Luxury marketplace connect design lovers with vetted sellers and makers of vintage, antique, and contemporary furniture, fashion, fine art, jewelry, and watches. Many of these sites also offer curated services that help luxury brands build their reputation online. Some, such as Vestiaire Collective, a platform for secondhand luxury goods, employs teams of experts to verify the authenticity of items listed on the site. Other marketplaces, such as JamesEdition and 1stDibs, capture the magic of Paris flea markets online.
These new-luxury companies are challenging traditional categories, and they have become the largest growth engine of the industry. They are generating significant sales and profit, and they are expanding rapidly in emerging economies. These companies have a much lower cost base than traditional luxury brands and operate with a more flexible capital structure, making them more resilient to economic turbulence.
The rapid rise of new-luxury companies has raised the bar for other brands to compete and succeed, but it has also shifted consumer expectations. While occasional treaters still seek high-quality materials and a sense of authenticity, they now overindex for the expectation that brand stories and narratives will add value beyond their purchase. Luxury brand marketers now need to think about how to create touchpoints that consumers can engage with and relate to in order to deliver on this new promise.
Some brands are testing the waters by partnering with resale platforms, such as Stella McCartney and Burberry. These initiatives encourage consumers to use and resell their products, and they help the brand achieve a higher profit potential for each item sold. In addition, some companies are rethinking their product pipelines to create more durable and less-fragile luxury goods.
For luxury businesses, the current economic turbulence provides an opportunity to assess and reconsider their strategic plans for the long term. As the economy slows, it may make more sense for some brands to refocus on their core markets and to invest in the digital experience. Others may take the time to review their product portfolio and determine if there are new opportunities to grow in niche segments.
Despite macro uncertainty and the reopening of China, luxury goods continue to prosper. Nevertheless, the luxury market remains late-cycle and susceptible to the effects of economic and political uncertainty, which are expected to continue into 2023. According to a recent study by Bain and Altagamma, luxury brands are better equipped to weather economic shocks than in the past. Their customer base has expanded and is more concentrated, and their customer-centricity and multi-touchpoint ecosystems offer resiliency against disruption.