The Future of Luxury is a weekly opinion column:
I am writing this column sitting on a plane on the way back to Los Angeles after spending three exciting days with the leadership team and top sales teams of one of the most iconic luxury brands in the world. The theme of the training was how to unlock luxury potential in times of massive change and uncertainty.
While consensus estimates of Équité, Bain & Co., and other luxury advisors predict growth between 5 percent and 10 percent for the luxury sector in 2023 and a long-term CAGR of around 6 percent until 2030 — a return to the level of growth seen between the mid-1990s and 2019 — the last few quarters have clearly separated the best managed luxury brands (Hermès, Dior, Louis Vuitton, Porsche, Rolex, Zegna, Technogym, to name a few) from the rest.
The best are clocking in one all-time-high quarter after the other, while others are not only falling behind but declining significantly in market share, revenue, profitability, and desirability. One reason? Organizations lack knowledge of luxury client insights, drivers of extreme value, and the art of creating a lasting impact, thus failing to create enough desirability.
And selling luxury consistently and successfully is hard. It requires a combination of deep insights and skills. While every organization aspires to hire and retain great talents, creating an ecosystem that provides an end-to-end luxury experience for clients at all touchpoints requires strategy, systems, talent, situational awareness, and executional excellence.
One misstep and client relations are destroyed, value collapses, and desirability craters. Roles and responsibilities need to be clear. And importantly, all client-facing staff need to know how to identify and act on the emotional triggers of the clients.
Having the privilege of advising some of the most successful luxury brands in the world provides profound insights into how organizations can create extreme value without changing their fundamental cost structure. This is why luxury training is the secret weapon that many underperforming brands are not yet tapping into with enough emphasis and focus.
Luxury training is, especially in times of uncertainty and crisis, one of the biggest and fastest levers for creating organizational change and a key differentiator between successful and unsuccessful organizations.
Luxury training is, especially in times of uncertainty and crisis, one of the biggest and fastest levers for creating organizational change and a key differentiator between successful and unsuccessful organizations.
One fascinating observation during my latest training was how hard it is for people to ask the right questions that help identify and classify a client in a real-world in-store situation. It is easy to discuss in theory what luxury brands must do to create an emotional response. But to actually execute is very difficult, even for very experienced sales representatives. In the best organizations, salespeople are trained on an ongoing basis because, without it, even the most successful brands would immediately fall behind.
In an era of unpredictability, the difference between consistently successful luxury brands and those merely surviving is knowledge and insight. The pitfalls typically lie within the nuances of brand experience, the ability to develop empathy towards the client, the decoding of luxury clients' emotional triggers, and the cultivation of enduring client relationships.
Another regular pain point is that sales ambassadors in luxury don’t live the same lifestyle as their clients. Hence, for many, it is almost impossible to understand patterns in their daily lives, purchasing power, and preferences.
While aspirational luxury clients often accumulate items and opt for brands that allow visual identification, more settled luxury clients value different aspects like time, community, inspiration, and peace of mind — hence, the emergence of quiet luxury, a term that is all but new and is as old as luxury itself. If a salesperson is in a completely different situation from the client in terms of wealth, liquidity, opportunities, way of living, goals, expectations, and experiences, it’s almost impossible to be able to inspire and create desirability without extensive and recurring training.
Even at the top management level, training is critical because luxury changes so fast that not understanding the rapidly evolving expectations of Gen Z and the opportunities and threats of technologies like AI will catapult brands into a rapid downward spiral from which many can’t recover. The speed of change is unprecedented, and many brands are overwhelmed trying to connect with their clients as competition heats up, critical parameters change, and clients demand more than ever before.
Without exposing the C-suite to the unprecedented changes of today’s reality and tomorrow’s client, brands won’t have a future. Équité predicts that 50 percent of luxury brands won’t survive the next decade, and for many brands, the writing is already on the wall.
The luxury sector is not just about the product; it's about the experience, emotion, and exclusive and desire-inducing story each brand needs to tell. That makes training in these areas not just a strategic advantage but a survival necessity.
Delaying or underestimating the importance of training means risking obsolescence in a world where the premium client's loyalty is won by those who dare to evolve faster and execute better.
This is an opinion piece by Daniel Langer, CEO of Équité, recognized as one of the “Global Top Five Luxury Key Opinion Leaders to Watch.” He serves as an executive professor of luxury strategy and pricing at Pepperdine University in Malibu and as a professor of luxury at NYU, New York. He’s authored best-selling books on luxury management in English and Chinese, and is a respected global keynote speaker. Daniel frequently conducts masterclasses on various luxury topics across all continents. He’s a sought-after luxury expert, appearing on platforms like Bloomberg TV, Forbes, The Economist, and more. Holding an MBA and a Ph.D. in luxury management, Daniel has received education from Harvard Business School. All opinions express in the column are his own and do not reflect the official position of Jing Daily.
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