What does the future hold for the luxury market: Carlo Pignataro, The Luxury Coach, shares his vision
2021 . 01 . 15 |
Coming off the heels of 2020, one can’t help but wonder what 2021 has in store for the world, and specifically for our industry. Determined to get some clarity I contacted Carlo Pignataro, author, entrepreneur and training specialist best known as "The Luxury Coach". In a series of conversations we discussed the evolution of the luxury industry along with some of the challenges and opportunities facing this sector.
We began by talking about who the luxury consumer is today, and Carlo pointed out that it varies depending on the product or service as well as the demographic. He explained, in general, the client is younger but is quite diverse, and that as women increase in economic power, their purchasing power is driving sales. “We know that Asia will drive the business because of their population growth, because of their wealth growth and so on. In Europe money is in the older generation more than in Gen Z, so brands must not forget their silver clientele. “ To his point, a recent report from Tencent and BCG indicated that the average age of the luxury consumer in China is 28 years old, which is ten years younger than the average in most of the rest of the world. No wonder we see so many collaborations between gaming and luxury goods. This youthful client partly explains why it is expected that luxury goods sales in China will double between now and 2025, while the rest of the world, including Europe and the US, is growing at a much slower pace. This dynamic, however, comes with a huge caveat that Carlo addressed. “The Chinese consumers are young and fresh, and they can change their mind overnight. And let’s consider, are Chinese luxury brands going to emerge? Yes, and they will give a hard time to many European brands.”
Our conversation took an interesting turn when it shifted to the importance of the tech industry. Carlo said, “The tech & science side is shaping the world – the luxury side is delighting and entertaining the world, but not necessarily shaping it.” With the rise of devices, people no longer rely on their memory for information: invariably we consult our phone for an address or phone number, and we often turn to Google with questions. Carlo explained, “This changes everything. Maybe not now, but in 3, 4, 5 years, it will. Brands need to move from top of mind to top of search, and to be top of search you must completely change the communication strategy so it answers the questions people will have.” The days of relying on the heritage, the legacy and the memories associated with brands (yet extremely important in the construction of a brand’s storytelling) will give way to being present in online conversations. In Carlo’s opinion, “This is a cultural shift that the luxury industry is very far from. “
Another major tech evolution regards the collection and use of data. According to Carlo, there are three types of enterprises: those who don’t use data (and will progressively disappear), those who leverage data and fine tune what they do based on data, and lastly, the leaders, who have built their products and services based on data. “How was the luxury industry born? It came from master craftsmen having the knowledge of how to make something: shoes, jewelry, fragrances. Now we go the other way around and this is unprecedented in the history of humanity. When you build a service or a product from scratch based on data, then you are creating something that is exactly what people need, often before they know they want it. There is going to be a moment in time when those who can create what responds directly to peoples’ needs will be in a position of power.” As examples, he cited Alibaba, Facebook and Amazon who have all built their businesses based on data. When I asked him about these giants as points of distribution for luxury goods, he said, “ Of course luxury doesn’t want to be in a place where you can buy your phone charger and your basics. Luxury wants to be exclusive, to be sure the storytelling is not diluted , and to have all the fanfare that goes with luxury. But I’d rather reflect on the resources these companies have.” In other words, consider the opportunity and don’t be snobbish! Indeed, the day after we had this conversation I read that Unilever is partnering with Alibaba Cloud’s AI and cloud-based technologies to measure customer patterns and behaviors to develop its omni-channel marketing strategies. This is food for thought.
When the topic turned to the return to in-store shopping, consumer expectations and the effects on staffing, Carlo had several specific viewpoints. “At the retail level, in the next 3-5 years, we will see progressively less staff in store because stores will be equipped with devices and more processes will be automated. But people still crave experiences, so staff will have to be experience creators.” He sees a rise in By Appointment store visits in which dedicated time is made for each client, a great asset for the luxury industry. He affirms that the store personnel will need to have skills beyond the basics. “Consumers will expect more: more knowledge, more charisma, better skills, more confidence, and an understanding of what’s going on in the world.” Consequently, the art of selling will rely not only on listening skills but conversational skills. Carlo explained “In the course of a conversation, I have clients who want to talk about finance, about riding horses, about cigars, and so on. You have to connect human to human.”
Next, I asked Carlo if there were any trends in the luxury market to watch out for. He stated that luxury must grasp what other industries have learned to implement: mass personalization. This is a skill in which a brand has the ability to give the individual something he perceives as unique while still ensuring this same item or service can be provided to a multitude of people. Personalizing the product, the messaging and all the consumer touchpoints means the shopper feels he has something special and uniquely his. This opens the door to a more fluid flow of communication between brands and consumers. Barriers have been broken down as brands are no longer dictating the way they were in the past, and they are involving their clients in conversations. “Companies and brands that know what they’re doing know how to listen, they know how to trigger the conversations and they have the charisma, prestige and self-confidence to then say, ok, I’ve heard you and here is what I’ve done for you.“ Consequently, the public feels it has a voice, resulting in a closer, more personal relationship with the brand. Another means of communicating with the client, which Carlo believes is a trend that’s ready to blossom, is the audio experience. Carlo elaborated, “Visual is still dominant in the way we make decisions but audio is underused and underestimated. We are surrounded by devices that are controlled by voice (and their popularity will dramatically increase with time); we can ask questions without looking at the screen. Anything that can be perceived, triggered, collected in an audio way will certainly emerge. Audio reviews, storytelling, podcasts, radio programs – and it’s not just in luxury but it’s for all industries.”
In closing, Carlo had one final piece of advice for luxury brands: don’t compromise on pricing. “The problem with luxury is that the minute you compromise on positioning that positioning is gone forever. You can afford many things, except going down. You’ll never go back to where you started.”
Wise words indeed.
For more information visit:
Carlo’s podcast LUX & TECH on Itunes:
Carlo’s Podcast LUX & TECH on Spotify:
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