milan — What if ChatGPT could help Dior personalize the shopping experience for young Saudi consumers who, for example, travel to Paris and visit the brand’s megastore on Avenue Montaigne for the first time?
That’s all too likely, according to the 9th installment of Altagamma Consumer and Retail Insights, released Wednesday in partnership with The Boston Consulting Group (BCG) and Bernstein.
The former estimates that there are a total of 370 million luxury consumers worldwide, of whom 20 million are very favorable VICs, or very important customers. Overall, 40 percent of luxury consumers said he expects to spend more on luxury goods this year compared to 2022, with net spending willingness to nearly double the average allotment in China. It is stated that
BCG’s research assesses nearly 12,000 luxury consumers across 11 regions who spend an average of €39,000 annually on personal luxury goods, highlighting the drivers shaping the sector, with luxury brands It provides insight into how you can acquire top-notch customers.
The consultancy forecasts an 8% increase in sales for the sector in 2023, and that percentage could increase by 11-13% if China fully recovers in its domestic and global markets. The domestic market now accounts for 82% of China’s luxury goods consumption, compared with 45% before the pandemic.
Luxury brands look to China for a recovery, defined by a thriving digital ecosystem and the emergence of tier 2 and 3 cities, but China has a relatively obscure potential. The Middle East is followed by a clear market winner.
The region is not only dependent on the United Arab Emirates, which has long been a luxury hub, but given the growth of Saudi Arabia’s luxury market, which BCG predicts will contribute €6 billion to local luxury goods. , is being shaped as a resilience and driving force. Worldwide, by 2030, he is expected to generate €12 billion in product sales.
“local [luxury] Filippo Bianchi, Managing Director and Senior Partner, Boston Consulting Group, said: “Consumer tastes will be heavily influenced by whether luxury brands exist where they don’t exist yet,” he said, noting the number of retail developments fueling real estate in the country. In Riyadh alone, three major developers are pouring €1 trillion into building 5.3 million square feet of luxury retail space.
Saudi consumers are young and highly digital, and are now shopping in major fashion and luxury hubs around the world, which is likely to help strengthen the VIC segment, according to the study.
The latter are growing fast, faster than the market and wanting a unique experience. The key is to enhance and customize your customer’s journey and beat the incredible competition.
Luxury powerhouses such as Louis Vuitton, Hermès and Dior are selling to Dior’s Avenue Montaigne division and Tiffany & Co. The relatively recent concept of “landmark flagship stores” such as , is said to intensify retail competition. Renewal of the 5th Avenue Door.
“They’re not just monuments, they’re money trees,” he said, adding that they best interpret Belstein’s formula for modern luxury retail called “Summit Up.” , Instagram-ready, memorable, time-stopping, universal, landmark-level, and profitable.
For the latter, he emphasized that retail space productivity, or profitability, is paramount in a well-executed retail expansion strategy.
“These are multi-layered [units] There is room for everyone, down to consumers who spend €50 or €500,000 per visit,” he said. “One of his biggest goals is to be among the top 10 must-see tourist attractions in each city.For many tourists visiting Paris from outside Europe, his Dior store is one of his top attractions. is one.”
Luxury brands may play in a league of their own, as smaller brands have little or no equivalent financial strength or market penetration.
Solca said smaller businesses should focus on smaller, but better-run stores. “It’s like David going up against Goliath. They need to do things differently,” he said, referring to several stores, including a pop-up store that serves as a laundry for eyeglass shop Gentle Monster in Daegu, South Korea. I gave an example.
The battlefield becomes more complex when it comes to omnichannel and online experiences. Highlights of the BCG research tracked nearly 2,600 customer journeys and found that the majority of consumers were unhappy with the integration of e-commerce and brick-and-mortar stores.
While luxury brands far outperform mass retailers in terms of customer satisfaction in physical stores, the former actually underperform online. According to BCG’s Bianchi, this is due to functional factors such as fit and size transparency, product specificity, reliability of the purchasing process and delivery times.
“We believe the issue here is deeply rooted in the operating model. Companies measure the performance of each channel. [individually]But no single channel exists in the minds of consumers. Customers perceive their journey regardless of touchpoint,” said Bianchi. “We measure value [online] Strategy based on conversion rate [luxury] Websites overshadow the opportunity for consumers to have a better experience in stores. ”
BCG sees two strategies going forward. It embraces a niche market to meet its needs, and depending on the customer’s preferences, either leverages its priority journey or makes a huge investment in that aspect, making every consumer his journey. either “more aggressively” customizing and working on it. Generative AI has little help.
Gia Rich, Managing Director and Partner of The Boston Consulting Group, shared how the Boston Consulting Group is helping brands define a customized journey for all of the estimated 370 million luxury consumers. In this way, the reach of the “VIC Treatment” can be extended to 90% of luxury consumers. Now premium he is not part of the level.
Attending a short panel discussion that concluded the research presentation, Etro CEO Fabrizio Cardinari summarized his current views on the evolution of the luxury consumer.
“They want to have the Via Montenapoleone experience in Esselunga with the same execution speed, the same ease of use, and the same selection that you see on Netflix that you experience on Amazon.” [supermarket chain],” He said.
