It is going to be a big era for luxury retail in Asia. With the high Millennials and Gen Z populations, coupled with its robust digital economy, the region is predicted to take the lead in luxury spending. The new luxury experience demands innovation, hyper-personalisation and a focus on sustainability. Let’s take a closer look at what the Asian luxury journey will look like this year and beyond.
Statista reported that the global luxury market will grow from US$111.5 billion in 2023 to US$131.7 billion by 2028. This impressive growth will be underpinned by increased spending by Chinese and American consumers and the influence of Millennials and Gen Z.
Celine de Robillard, Omnichannel Director at VISEO APJ remarked “Reflecting on 2023, our prestigious clients have delivered an outstanding performance. The LVMH group reported significant growth with a record revenue of €86.2 billion ($93.3 billion). Asia as a region played a pivotal role, making up 38% of its revenue share. Notably, the group’s asian consumer base has doubled since 2019, signalling a profound shift in market dynamics. It is crystal clear: in the luxury sector, only brands that fully embrace innovation will continue to grow and maintain this momentum in the next five years.”
Japan (US$58.4 billion) comes third, a growth partly driven by increased tourism. There’s also Thailand, often overlooked but brimming with potential. It is expected to pose the highest growth rate over the next five years. The region is anticipating immense growth, and luxury retailers must have the right formula in place to seize the opportunity.
Every customer today desires to be seen as a unique person, with their own style preferences and shopping habits. The way to win their heart is through data-driven insights.
You need to move beyond just collecting demographic information like age and gender. Armed with the right tools, you can get a customer’s browser history, shopping cart and purchasing habits at your fingertips. Technologies like Artificial Intelligence (AI) can be used to identify patterns along the consumer purchase life cycle. This helps you to gain a deeper understanding of each customer and make informed recommendations.
With an unrivalled ability for accuracy, AI processes data to help retailers make predictions and data-driven business decisions. On the online platform, optimised search algorithms enable you to combat consumer fatigue from repetitive content. AI can recommend relevant products and suggest tailored deals based on the items that customers add to the cart, driving conversions. Like the human brain, AI continually learns and acquires new information, so luxury retailers can understand customers better with time.
As technologies perform their magic, sales associates can focus on building a stronger relationship with customers. Staying up to date with all the latest information about the brand, such as new collections and sustainable materials, can help the team offer personalised advice. Tailoring the shopping experience for each customer will create a lasting impression.
Cracking the code for the best sales recommendations
David Liu, Cegid Director at VISEO APJ remarked “Take Fendi’s Made to Order service, for example, which offers customers with unparalleled handbag customisation options. The collaboration with local Chinese artists for the bespoke Peekaboo bag collection adds a unique touch. On the sustainability front, the brand features Furmark, a global certification and traceability system for natural fur that meets animal welfare and environmental standards. Fendi definitely ticks all the right boxes!”
Having a unified platform that combines human knowledge and digital innovation makes a difference. For instance, the unique Dior Star app functions within an ecosystem to assist sales
advisors throughout the whole sales process. From accessing customer backgrounds to creating wishlists, the app can be used to book appointments, make payments with tap-to-pay, and arrange for duty-free tax refunds.
Furthermore, Dior offers VIP customers with exclusive moments that resonate with them on a personal level. Top clients can rent a penthouse in Paris with 24-hour shopping access. The extravagant experience is extended to China through VIP member rooms, where elite patrons can purchase one-of-a-kind handbags and select haute couture pieces.
Speaking of the future, the Asian luxury clientele is open to new technologies in luxury boutiques.
While robots are rising in popularity in F&B businesses, the same cannot be said for the retail sector. As the production of human-like robots or humanoid production is still in the testing stage, this technology seems to be more of a window-shopping affair at the moment. For instance, Louis Vuitton deployed a life-like Yayoi Kusama robot at its stores in New York, London, Paris and Japan to create interactive experiences for customers.
Elevating luxury through experiential events
Gone were the days when a retailer could simply focus on selling products. It’s now all about curating immersiveexperiences. Rather than fixating on sales, luxury brands are launching spaces as a form of storytelling to appeal to customer emotions and leave them mesmerised.
Another eye-catching luxury exhibition is the Gucci Cosmos, which debuted in Shanghai‘s West Bund, a former aircraft factory overlooking the same river. Visitors were welcomed by iconic designs and classics from Gucci’s century-old archive. The Italian luxury house delivered an immersive experience featuring eight themed ‘worlds', using audio, visual and kinetic technology to create a show-stopping experience.
Experiential events like these are a game changer! Adopting this powerful marketing approach will help to drive brand engagement, nurture loyalty and expand the customer base. Luxury brands risk missing out if they fail to embrace this trend.
Tech-powered omnichannel journey
In Asia, physical stores continue to dominate as the preferred channel for luxury purchases, with 85.7% of affluent customers opting for offline sales in 2023. The offline sales of luxury goods in the region is expected to increase in market share in the years ahead.
While physical stores are where most luxury sales are made, it’s not wise to overlook other sales channels. An integration of all points-of-sales allows you to maximise customer satisfaction across different touchpoints, which has become more important since Covid-19.
The share of online sales of luxury products is expected to rise from 21% in 2022 to 26% by 2025, reported Statista. Ensuring a seamless customer journey from the website to the storefront comes easily with the right technology.
Even with the rise of experiential events, omnichannel solutions are beneficial to send invitations and provide real-time inventory visibility. This way, customers can easily find and purchase products on display at the event, even if they are not available in-store.
“A more fluid shopping experience is attractive, both offline and online. Offering superior services and following up with customers post-event or store visit do wonders in driving purchases. Having the right technological tools can make a huge difference.” – Marco Lim, Sales Director at Cegid APAC
Luxury with a purpose
Consumers are increasingly attuned to environmental concerns. We see a shift towards people becoming more conscious of where their money goes, the ethical consideration behind their purchases and how they may impact the planet.
Luxury consumers in APAC today believe they are more environmentally conscious than they were two years ago, reported a study by Delta Global. A staggering 92% of Asian consumers would stop purchasing, buy less or reconsider buying from brands that do not prioritise sustainability. The Gen Z, especially, are ready to put their money where their mouth is. This is evident from their eagerness to pay a 28% premium for greener choices.
A brand’s social impact is now seen as equally as important as the brand name, in the eyes of the consumer. We can see strategic initiatives taken by brands like Dior in renovating its stores to obtain environmental certifications. Not only that, the luxury house is growing flowers to regenerate biodiversity to complement its perfume business. This makes Dior the first beauty partner of Hectar, the world’s largest agricultural campus in Paris.
Launched in 2019, Prada’s Re-Nylon 2024 campaign features celebrity activists Emma Watson and Benedict Cumberbatch. This sustainability shift sees the production of all Prada virgin nylon converted to regenerated nylon, which can be perpetually recycled. Proceeds of the campaign are donated to UNESCO for ocean preservation.
“Brands need to be more proactive in showcasing their sustainability initiatives. But how do you turn these efforts into the talk of the town? With the right digital solutions, you can amplify your initiatives and make sure it reaches the target audience among affluent Asian consumers.” - Celine de Robillard, Omnichannel Director at VISEO APJ
The right omnichannel platforms enable luxury brands to share their social impact to potential customers and foster a sense of shared responsibility. Meanwhile, data analysis tools aid in tracking consumer preferences and purchasing habits, making it easier to send targeted messages related to sustainable campaigns.
Creating the best luxury experience has never been easier
A premium customer experience is no longer a distant dream with VISEO and Cegid. With our expertise in the luxury market, we can enhance your team’s efficiency and ensure a flawless integration of sales channels. Asia is a world of endless possibilities for luxury retailers, so contact us today to see how we can support your future.
