A New Class of Consumers Is Changing the Luxury-Goods Market {A New Class of Consumers Is Changing the Luxury-Goods Market} – English

A New Class of Consumers Is Changing the Luxury-Goods Market {A New Class of Consumers Is Changing the Luxury-Goods Market} – English

For the world’s top luxury brands, business has been good in recent years. Increasingly, this growth is coming from a new crop of consumers.

Despite a slowdown in several major global markets, the outlook for luxury brands remains strong. The latest Global Powers of Luxury Goods, an annual report published by Deloitte, finds that the aggregated revenue of the top 100 luxury-goods companies topped $247 billion in FY 2017 (the latest data available). That reflects a nearly 11-percent growth in year-over-year sales.

Between 2015 and 2017, the growth rate in this market segment exceeded five percent—which likely would have been higher but was pulled down by a lackluster performance in 2016, which logged only a one-percent increase for the year.

According to the report, the minimum revenue threshold to enter the list of the world’s top 100 luxury-goods companies was $218 million, up $7 million from the previous year. The average company size on the list was $2.47 billion.

Once again, the ten largest companies accounted for the lion’s share of the total luxury-good sales (48.2 percent) and accounted for 14.2 percent of composite sales growth.

Breaking from historic trends, recent growth in the luxury markets is being driven more and more by younger, digitally-savvy consumers, the Deloitte report notes. Unlike older generations, these high-earners-not-rich-yet, or “HENRYs,” are seeking inclusive, personalized and self-expressive products and experiences. And it has brands scrambling to cater to a shifting consumer base.

“Companies are re-examining the value of brand heritage and brand history for their new customers and are adopting an omni-personal approach, focusing solely on the consumer, even prior to channel identification,” Deloitte’s analysis states.

“In this path between the old and the new, companies are faced with consumers’ increasing sensitivity towards privacy, but are trying to convert it into an opportunity to offer more personalized products and services to their customer base.”

This younger consumer demographic is moving luxury brands away from traditional marketing strategies, which emphasized legacy and company history, to instead prioritize lifestyle and personal touchpoints. Not surprisingly, the shift has directed companies to social media, greater online presences and peer-to-peer and experiential marketing.

“Long established luxury brands face a new reality,” Deloitte reports. “The reality is that ‘new’ luxury consumers only care about the brands that have created value for them in the last 24 hours.”

As more Gen-X and Millennial consumers move into the luxury space it’s likely these trends will accelerate further. That provides a real opportunity for shrewd brands to connect with new audiences—if they can navigate the change. It also provides a challenge for long-established brands to reinvent themselves to stay relevant.

Wherever brands find themselves in the equation, all signs point to a healthy luxury-goods markets rife for continued growth. But that may change over the long-term as younger consumers gravitate towards purchases that reflect their lifestyles and interests.

Blockchain Is Rapidly Disrupting Traditional Sales Models {Blockchain Is Rapidly Disrupting Traditional Sales Models} – English

Blockchain Is Rapidly Disrupting Traditional Sales Models {Blockchain Is Rapidly Disrupting Traditional Sales Models} – English

Once a relatively obscure technology, blockchain has quickly moved into the mainstream. Yet, for most consumers, it’s still ambiguous territory.

Originally designed as the foundations of Bitcoin, a digital currency, blockchain has quickly grown into a system to securely trace transactions of nearly every variety. Today, the technology is creating its own markets and disrupting business models, from food supply chains to renewable energy deployment.

“What the Internet did for communications, I think blockchain will do for trusted transactions,” Ginni Rometty, CEO of IMB, tweeted in 2017. Indeed, blockchain in its many different forms is reinventing how business is done, from consumer purchases to international trade.

Blockchain originated as the foundations of crypto-currencies like Bitcoin.

Nearly 70 percent of commercial banks are currently experimenting with blockchain technology—which could return as much as $12 billion in savings to financial institutions, according to experts. At least 14 countries are exploring the possibility of introducing official crypto-currencies. Last year, businesses spent $2.1 billion on blockchain solutions, and the market is expected to be worth $20 billion by 2024.

Yet for many consumers, blockchain remains something of an enigma. Fortunes have been quickly made and just as quickly lost in volatile crypto-currency markets, which are often conflated with blockchain, and, as a result, often the latter is considered with some skepticism.

So, what is this new technology, and what are the implications for everyday consumers?  

“Blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value,” write Don and Alex Tapscott, authors of Blockchain Revolution.

In simpler terms, blockchain provides an “immutable” ledger—or a record that cannot be changed—that captures and verifies transactions along a supply chain. There are few or no transaction costs due to the nature of the technology.

Data in the blockchain is managed by a collective system rather than a single entity, which provides transparency to authenticate information. Blocks of data are then secured and bound to each other, providing an accounting of each step of the transaction.

Blockchain provides a secure, “immutable” ledger of transactions.

Simple as that may sound, it has huge implications. Consider food supply, for example. As Forbes reported last year, 10 major food companies plan to introduce blockchain systems that will allow consumers to trace their food from farm to grocery aisle. The system may help companies to more effectively isolate contamination outbreaks and reduce transactions costs, which could mean big changes for an industry that operates on thin margins.

In many industries, blockchains are already being employed. From automobiles to real estate, blockchain technologies are helping to verify information, reduce processing time and cutting transaction costs. This year Louis Vuitton owner LVMH announced a blockchain project that promises to “set a new standard in the world of luxury.”

The system will help ensure the authenticity of products, which is a serious concern of customers. Eighty-three percent of consumers reported concerns that a brand-name product may be counterfeit, according to a recent study. In China, on of the biggest luxury-goods markets, 95 percent of respondents expressed those concerns.

The World Economic Forum forecasts that 10 percent of global GDP will be stored on blockchain by the end of 2025. Even the U.S. Treasury has signaled that the technology needs to be recognized, which will require additional oversight and testing.

Today, new blockchain initiatives are launched daily. And it’s not just tech specialists working in dark rooms—it’s major governments, multi-national businesses and organizations and even everyday individuals.

Like any emerging technology, questions continue to arise nearly as fast as the systems evolve. How should blockchain be regulation. What are its susceptibilities? What is the impact on personal privacy? Those often are not easily answered, nor is evidence always readily apparent. What’s certain is that blockchain technology is rapidly changing the traditional transaction paradigm, and it doesn’t show any signs of slowing down.