Luxury brands should plan to focus on digital goods and virtual experiences to increase growth and reach a wider audience, according to data from Bain & Company.
In 2022, the luxury goods market grew by 20%, says Bain’s recent study. And despite a potential recession, experts say the market could be immune to incoming economic strife. This is due to a couple of factors, Marie Driscoll, Managing Director of Luxury and Retail at Coresight Research, tells Retail Touchpoints. Higher-income consumers usually purchase luxury goods, and those consumers are less likely to be impacted by economic shifts. Additionally, data from BCG's Luxury Outlook 2022 study found that 65% of luxury goods consumers believe that the industry is lagging when it comes to digital offerings — namely, digital goods and virtual experiences.
One of the key benefits of digital goods and virtual experiences is the ability to provide customers with a personalized, seamless, and convenient shopping experience. Digital goods, including e-books, virtual tours, digital collectibles, and virtual styling sessions, allow customers to access a brand's offerings from the comfort of their own homes. Likewise, virtual experiences, such as virtual fashion shows, loyalty programs, and virtual store tours, allow brands to showcase their products engagingly and interactively from anywhere a consumer desires.
In addition to providing a new kind of customer experience, digital goods and virtual experiences also benefit luxury brands by catering to younger consumers. Bain expects Generation Z and Generation Alpha’s purchasing power in the luxury goods industry to grow three times faster than any previous generation. Tech-based offerings will also reduce costs associated with physical retail operations and enhance sustainability efforts, which younger consumers value in companies they patronize.
Digital goods and virtual experiences also allow brands to collect valuable data on customer behavior and preferences, which can be used to improve their offerings and better understand their target market.