Research Report
Luxe Eternal
How luxury brands are reinventing for success
5-minute read
November 14, 2024
In brief
- The luxury market is facing a notable downturn driven by evolving market dynamics and deep customer behavior changes.
- An elite group are thriving by focusing on desirability components that matter while tackling their operational excellence.
- These leaders are unlocking a continuous cycle of business and operational performance, thus creating emotional connections with their clientele.
Luxury’s new era of audacity
Luxury maisons are at a crossroads, facing macroeconomic headwinds and a lack of desirability in design while their shoppers are looking for relevance. But a select group of leaders are audacious enough to thrive despite these challenging conditions.
These leaders aren’t just weathering the storm—they’re reinventing for success. How? By embracing continuous change in how they operate. And redefining what brand desirability means today.
Why is change needed? A deep-rooted shift in customer desires is underway. Today’s luxury customers are not naïve. They are more demanding when it comes to true desirability. Their values are evolving faster than ever—especially when it comes to hyper-personalization, sustainability and an omnichannel customer experience “sans couture”.
83%
of luxury executives agree that customers are changing faster than their businesses can adapt.
82%
acknowledge that the values and behaviors of younger customers frequently contradict those of older customers.
83%
believe that cutting-edge technologies—like generative AI—will disrupt the industry in the coming years.
Rethinking brand desirability
These shifts mean brand desirability is no longer just a question of quality and exclusivity. It’s also about delivering fluid, consistent experiences both in store and online. And it’s about supporting this with foundational digitized operations and a renewed commitment to brand DNA with sustainability by design.
The implication? Reinvention is no longer optional for luxury brands—it’s essential. Our research identified how a small group of Luxury Leaders are embracing change across all parts of the business. It’s allowing them to create a self-reinforcing cycle of improved operational performance, improved business performance and improved brand desirability.
But their success creates a challenge for other luxury brands. As the gap between top performers and the rest of the market grows, the imperative for reinvention becomes ever more urgent.
We continue to progress in our journey towards retail excellence, enriching our product range and driving customer engagement to nurture our brands’ desirability.
Andrea Guerra / Prada Group Chief Executive Officer
The desirability dividend
Companies that invest holistically and continuously in both brand desirability and operational excellence outperform financially.
What does it take to reinvent?
Four ways Luxury Leaders ensure reinvention-readiness:
Embrace the constantly evolving nature of desirability and seek for genuine relevance while keeping the brand fresh with experiential and social values.
Prioritize operational excellence and remove friction from the entire value chain, while reinvesting in customer centricity and building effective loyalty programs.
Establish a strong digital core by integrating AI, data-driven insights and automation to streamline operations. Enhance personalization and boost efficiency, ensuring agility and long-term customer loyalty in a dynamic market.
Create a workplace that empowers people and elevates them to be brand ambassadors. Strengthen the competency framework and invest in continuous learning to retain and attract the brightest talent.
Time to take action
The luxury market is entering to an era where balancing “art and science” will be fundamental for its rebound—where the “art” is the power of desirability and intuition of what customers are looking for. And the “science” is the diligent analysis of the value chain operations and a healthy bottom line.
Maintaining a luxury brand’s iconic status means being willing to act creatively and audaciously—reinventing how the whole business operates.
It’s time to take actions that align with the brand’s DNA—and reinvent luxury operations—for a new time and a new generation of customers.
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