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THE POSSIBLE AND THE PROBABLE

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Construct + Luxury Briefing

"Most luxury consumers are looking for brands with something to
say and this will undoubtedly drive a shift from brand-centric
business to consumer-centric brand."

There has been an admirable sense of resilience and calm evident throughout the last 18 months. This impressive adaptability has given rise to a deep analysis of brand, business and consumer. Many businesses would even credit Covid-19 with precipitating a powerfully positive impact on future strategy. Planning teams have been busy plotting pivots, accelerating change and responding to a seismic shift in consumer behaviour. Initially, these changes were the result of restrictions that were forced on consumers rather than chosen. During this phase, businesses have been able to see and solve their problems. What comes next is the biggest question: how will this impact all of us in the long term? And what will the role of luxury be in the post-pandemic landscape?

Management consultancies, futurologists and strategists will tell you they know the answer. But the best of them will admit that, while they might be able to project likely scenarios, they have never been so unsure. This is because we don’t yet know what is happening in the minds of our audiences and consumers. It’s what they are thinking and, perhaps even more importantly, what they are feeling that will determine what's next. If you want a robust answer, you’re going to have to wait and see; any valuable qualitative or quantitative understanding will not emerge until the end of this year. One could argue that the true impact on audience psyche and, therefore, behaviour, will not be robustly understood until 2024 at the earliest. Johann Rupert, chairman and founder of Richemont, stated in May that he believed it would take at least three years to return to pre-pandemic results. This is not surprising given the 11 to 26 per cent drop in consumer spending in the first months of the pandemic across China, the United States and Europe.

There are already some positive indicators, however. The share prices of Hermès, LVMH and Kering last Autumn suggested the world would emerge into a frenzy of luxury indulgence, a return to the roaring ’20s that was tipped by so many. There are plenty of reasons to believe that this is the logical outcome. Unlike previous recessions, this one involves no consumer debt or asset price bubbles. This is likely to be short-term, a response to restrictions endured – consumer behaviour springing back to, and beyond, previous performance, a bounce back to better than before. The result will be a limited economic re-balance likely to settle down when the savings are splurged, and regular habits have re-emerged post-restrictions.

In March 2021, McKinsey Global Institute reported more than $1.6 trillion more savings in the United States in 2020 and about $400 billion in Western Europe. They say: ‘e-grocery shopping, virtual healthcare visits, and home nesting are likely to stick while remote learning, declining leisure air travel, and decreasing live entertainment will likely revert closer to pre-pandemic patterns.’

What will happen longer-term? The question of how the pandemic will impact consumer behaviour is complex, it will vary generation-by-generation and region-by-region. The prognosis for luxury brands is particularly challenging, as research suggests that many people feel more conflicted about consuming luxury goods, torn between a desire for the exclusive and growing concern about perception and consciousness connected to their sense of purpose and values. The increasing significance of serious long-term concerns like the environment and social equality indicate any boom is likely to be short-lived. Long pandemic lockdowns gave many luxury consumers more opportunity to reassess their values; they spent more time discussing social issues, they focussed more on nature and the environment, not just as a cause, but as an experience they valued and enjoyed.

It’s interesting to hear Sarah Willersdorf’s take on the impact on UHNW consumers. The head of luxury at Boston Consulting Group said: ‘Covid was the first time that a lot of people realised that their individual actions have societal consequences.’ Perhaps for this reason, philanthropy among UHNWs has accelerated when compared to other recessions. Some of this was already trending pre-pandemic. For many, the search for meaning and happiness has become more urgent and profound. The experiences and their outcomes were not universal, generational trends emerged and brands would do well to study them. For example, Millennial and Gen Z consumers are typically more engaged with social responsibility, while older consumers are more likely to be concerned with sustainability.

Underneath these differences, we must engage with and understand that there are some universal themes – the desire for relevance, brands with a focus on quality, design, sustainability and societal messages. Most luxury consumers are looking for brands with something to say and this will undoubtedly drive a shift from brand-centric business to consumer-centric brand. The question is, how much do you know about what your consumer is thinking? And is your brand really in-tune with how they are feeling?
Whilst so much is uncertain, it’s clear to see that customer-centric reactivity will be key to success in the coming years.

LESS, BUT ONLY THE VERY BEST

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Construct + Luxury Briefing

The events of the last 12 months mean there is no patience for anything other than honesty, quality and sustainability. Smoke- and-mirrors marketing and the economics of anxiety seem fragile in a world re-connected with self, an individualised appreciation of value and a genuine desire to see change in action.

"Slow but sure, a tide of realisation and re-prioritisation is taking place in the hearts and minds of consumers"

At its most basic, this means the future of luxury will be focussed on quality, sustainability and purpose. Brands with these values at the heart of their business will find a magnifed resonance with their consumers. Honest communication will gain more traction, the timeless product will be valued and innovation for positive impact will win new customers.

This is not being driven by the marketing departments of multi-nationals. It is not a trend; it is a movement. Slow but sure, a tide of realisation and re-prioritisation is taking place in the hearts and minds of consumers. This change happens first at an individual level, it gathers momentum and becomes a collective cultural conscience. A new context for business and consumption is impacting every one of us.

The movement might start slowly and in private, but it quickly gathers momentum. As critical mass is achieved, it will result in a sudden shift in perception. Every category will be impacted, and the luxury market is likely to experience these changes the most. Luxury items that were once lusted after will become uncomfortable to display, status will be indicated by a different set of signifiers, more complex, more coded but as sharply observed as ever.

What does this mean for our businesses? At Construct, we are observing an exaggeration of market dynamics with the most premium products and services performing better than those that are more mainstream. We are seeing a renewed interest in more discrete expressions of connoisseurship, as evidenced by the changes in the watch market, where dials are getting smaller again; and in the car market, where green credentials are the campaign headlines.

In fashion, a category that has always been a clear barometer of cultural conscience, uplifting vibes, comfort, the outdoors and craftsmanship are king. Homewares, beauty and wellbeing chime with this momentum and will continue to outpace other categories, while adventure and experience will bene t from resonance as well as a rebound born out of the enhanced value of freedoms lost and rediscovered.

And what does it mean for each of us? I can’t speak for anyone but myself. After all, this new dynamic is not about new seasons or being on-trend, it’s about lifelong passions, personal style and individuality. On a personal level, I have rediscovered my love for Church’s shoes through their collaboration with Noir Kei Ninomiya (sold out, of course). Why? The hypnotic promise of authentic, timeless craft and con dent creativity existing harmoniously in an eminently practical (and comfortable) product.

I have enjoyed playing endlessly with Carolina Bucci’s Forte beads, creating my version of her genius concept: precious, hard-stone beads (think turquoise, amethyst and cornelian) to construct as bracelets and necklaces, strung on metallic cords with precious gold tips, threaded and re-threaded to match the day’s mood (or outfit).

I can’t wait to return to places that ll me with peaceful contentment, from Amangiri to The Anchorstone Café in Dittisham. (Who would have ever thought those two could co-exist in a single sentence!) And, I have watched and re-watched singer FKA Twigs’ mesmerising live performance at Valentino in January this year. Emotional, powerful and somehow prophetic, it reminds me of the beauty of unforgettable moments we will hopefully soon be able to enjoy again.

In a nutshell, I have remembered I truly value nature, friends, family, my home, exceptional craft, timeless quality, those things that reflect my unique perspective and experiences I can connect with emotionally. Some brands seem to be in tune with this feeling, they have become part of my bubble and I am ignoring all the rest. What we all want now is less but the very, very best.