Where Consumers Shop for Luxury Goods: E-Commerce's Dominance and the Rise of Generative AI, Re-Sell and the Future of Third Space Retail
DUBLIN, March 22, 2024 /PRNewswire/ -- The "Where Consumers Shop for Luxury Goods" report has been added to ResearchAndMarkets.com's offering.
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The pandemic, cost-of-living crisis and high inflation continue to have an impact on affluent consumers, their wealth, and their shopping habits on luxury goods. Offline retail maintains its importance alongside e-commerce, as luxury consumers demand seamless integration of online and offline channels, leading to store renovations. E-commerce is projected to outperform offline channels, and generative AI as well as re-sell and "third space" retail holds promise for the future of luxury goods.
Key Findings
Macroeconomic Factors Continue To Weigh Heavily On Industry Recovery
The global luxury goods industry continued on its road to recovery in 2023 with 4% year-on-year growth, driven by Asia Pacific and the US. However, challenges persist as it moves into 2024 thanks to slower global growth and high inflation, teamed with ongoing energy pressures, rising cost of capital, tight labour market, geopolitical risks and a reset of globalisation.
Blurring The Boundaries: Seamlessly Fusing Online And Offline Shopping
While luxury consumers still expect the convenience of e-commerce, they also seek a high level of customer service and distinctive experiences that only brick-and-mortar stores are able to deliver. In this context, building an omnichannel presence has become paramount for luxury retailers, including digitally native direct-to-consumer (DTC) brands and retailers.
The Emergence Of Interactive And Tech-Driven Enhanced In-Store Experiences
Offline channels experienced a revival as luxury consumers embraced in-store shopping again. To cater to consumers' emerging expectations for in-store shopping, companies are prioritising store renovations and the incorporation of technology.
Leveraging Technology For Enhance Customer Experience, Streamlined Processes And Completeness
In 2023, e-commerce accounted for 18% of sales, just slightly up from the 17% in 2022 but significantly higher than the 10% recorded in 2018. Luxury retailers and brands are prioritising omnichannel strategies, delivering seamless online and offline experiences, and enhancing the online shopping journey through innovative techniques, such as personalisation and AI.
E-Commerce's Dominance And The Rise Of Generative AI, Re-Sell And The Future Of Third Space Retail
Challenges persist for the industry's growth in the five years to 2028, including high inflation, and the war in Ukraine. E-commerce is projected to outperform offline channels, diminishing the market share of physical stores. Generative AI holds promise for product innovation, as well as the re-sell model and "third space" retail as luxury looks towards future innovations.
The Where Consumers Shop for Luxury Goods global briefing offers an insight into the size and shape of the luxury goods industry, highlights buzz topics, emerging trends as well as pressing industry issues, their effects on luxury goods retailing in markets around the world and on the development of consumers' shopping patterns. Forecasts illustrate how the market is set to change and criteria for success. In short, it identifies the opportunity zones within luxury goods industry
Key Topics Covered:
Industry snapshot
-- Luxury market continues to show resilience amid a new economic reality
-- Luxury retailers grapple with persistent pressure on discretionary
spending
-- Performance across different categories continues to show mixed results
-- Navigating economic challenges as global regions strive to attain
pre-pandemic sales
-- Luxury retailers to benefit from boost in number of affluent consumers
in emerging markets
-- Recovery in travel retail remains in motion but macroeconomic factors
challenge growth
-- Travel spending on luxury remains low, but numbers creep closer to
pre-pandemic levels
-- Repatriated and tax-free shopping habits in mainland China may be hard
to break
-- While affluent Chinese are travelling again, they are staying much
closer to home
-- Anticipated surge in luxury travel retail amidst Chinese domestic
shopping resurgence
Channel shifts
-- Retailers to optimise diverse customer engagement by tapping into
multiple touchpoints
-- The unfolding journey of digital transformations across luxury retail
gathers further steam
-- Store-based retailing remains the largest distribution channel across
the luxury landscape
-- Digital transformation becomes a playground for luxury retail
development
-- Consumer pathway for mobile mavericks and digital natives thrives on the
smartphone
-- Gaming crosses over to the realms of luxury emerging as an alternative
distribution model
-- Retailer strategies are adapting to meet the needs of Gen Z consumers as
they come of age
-- Pre-owned luxury poised to gain more prominence within the realm of
luxury and fashion
-- Luxury brands and retailers move further into recommerce , diversifying
product categories
-- Case study: LVMH introduces Nona Source, the first online resale
platform for materials
Store-based channels
-- Luxury department stores retain their leading status despite major
challenges in key markets
-- Luxury brands benefit from their own monobranded stores and the D2C
channel
-- Leisure and personal goods specialists continued to thrive
-- Embracing the unique offerings that only physical shopping can provide
-- Luxury consumers will continue to crave the physical aspect of in-store
shopping
-- Shoppers yearn for the customer-centric and tactile experience of
brick-and-mortar stores
-- French luxury department store Galeries Lafayette expands into next
frontier markets
Non-store channels
-- Growth in e-commerce stabilises from pandemic highs with steady
expansion in all sectors
-- Continued acceleration of luxury e-commerce albeit at a slower pace of
growth
-- Increasing digitalisation r eshapes luxury shopping h abits a cross all
regions at varying speeds
-- Generative AI to shape online experiences ushering in next "Uber moment"
in luxury retail
-- The increasing prevalence of mobile internet usage has significantly
impacted luxury sales
-- Consumers increasingly favour businesses that offer a hassle-free
experience
-- Leveraging social media and s-commerce to cultivate Gen Z engagement in
fashion
-- More luxury consumers flock to TikTok and Douyin with China leading the
pack
-- Fresh wave of l ivestreaming and social commerce further drives luxury
digital sales
-- Luxury brands aim to capitalise on TikTok's popularity with viral video
content of their own
-- Luxury brands expand to livestreaming on social media to increase
exposure in China
-- Case study: Alibaba uses generative AI to optimise the Tmall shopping
experience
Non-retail channels
-- Inflationary pressures encourage consumer exploration in non-retail
channel
-- The "third space" and hyperphysical stores as the next luxury retail
channel?
Future developments
-- Outlook for luxury retail development faces continued pressure due to
economic uncertainty
-- Selling to the 1% of global VICs will become ever more challenging amid
a market slowdown
-- The TikTok economy looks set to become a significant part of the luxury
retailers' puzzle
-- Bridging e-commerce and offline retail to complement each other's
strengths in luxury goods
-- Luxury consumers will continue to want the best of both worlds
-- Omnichannel strategy paves the way for the future of retail and luxury
transformation
For more information about this report visit https://www.researchandmarkets.com/r/nj2x6
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