The study of the Luxury Business Report shows how luxury and sustainability go together in the future
Source: LBR Luxury Business Report, NEO Luxury Study
Luxury is on the move. After this NEW Luxury,the new luxury around 10 to 15 years ago was an upheaval from the classic that had prevailed for decades Luxury termhad heralded, the next big change is currently taking place in the understanding of luxury, luxury needs and luxury business models. Trends such as sharing & 2nd life-Change business models, co-creation & customization, digital detox & sustainability, health & mindfulness Luxury marketsjust substantial - even more: in some cases luxury is not just a consequence, but a driver of change.
A third era of luxury: NEO Luxury 2025
Ob Cooperationsthat would have been unthinkable 10 years ago (Louis Vuitton with Supreme, Virgil Ablohand Off White etc.), new business models that the established players take arrogantly at first, then increasingly seriously (Philipp Man with Chronext) or customer needs that two decades ago would have suited luxury like fire to water (digital detox, Sustainability, mindfulness as propagated and lived luxury needs).
The examples are manifold and make it unmistakably clear that at least in the luxury markets of the western hemisphere, profound changes are underway. Luxury brands, luxury customers, understanding of luxury - everything is in dynamic motion. Just how to understand, classify, structure, (evaluate) these? To this end, Inlux and Keylens carried out the top decision-maker study “NEO Luxury 2025” and examined the future of the luxury industry with 51 top decision-makers.
With a need for action that cannot be surpassed in terms of clarity! When asked about the scope of the change, 65% and thus almost two thirds currently see the greatest change in the understanding of luxury, luxury markets and luxury management in the last few decades, a result of the study that is definitely not to be expected with such broad approval.
And 79% of the top decision-makers agree with the thesis "Established luxury companies are required to rethink, adapt or even radically develop their existing business models". Explicit rejection: only 2%! The consequence for current business models is therefore a fact. As an absolute core result, the study identifies 4 clear top management implications that should not be missing on any CEO agenda:
Top management implications
- Expand digital competence
- Make customer centricity the strategic core issue
- Change management as a multi-national and multi-generation team / character
- Change current business model
With these 4 measures, the top decision-makers see the highest relevance (up to 88%) and at the same time the largest implementation gap (up to 26%). In addition to these top measures, NEO Luxury 2025 describes 14 further management implications in four relevance / implementation clusters, ranging from the use of ethically correct materials to co-creation and innovative participation models (such as a Millennial ThinkTank) to 2nd life and Sharing concepts and secondary brands are sufficient for the NewGens.
The possible measures cover the four areas in terms of content: business model and brand, products and marketing, management and organization / HR / processes. NEO Luxury is an eclectic phenomenon and sums up 7 central luxury trends. There are 3 central driving forces behind NEO Luxury: a sense momentum, an innovation momentum and a dispersion (= broadening) momentum.
The NEO Luxury Trends
Source: LBR Luxury Business Report, NEO Luxury Study
- Sharing and 2nd life business models (Relevance: 58%), whereby sharing means the temporary loan of luxury products and 2nd-life business models, e.g. a watch portal for used luxury watches.
- One key challenge is Digitization of luxury including the digital detox counter-trend (Relevance: 71%), with digitization ranging from digital products / services to e-commerce, digital marketing and digital added value in the customer journey, such as augmented reality solutions.
- An advancing customer need forIndividualization / customization, co-creation (Relevance: 75%), whereby customization means the completely individualized production of luxury products and co-creation means the involvement of the customer in the product design or creation or communication.
- The mega topicsustainability (Relevance: 72%), whereby we understand this in its ecological and social dimensions, both internally and externally.
- The Health and Mindfulness Trend (Relevance: 70%), whereby it is not only about physical health, but the unity of body, soul and spirit.
- The increasing Luxury casualization / democratization up to public luxury (Relevance: 50%), which means that luxury is increasingly also becoming street luxury - part of normal life and accessible to more and more people (and thus contradicts the traditional understanding of luxury, because here luxury no longer consistently means restriction and scarcity).
- Mmodels of Lean luxury and conscious renunciation / focus on consumption (Relevance: 35%)
Top decision-makers broadly agree to the NEO Luxury Trends
As the figures above make clear, the study shows that the top decision-makers generally agree with the NEO Luxury Trends: On average, 62% see a (very) high relevance of the trends, what their significance and strength for the change, if not disruption of existing luxury business models even confirmed. Altogether, with NEO Luxury 2025, a highly significant investigation result has been achieved in that the NEO Luxury development suggests the interpretation and classification as an independent development stage of luxury.
Well over half of the top decision-makers (59%) see exactly this third evolutionary stage of luxury in NEO Luxury. Old Luxury (object and property luxury), New Luxury (experience luxury and democratization of luxury concepts) and NEO Luxury as sustainability and sensual luxury will form THE three distinguishable evolutionary stages of luxury in the future and can be used as a new basic order for luxury management. How? In addition, NEO Luxury 2025 shows the "Journey to NEO Luxury Management". Four steps to locate, assess, prioritize and implement the results of the study in your own company.
The 4 steps to a NEO Luxury company
- Determine and prioritize the need for action using a heat map
- Develop NEO Luxury target image - the why, how, what
- Create NEO work culture - using Change Flexagon
- Develop and implement concepts with agile project management
One key challenge is Keylens / Inlux NEO LuxuryThe study is designed as a top decision-maker study. 16 personal and 35 online interviews with national and international owners, board members, managers of luxury brands and selected luxury experts form the core of the survey. Together with comprehensive international research on the latest developments in the luxury markets.
Both classic business models and start-ups were taken into account in the interviews. Similarly, in addition to established top decision-makers, young challengers were deliberately surveyed. In addition, there was a categorization according to 8 industry clusters.
Authors and authors of the study: Dr. Jörg Meurer, Keylens and Julia Riedmeier Neo Luxury Expert