The Luxury Institute establishes humanity as a success factor in the luxury industry. Milton Pedraza, CEO, reveals what is important
Author: House of Eden
The Luxury Institute is considered the trusted partner for providing research, training and elite business solutions for top tier luxury brands. With a global network of executives and experts in the high-end segment, the Institute offers powerful solutions based on its emotional intelligence-based education system. It is all about knowledge, humanity and trustworthiness to establish lasting business as well as personal relationships.
Milton Pedraza, founder and CEO of the Luxury Institute, enriches as well as advances the luxury industry with his innovative, practical and humanistic insights. In our exclusive interview, he reveals how luxury will be defined in the future, which trends will revolutionize the industry and on which success factors high-profile premium brands should rely today.
Founder & CEO Luxury Institute Milton Pedraza
When it comes to trends, the luxury industry often positions itself as a pioneer
According to our global network of experts, health and wellness are the fastest growing segments in the luxury industry. The two areas are growing exponentially, particularly because of coronavirus and the associated consumer needs. With more mindfulness, the need for security through health as well as relaxation and well-being through wellness increases. In response to this social development, the luxury industry is leading the way with trends.
Luxury means satisfaction of needs
As a result, we see more and more concierge medicine. That means medicine beyond annual check-ups or urgent matters - treatments are carried out proactively instead of reactively. And since coronavirus causes a lot of stress, wellness is proactive medicine. The result: Beauty appointments are fully booked all across America. Triggered by the psychological and physical desire to relax and be touched. After all, a human touch can increase physical and mental well-being.
It is also assumed that Zoom and other online offers have accelerated the beauty and wellness trend. Due to the increased screen time, the feeling of having to invest in botox or expensive beauty care has intensified.
Data favors exclusive services
In addition to beauty trends, online providers like Zoom also lead to changes in our habits. We notice that effective communication is also possible in the home office. Face-to-face interaction is important - but not every day. An online-offline balance can, for example, avoid unnecessary commuting, which increases overall productivity. This is how new habits will remain in the online world after the pandemic, simply because they make sense.
Of course, there are also areas that will remain offline. We want to touch things, visit restaurants, taste creations and test drive cars. And we will as soon as a vaccine is launched. However, it's not offline or online. Both worlds are complementary.
Artificial intelligence will complement retail
While digital business models develop further because of artificial intelligence, the retail sector will not suffer. Rather, have added value. There are some tasks, such as math, that computers are just better at. For this, AI and algorithms can only learn from the available data. In service, however, you also need an emotional connection and human judgment.
If a customer is looking for a handbag, a computer can only suggest a model on the basis of the data history. What it can't see, is what the customer really wants, what personal circumstances and preferences exist - it can not take the general context into account. The dynamics of a healthy human brain cannot be imitated and therefore not replaced. And it is precisely this thinking that defines a luxurious product or service.
Innovation & adaptation are success factors in the luxury landscape of tomorrow
From a financial perspective, large, financially strong companies will emerge from the pandemic without major damage. In the long term, however, it is the innovative, agile and adaptive brands that use online offers as a supplement that have a prosperous future. It is the brands that respond to the needs of people - customers and employees. In a responsible, ethical, legal and innovative way. Humanity plays a big role in modern luxury.
Customers want to be treated special, to have a relationship with the representatives of a brand and to trust them - especially in the high-end segment. The ethical and legal handling of data is becoming more and more relevant, as value-adding, personalized products and services can be provided - keyword customization . In this way, data become resources in order to offer customers the best possible added value and can actually be the basis for an increased quality of life.
Consumers need to learn data control
For consumers, this means learning to control their own data. And for that, EDGE AI - at least in our eyes - is the greatest innovation of 2020. The technology makes it possible to remain anonymous while an algorithm makes forecasts and recommendations without actually transferring data.
The principle: The data is decentralized on your own device. In contrast to older technologies, it is no longer on a mass server or the server of a brand. Everyone controls their data themselves and allows brands to selectively access it in order to generate personal added value. The result: more insights into the use of data and payments by brands to private individuals. Brands will license or subscribe to data.
But what is data if we don't have a healthy planet?
Our life depends on environmental protection. That is why sustainability is an even more important issue for the luxury industry and the world in general. If we look at the e-mobility revolution, for example, it becomes clear that sustainability is not only "the right thing to do", but is also significantly driven by innovation. Sustainability happens because the innovation market is expanding the infrastructure for it.
The biggest challenge for companies is to understand that sustainability can actually cost less. Sustainability is not a synonym for high costs on the corporate and consumer side. Rather, fewer costs are possible. In terms of money and the environment. It's a synergy, not a compromise.
Luxury brands should position themselves as ambassadors for social responsibility
Since luxury goods are not a necessity, high-end brands have to demonstrate ethical and sustainable behavior. The products have to be durable and not harm the environment - after all, their existence is not legitimized by a purpose, but rather by aesthetics, status or joy.
So we see a paradigm shift: Instead of maximizing profit through an endless supply, the focus is on quality - a Chanel bag or a Patek Philippe can be passed on for generations. In addition, services from brands extend the life cycles of products. The provision of spare parts, Made2Order and personalization are such luxury business models in the name of sustainability.
Claims & values of the sophisticated and wealthy customers
In the future, the luxury segment will be more about exclusive services than material possessions. This is shown by the boom in wellness and technology. It is about personal, safe experiences that are within the scope of ethical and sustainable responsibility.
Brands must have a soul and, ideally, be socially committed. Hence my appeal: It is important to act in the moment, if there is an opportunity to help. And with this approach we also hope to bring about positive change in the luxury industry.
Thank you for the interview, Mr. Pedraza!