Institutions such as PwC, Bain, the BCG and others have been observing a shift in demand for luxury goods from owner-oriented to experiential consumption. The “experience” is increasingly preferred to “owning”, or “being” becomes more important than “having”.
Suppliers of luxury- and adventure travels as well as top-class restaurants are currently benefiting particularly strongly from this change. Especially the younger luxury-affine target group (Millennials) is less and less prepared to invest into so-called “big tickets” or, in other words, to spend a lot of money on just one article. Terms such as “borrow” and “rent” (temporary ownership) but also “exchange” are gaining in importance. However, the desire to be part of the luxury society remains an important motivator. Only under changed conditions. Against this background, those suppliers will benefit most in the future, who can best bridge the gap between product and experience from the consumer’s point of view.
Some start-ups have already recognized the potential of the sharing economy in the luxury brand segment. Online platforms such as “Eleven James“, “Rent the Runway” or “Bag, borrow or steal” primarily offer items that are characterized by a high unit price and low frequency of use. This applies in particular to designer fashion and handbags as well as wristwatches. In the future, such business models will also become more important for durable consumer goods such as real estate, yachts and cars. Because, fewer and fewer luxury customers want to bind such blocks to their legs and rather enjoy the flexibility to try something new more often.
Major luxury goods manufacturers are working intensively on topics such as digitization, addressing younger target groups in the digital age and their growth through vertical integration. But have they also adjusted to the changed consumer behavior? I think not enough, although there is great potential for additional business opportunities and sustainable customer loyalty, especially in the area of ”sharing goods”.
Therefore, in the future, especially those luxury goods manufacturers will benefit, which provide their product together with a corresponding range of services and leave the customer the choice of whether they prefer to buy or borrow an item.
Wolfgang Stelling is Head of Strategic Business Development Luxury Goods at Concinno, an association that opens up new growth opportunities for owner-managed factories and manufacturers with special products and capabilities. Previously, he led many years a strategy and marketing consultancy for luxury goods companies. He was also appointed Vice-President Marketing of the Saxon luxury watch manufacturer Glashütte Original after he had been more than fifteen years Head of global marketing for the Rodenstock Group’s licensed brand portfolio (including Porsche Design, Cerruti, Féraud and others). https://www.linkedin.com/in/wolfgang-stelling/