Women are an increasingly dominant economic force—and all sectors, luxury brands and male-dominated categories in particular, will have to adapt their tactics to reach the rising female audience. The Boston Consulting Group projects that women will control 75% of discretionary spending around the world by 2028. Nielsen estimates that by then, women will collectively out-earn men in the U.S. More immediately, BCG expects women’s global income to reach $18 trillion by 2018, up from $13 trillion in 2013. In developing nations, earned income among women has been growing at a rate of 8.1%, compared with 5.8% for men, according to Deloitte’s Gender Dividend report. In China, for instance, women’s average contribution to household income has more than doubled since 1980, reaching 50% in 2014.
Gucci has already launched the Chime for Change, a female empowerment platform, while Hermès recently hosted a fashion show dedicated to the power of women and Tory Burch has established a platform for female entrepreneurs.
As more women hit the affluent, high-net-worth and ultra-high-net-worth brackets, luxury brands that traditionally have catered to men will have to find new voices, products and approaches to speak to a growing category of sophisticated, affluent women.
The sharing economy is growing up, formalizing services and aligning with upscale brands and big business. Airbnb is expanding its brand beyond the digital world, launching a glossy coffee-table magazine, Pineapple, in 2014 and collaborating with the London Design Festival on an interiors exhibit. Airbnb has also partnered with Concur, a company specializing in business travel and expense management. Uber also has signed a partnership deal with Concur, making it easy for employers to pay for rides that employees take.
More businesses are embracing “lean startup” culture and are therefore taking affordable sharing economy platforms such as Uber more seriously. As Airbnb users top 10 million, the company is moving away from its couch-surfing roots and evolving into a credible hospitality service that consumers rich and poor, Millennial and Boomer, are embracing.
We may think that everyone and everything is online, if not mobile- optimized, but there’s one sector that definitely is not—the luxury sector. Net-a-Porter, MatchesFashion.com and Saks Fifth Avenue are successful online outlets, but 40% of luxury brands are still not on the web, according to Bain & Company. E-commerce has been described as “the next China” for the luxury industry as sales slow down—and has the potential to add about $43 billion in sales through 2020, forecasts Exane BNP Paribas analyst Luca Solca.
Strange to think, in a world where we can now purchase with a thumbprint, that luxury has not joined the digital revolution wholeheartedly. According to the Luxury Institute, luxury consumers are far from averse to mobile spending; 72% say there is no upper limit to what they’d spend on an app. While exclusivity certainly adds to luxury’s allure, are luxury brands missing a trick?
As the Chinese and Asian market for uber-luxury slows, analysts are pointing to another lucrative market in these regions: masstige. American contemporary brands are big in the U.S. but underexposed in China compared with brands such as Louis Vuitton and Gucci, and are poised for expansion, their popularity also driven by visas that allow Chinese citizens to shop in the U.S. Coach is recruiting Chinese-speaking staff for its American stores, to capitalize on this. Both Coach and Michael Kors are using Chinese social networking apps such as WeChat and expanding in China; Coach has reported an increase of 10% in comparable sales in China in some instances, while Kate Spade saw comparable sales from its China joint venture rise 28% in 2014.
American contemporary luxury brands are well-distributed in the U.S., but in markets like China they are still perceived as relatively exotic, in contrast to the blue-chip European brands, which have been present for years. Will European luxury brands need to rethink their strategy to capture this new mood?