O n the face of it, the luxury market is changing at a faster pace than ever before. Gen Zers – or Zoomers, those aged 25 and under – challenge expectations and categories for luxury. They have a much more tech-driven approach to luxury, from non-fungible tokens (NFTs) to virtual handbags, but being social media curators since their early years means they opt for luxury items that match their values. The stakes of being seen with the wrong brand by their followers are just too high. Sustainability, diversity, connectivity and inclusion are becoming critical success factors and are non-negotiable.
"As brands compete for time and attention, the 'new luxury real estate' is digital customer access"
Computer games, such as Fortnite and Honor of Kings, have turned into social networks exceeding a billion daily users. They are now virtual multi-billion-dollar marketplaces, where people hang out, play and admire their avatar’s latest luxury skins. Microsoft’s unprecedented $68.7 billion all-cash acquisition of game-maker Activision Blizzard proves that as brands compete for time and attention, the “new luxury real estate” is digital customer access. A paradigm shift is happening in plain sight.
The metaverse – the next and more immersive iteration of the internet – is accelerating the disruption even more dramatically. It will lead to more personalised and on-demand interactions with customers and unprecedented fluidity between physical and digital brand experiences.
Prepare for the biggest change ever: I predict that the value of digital art sales via NFTs may surpass traditional art within this decade. Entire categories such as watches, fashion, jewellery and cars will further fuse craftsmanship and tech, including through NFTs.
Brands are already reacting: Gucci recently introduced an online gender-neutral collection called MX as an alternative to its traditional men’s and women’s lines, thus disrupting through inclusivity; Balenciaga announced a new metaverse department and a virtual store on Fortnite; Sotheby’s allows clients to attend auctions fluidly from virtual to physical, buy digital art on its dedicated NFT marketplace or purchase luxury items instantly via fixed-price platforms, all while curating a seamless luxury experience and using AI to personalise and optimise content.
Elsewhere, Louis Vuitton has entered the market of headphones and loudspeakers, transposing famous designs onto some of the most artistically crafted portable technology pieces ever made. Underlining luxury’s reconfiguration, Ferrari has appointed a new chief executive: Benedetto Vigna has no traditional car or luxury background, but instead arrives from an executive position at a semiconductor chip manufacturer to take over as the Italian firm moves towards electrification.
Mastering the basics of luxury, however, remains critical. Clients expect luxurious experiences and inspiring curations. A case in point: the Louis Vuitton and Nike expression of the Air Force 1 trainers by Virgil Abloh, offered in an exclusive collaboration with Sotheby’s. A total of 200 pairs were auctioned, entirely made in leather, and embellished with Louis Vuitton’s emblematic monogram and damier patterns with natural cowhide piping accompanied by a specially made Louis Vuitton pilot case. The auction results went well beyond expectations: the collection sold for $25 million. One pair alone, carrying an estimate of $5,000–15,000, fetched more than $350,000.
Attention to detail, creating desire through a unique story and perfecting the client experience are all more important than ever in the new era of luxury. The expression of luxury changes rapidly but, fundamentally, the definition of luxury remains the same – the ability to create extreme value.