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 NEW Luxury, the new luxury, about 10 to 15 years ago ushered in a revolution in the classic concept of luxury that had prevailed for decades, the next big change in the understanding of luxury, luxury needs and luxury business models is taking place. Trends such as sharing & 2nd life business models, co-creation & customization, digital detox & sustainability, health & mindfulness are changing luxury markets substantially - more than that: luxury is not just a follower, but a driver of change.
A third era of luxury: NEO Luxury 2025
The new era is characterized by cooperations that would have been unthinkable 10 years ago (Louis Vuitton with Supreme, Virgil Abloh, Off White etc.), new business models that established players increasingly take seriously after acting arrogant for a while (Philipp Man with Chronext) and customer needs that would have been opposite to luxurious standards just two decades ago (digital detox, sustainability, mindfulness as propagated and lived luxury needs).
The examples are varied 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. But how to understand, classify, structure and evaluate them? For this purpose, Inlux and Keylens carried out the top decision maker study "NEO Luxury 2025" and with 51 top decision makers illuminate and explain the future of the luxury industry.
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 recent decades - a result of the study that was definitely not expected to this extent. Moreover, even 79% of the top decision-makers agree with this 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 works out 4 clear top management implications that shouldn't be missing on any CEO's 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
For 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 management implications in four relevance / implementation clusters, ranging from using ethically correct materials to co-creation as well as innovative participation models (such as a millennial think tank) to 2nd life or sharing concepts and second brands for the NewGens. The possible measures cover the four areas: business model and brand, products and marketing, management and organization / HR / processes.
NEO Luxury is an eclectic phenomenon and summarizes 7 key luxury trends. There are 3 key drivers 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 for example include watch portals for used luxury watches.
- The digitalization of luxury, including the digital detox counter-trend (relevance: 71%), whereby digitalization ranges from digital products / services to e-commerce, digital marketing and digital added value in the customer journey, such as augmented reality solutions.
- An increasing customer need for individualization / customization, co-creation (relevance: 75%), whereby customization means the completely individualized production of luxury products and co-creation even more involves the involvement of the customer in product design, creation or communication.
- The mega topic of sustainability (relevance: 72%), whereby we understand this in terms of its ecological and social dimension 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 casualization and democratization of luxury as far as public luxury (relevance: 50%), which means that luxury is becoming more and more street luxury - part of normal life and accessible to more and more people (thus, contradicting the traditional understanding of luxury, because here, luxury does no longer mean limitation and scarcity).
- Lean Luxury models and deliberate avoidance / focus on consumption (relevance: 35%).
Top decision-makers broadly agree to the NEO Luxury Trends
As illustrated by the figures above, 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, which confirms their significance and strength for change, if not also the disruption of existing luxury business models. Altogether, with NEO Luxury 2025, a highly significant investigation result has been achieved in that the NEO Luxury development suggests interpretation and classification as an independent development stage of luxury.
Clearly more than half of the top decision-makers (59%) see the NEO Luxury as precisely this third evolutionary stage of luxury. Old Luxury (property and property luxury), New Luxury (experience luxury and democratization of luxury concepts) and NEO Luxury as sustainable and meaningful luxury will in future form the three distinguishable evolutionary levels of luxury and may be used as a new basic order for luxury management.
How? NEO Luxury 2025 demonstrates the "Journey to NEO Luxury Management". Four steps to locate, evaluate, 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
The Keylens / Inlux NEO Luxury study is designed as a top decision maker study. Sixteen personal and 16 online interviews with national and international owners, board members, managing directors of luxury brands and selected luxury experts form the core of the survey. Together with extensive 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, alongside established top decision-makers, young challengers were deliberately interviewed. In addition, there was a categorization according to 35 industry clusters.
Authors and study authors: Dr. Jörg Meurer, Keylens and Julia Riedmeier, Inlux