of luxury. However, this democratization came at a significant cost: the essence of luxury, characterized by uniqueness, craftsmanship, and creativity, has been progressively diluted. The pursuit of profits has taken precedence, transforming once-exclusive products into mere commodities to be consumed. With the pandemic and the subsequent rebound in consumption, the luxury sector has begun to rethink its strategy. In an apparent attempt to rediscover its identity, many brands have decided to turn their backs on the middle class, which has supported their growth in recent years. Now, attention has shifted towards an ultra-rich clientele, with VIP experiences and exclusive stores, accompanied by significant price increases. However, this move risks being short-sighted. Over half of global luxury purchases come from a broad segment of consumers spending about $2,000 annually. The top 10%, spending over $20,000, cannot sustain the entire sector alone. Ignoring the aspirational middle-class consumer could prove to be a dangerous strategy. In conclusion, as luxury brands seek to reclaim their aura of exclusivity, they risk alienating a crucial market segment. The race to cater to the super-rich could lead to an impoverishment of luxury's global appeal, undermining the very essence of what made these brands so desirable in the first place. The real challenge for the luxury sector will be finding a balance between exclusivity and accessibility, without compromising its identity.

I’m genuinely surprised to see how luxury is evolving in such a thoughtful direction. At Zurich Airport, this morning I discovered Pre-Loved Luxury. This is more than a marketing initiative – it represents real change. By offering unique, vintage pieces at attractive prices, each carefully selected and certified for authenticity, Pre-Loved Luxury illustrates how sustainability and timeless elegance can coexist seamlessly. This approach proves that luxury doesn’t always mean new; sometimes, it’s about valuing what has stood the test of time. Discover how sustainable style can be both fulfilling and beautiful, and let’s work together to reshape the future of fashion. The preloved luxury market is thriving, experiencing significant growth driven by changing consumer preferences, sustainability concerns, and digital advancements. Market Growth and Projections • Global Expansion: The secondhand luxury goods market was valued at approximately $31.12 billion in 2022 and is projected to nearly double, reaching $58.3 billion by 2028. • Growth Rate: This sector is growing four times faster than the primary luxury market, with an annual growth rate of 12%, compared to just 3% for new luxury goods. Regional Insights • Asia-Pacific Surge: The secondhand luxury market in Asia-Pacific reached $7.2 billion in 2022 and is expected to grow annually at 9.75%, reaching $12.5 billion by 2028. • China’s Market: China’s secondhand luxury market is valued at over $8 billion, reflecting a growing interest among consumers in preloved luxury items. Consumer Demographics • Younger Generations Leading: Millennials and Generation Z are the largest participants in the secondhand luxury market, with 54% of Gen Z and 48% of millennial luxury consumers purchasing preowned goods. • Sustainability and Affordability: These consumers are motivated by sustainability concerns and the desire for more affordable access to luxury items. Brand Participation • Luxury Brands Engaging: Brands like Gucci, Alexander McQueen, and Chloé are embracing secondhand sales to attract younger clients and promote sustainability. • Online Platforms: Digital platforms such as The RealReal, Vestiaire Collective, and ThredUp are fueling the preloved luxury market by offering authentication services and a broad selection of products.

Anyone who knows me knows about my passion for luxury #watches. I love the craftsmanship, precision, elegance, and unique design that each piece encompasses, and the empowering feeling they evoke when putting one on. While this #luxury category has traditionally been focused on new collections and designs, the preowned market continues to rise in popularity. That is true in the US and it’s a growing trend in Asia too. A recent report by Re-Hub caught my eye, highlighting this development. Consider these quotes from the report: “The preowned market has emerged as an influential component of the luxury industry, embodying principles of sustainability, affordability, and collectability… The watch category is perhaps one of the categories within luxury where the preowned trends align the most.” Luxury watches have delivered a compound annual return of 9% in the past 10 years, according to a recent article by The Economic Times citing research by Frank Knight. The category outperformed vintage cars, art, and diamonds, the report stated. The segment experienced a boom in the aftermath of Covid, with a surge in prices of preowned watches. The Re-Hub report cited Boston Consulting Group (BCG) which estimates the pre-owned segment accounted for just over 30% of the entire watch category, or $24 billion out of $79 billion sales in 2022. The penetration rate of preowned is strongest in the US and Japan, the report showed. But while China has lagged those more mature markets, growth in is now being driven by the overall trend of the circular economy, an increased desire for access to luxury goods, the rise of the collector mentality, and the advanced development of China’s e-commerce ecosystem. We’re seeing third party resellers, and the watch brands themselves, capitalize on this through collaborations, partnerships, and traditional trading. It’s a fascinating market, and an exciting development for watch enthusiasts such as myself. In addition to the luxurious feeling these pieces evoke, pre-owned watches inevitably have a celebrated past waiting to be revealed. That combination of storeyed luxury almost seems priceless. This segment of the market is something I’m watching with interest as I expect the growth trend to continue through 2024. #LuxuryWatches #PreOwnedMarket

Accessible Luxury: Let's talk about a trending retail term, thanks to Tapestry Capri Holdings Limited merger and rising luxury prices. 🛍️Accessible Luxury: The Tantalizing Yet Risky Middle Ground 👀 I've been closely watching the rise of "accessible luxury" - that lucrative sweet spot price range of $200-$800 where brands can offer quality and style without astronomical luxury price tags. With recent acquisitions like Tapestry's pursuit of Capri putting this category under scrutiny, it's clear accessible luxury is where brands want to play. However, there are valid concerns about getting stuck in this middle ground. ⚠️ The tricky positioning: While accessible luxury fills the gap between fast fashion and true luxury, it's also a precarious place to be. In tough economic times, consumers on a budget may trade down to fast fashion, while the highest luxury spenders rarely change habits. Those stretching to buy accessible luxury risk being the ones most impacted by financial constraints. 👛 Feeling the Pricing Pinch: Brands operating in this middle tier also have less flexibility on pricing often because the quality is still very high. 💡 Curation is Key: Brands can't just haphazardly release pricier items and expect them to work. Curating an intentional collection with a true luxury aesthetic is essential. Brands like STAUD have found success through dedicated bridal lines capturing the upscale audience. There are also a number of handbag lines doing really well in the accessible luxury space: Mansur Gavriel LITTLE LIFFNER and Cuyana are a few examples. 🚀 The middle ground is always risky, but the rewards of hitting that accessible luxury sweet spot could be massive for brands that navigate it successfully. While economic conditions will continually pressure this segment, its growth potential remains stellar for those making the right investments and tradeoffs. ❓What's your perspective on the accessible luxury opportunity and challenges? I'm always eager to discuss this fascinating space. Let me know your thoughts! This article by Madeleine Schulz for Vogue Business is a great read on the Accessible Luxury space.

Here's a truth we don't talk about much in the luxury market but should: Status sells. INSEAD Professor David Dubois whose done extensive research into consumers' motivations for luxury purchases said, “Consumers’ enduring desire for luxury largely derives from the need for status, that is respect, admiration and voluntary deference afforded by others.” But that status can be expressed in a myriad of ways beyond sporting a logo handbag. For example, what Dubois calls "non-consumption behaviors," i.e. experiential luxuries, can yield equally high-status benefits. Read about it in my latest The Robin Report article with Chris Gray, Psy.D. The Buycologist Chandler Mount Affluent Consumer Research Company #luxuryconsumption #luxurypurchases #consumermotivation #status #conspicuousconsumption #quietluxury #affluentconsumers https://lnkd.in/eXhzHpbb

The concept of accessible luxury, which, let’s face it is an oxymoron, was declared dead years ago; You had to be at the very top of the market, or right at the bottom and certainly not in the consumer purgatory in-between. Likewise, we keep being told that China is currently a bloodbath for brands, and indeed when you look at first half sales in Asia (ex. Japan) Kering (-32%), LVMH (-10%) and Richemont (-27%) can testify to this. So, this article by Lisa N. caught my eye as it suggests a potential change in the way consumers, and in particular GenZ are not just shopping, but also engaging with brands. As she suggests, there is a real opportunity for brands such as Marc Jacobs, Coach and Longchamp to increase their market share through fresh and innovative design and crucially affordability. Other brands such as MCM WORLDWIDE are grabbing the initiative. In the article, their President Sabine Brunner discussed the smart ways they are engaging the aspiration Chinese consumer: “We do collaborations that are linked to Chinese culture, telling stories that not everybody is aware of. We partner with local bookshops for example in Shanghai, or we created a fun ride through an MCM passport in Shanghai where we would invite customers to discover several places for flowers, Mybarre dancing, and bike tours. With every stamp, you could then return to MCM and receive a surprise. It is all about traveling, physically but also digitally, the digital nomad lifestyle.” Luxury brands feel like they are on a pricing knife edge currently. For the last few years prices have increased every year, with little resistance, but suddenly as interest rates spiked, it all looked a bit out of control. I did a quick walk around Harrods the other day and looked at plain white T-shirts. Prices ranged from around £80 to a frankly ludicrous £1100, no wonder people have lost interest. Look at the criticism faced by CHANEL or Burberry over recent price hikes. Suddenly there is an opportunity for well curated accessible brands such as MCM to steal market share from above. It has always been necessary for brands to trade their runway shows to sell entry-level accessories, sunglasses and fragrances. But these items are now creeping into the unobtainable space as well. Luxury sunglasses which were recently €200-250 are now €375-€450, and fragrances from the big fashion houses are on the rapid rise, easily breaking €220. They are big psychological barriers to be breaking. Luxury brands can’t afford to lose the aspiration customer. Benjamin Voyer hit the nail on the head recently when he wrote in Forbes magazine: “Marketing to consumers who may never be able to afford these brands—but can dream about them—is crucial. This ensures that those who can afford the brand have an audience that recognises the value of what they display.” DHR Global #china #fashionbusiness Jing Daily

Great piece here by Mathew. I am noticing that there is a generation of young professionals, 20-25 who while very trend savy.. do not care for the catchet of the aspirantional luxury brands. Is it because they simply cannot afford it, part of the cost of living crisis. The inability to access into these brands coinciding with big price point increases over past few years. Or has the buying trend for aspirational product moved on- from the traditional high end luxury brands.. to brands with a different narrative, a story behind the product/brand ( sustainability, charitable links, the product proposition Vs a clear USP). As Matt articulates it very well..Luxury brands have always hooked into the fever of the aspiring client..to increase the perception and value of their products to those clients that are on easily affordable scale..how will they get that fever back?

🚀 Functional Luxury: How Rimowa Keeps Thriving During a Downturn Even amid global economic uncertainty, Rimowa continues to prove its resilience. The German luggage brand, now part of LVMH, has seen sales quadruple in just five years and keeps its momentum strong, thanks to a strategy focused on functionality and innovation. Led by CEO Hugues Bonnet-Masimbert, Rimowa has not only embraced travel essentialsbut also made its first foray into handbags, blending purpose with luxury. As Bonnet-Masimbert puts it, Rimowa's success lies in “functional luxury”—products that serve both as status symbols and practical investments. This approach has kept the brand relevant even as high-end fashion sales waver, especially in markets like China. Collaborations with brands like Aimé Leon Dore and La Marzocco add to its appeal, alongside a new lifetime warranty that underscores Rimowa’s commitment to durability. 💼 Expansion Beyond Luggage: Introducing the Original handbag—a piece that combines Rimowa’s classic design with new possibilities. Although launched modestly, it’s already in high demand, setting Rimowa apart in a challenging luxury landscape. With innovative designs and a solid German identity, the brand proves that luxury today is all about blending elegance with function. Read more on BoF: https://lnkd.in/eH9RPs-C #Rimowa #LuxuryInnovation #FunctionalLuxury #LVMH