Business of Luxury Summit 2024

 

This year marked the 20th anniversary of the Financial Times ‘Business of Luxury’ summit. With keynotes from industry leaders like Laura Milani Head of Luxury Fashion & Beauty at TikTok, Dan Ruff CEO of Belmond, Stéphane de La Faverie Executive Group President of Estée Lauder, and panel discussions on the future of beauty, the art of hospitality, and the power of influence this annual event was primed to be the best one yet. Here are our main takeaways.

 

1. Familiar themes and thinking

Our main takeaway was that the industry themes were all very familiar. There was a general lack of innovative thinking or new perspectives that we’ve come to expect from this excellent summit.

One interpretation is that the existing challenges, priorities, and trends within the luxury industry continue to endure as brands navigate uncertain times and tough headwinds.

It was instructive to see this pattern across the conference and the things luxury brands are, and should be, paying attention to.

 

2. The traditional structure of luxury is changing

There is still a lot of market asymmetry around the globe, especially in emerging markets such as Asia, the Middle East, and Africa where consumers have yet to be exposed to the full spectrum of luxury brands and everything they offer.

In his keynote interview about the future of beauty, Stéphane de La Faverie (Estée Lauder), remarked: “Post-COVID, complete transformation in countries like India, the emerging middle class have not been exposed to luxury brands yet, and here is an opportunity”. With the right strategy and approach, opportunities await for brands to be early movers in these markets where demand is growing.

Having a strategy to trade in emerging markets and not completely focus on fiercely competitive developed markets in the West and East is especially important as the traditional pyramid structure of luxury is shifting towards an ‘hourglass structure’. Stéphane observed, “The famous pyramid of luxury as we know it is shifting to an hourglass where high-end is growing extremely strongly, and because of tension we see in an inflationary world the bottom of the pyramid being more mass is growing, everything in the middle is being squeezed”.

This restructuring of traditional luxury structures increases the importance for those brands in the middle to explore the untapped potential in emerging markets rather than struggling in highly established ones.

From our perspective, we see the luxury market evolving in a slightly different shape to the hourglass model. As the middle of the luxury market is squeezed and companies look for opportunities and differentiation, more and more brands are seeking to become even more luxurious. This in turn has created a drive for ever more extremes in terms of pricing, exclusivity, and value propositions. So the top of the market is not characterised by a flat hourglass but rather a teardrop shape with an ever-increasing spire as ultra-luxury brands continue to push the envelope of luxury.

 

New Teardrop Model of luxury

 

So what?

Brands must be prepared for fierce competition as the luxury space continues to become more crowded and complex. Greater clarity in identity and storytelling, and strong consumer-centric innovation will help them maintain their position or justify a shift in positioning without falling under scrutiny.

Capitalising on underserved markets requires:

    1. a strong brand identity,
    2. a deep understanding of new target audiences,
    3. and their culture.

It is when these three points come together that brands are able to quickly, effectively, and authentically position themselves in new markets.

 

3. Social media continues to shift how brands connect with their audiences

During the panel discussion ‘The Power of Influence”, Laura Milani Head of Fashion and Luxury at TikTok reinforced the continued and growing importance of TikTok for luxury brands. The message was clear – brands need to pay attention and nurture their presence on the platform now more than ever.

With a community of 1 billion luxury enthusiasts, Fashion & Beauty on TikTok has seen a 300% increase this year. And it’s not just Gen Z on the platform anymore as Milani said, “We’re seeing an increase in users across all demographics”. Social media increases visibility and bridges the gap between audiences and luxury brands.

Milani went on to share that Gen Z, ‘the future consumer’, shows a desire to learn about luxury brands. Even though many who engage on TikTok today do not yet have purchasing power, they will in the future. So brands who are successfully engaging with younger generations now are nurturing relationships with their future customers, as well as remaining culturally relevant today.

Hearing this, we were intrigued to learn about which luxury brands are nailing their social media strategy. Bentley is a brand that has thrived on TikTok by connecting with audiences through a variety of methods; collaborations with influencers like TubeGirl to connect to a younger audience and hopping on to microtrends like ASMR Tok.

One interesting approach, which at first glance seems contradictory to the notion of luxury, is the tactful use of humour. One of Bentley’s most viewed and liked TikToks features a video of someone comparing a Bentley SUV to a tent. An unconventional and humorous take on showcasing the aspirational features of the car. A view comment reads “This is so funny and serious at the same time. Absolutely love it. Makes me wanna buy a Bentley and a tent then hit the road (seriously) fantastic ad”.

 

Bentley Tent TikTok

 

So what?

Considering brand image and prestige are paramount to luxury brands and a wrong move could discredit years of brand building, using social media is both risky and pivotal in an increasingly digital and AI-driven world. Luxury brands face the challenge of balancing inclusivity and exclusivity with social media. The rapid evolution of these platforms means brands must continually reassess their approach. Being present on TikTok has become a no-brainer, yet luxury brands risk damaging their aspirational image and core identity if their social media strategy lacks differentiation or they miss the mark.

As Robert Ferrell, Founder of ML11 noted “People have shorter memories, it’s a cycle of well that’s old news, who’s next.” In this context, Luxury brands must remain vigilant to stay ahead of the curve.

 

4. Relevance is being reframed as audiences seek genuine connection

Social media has redefined how brands achieve and maintain cultural relevance, with consumers now seeking empathy over idolisation. As Laura Milani, Head of Luxury & Fashion at TikTok emphasised “It’s not about ‘celebrities’ it’s about people. People who have interesting content and values. Whether that’s a celebrity or a normal human being. What’s most important is the story. An authentic story. It’s about being empathetic with consumers, opening up and sharing”.

Whilst celebrity endorsements are here to stay, the humanity behind the brand is driving engagement. How every day people show themselves on these platforms has shifted from ‘highlight reels’ to more vulnerable and authentic representations. The popularity of apps like BeReal illustrates the fatigue around idealised portrayals of ourselves. Brands are following suit in the kind of content they produce to stay connected and resonate with audiences.

“It’s all about the BTS (behind-the-scenes)” said Jo Ellison, Editor at The Financial Times during The Power of Influence panel. Brands like Prada are showing behind-the-scenes content of their MetGala looks. People want to see the messy, real-life process that is typically hidden from public view, rather than the sanitised, polished portrayal of outfits on the red carpet. However, in this example, there is also the question of whether the pull is more about rawness or in fact creating a sense of rarified, privileged access. Or both.

 

Prada MetGala BTS TikTok

 

So what?

Given how quickly things evolve on social platforms, will there be BTS fatigue? As highlighted by Rober Ferrell, Founder of ML11, “BTS often projects the sentiment of spontaneity and candidness, yet these videos are as meticulously curated as runway shows.”

We’ve heard of ‘green-washing’ and ‘wellness-washing’, could ‘authenticity-washing’ be the next thing that brands need to prepare for as audiences become more discerning over their detection of genuine authenticity?

 

5. ‘Slowification’ is not just the remit of hospitality brands

While short-form content was a hot topic, so was the concept of ‘slowing down’. Brands will continue navigating the hyperconnected digital and AI-driven world to engage with audiences around the globe. Yet, paradoxically, once they have an audience’s attention, the brand’s role shifts to addressing the disconnection caused by the very medium they use to find their audience.

Many talks touched on the result of this paradox, especially the trend for ‘‘Slowification’. Dan Ruff, CEO of Belmond in his session titled “Slow Luxury” made the point that “slow luxury is about celebrating luxury craftsmanship, valuing time, and experiential richness”. Belmond epitomises slow luxury with a philosophy centred around the “suspension of time”. They aim to disconnect their clients from the hustle and bustle, fostering a deeper connection to themselves, others, culture, nature, and the present moment.

The panel discussion on ‘The Art of Hospitality’ emphasised that hospitality is slowing down to deliver more transformational luxury through meaningful touchpoints. People don’t just want to go on holiday to ‘have a nice time’ anymore. They want experiences that disconnect them from everyday life and connect them to something more single-minded to help them enrich their lives.

 

So what?

Luxury brands can create moments that intentionally slow customers down and foster meaningful connections. The hierarchy of luxury experiences is evolving, and to stay relevant, luxury brands must adapt and integrate moments further up the hierarchy wherever they can.

 

Hierarchy of Luxury

 

Brands selling luxury products are now also in the business of luxury hospitality, and luxury hospitality is becoming the business of transformation.

 


 

Do you want to learn what 42 luxury consumers, 11 senior executives, and 6 industry experts from The Sense Network had to say about the future of luxury?

 

Download our latest luxury report

 

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