The NOwnership Experience

According to BCG-Altagamma’s 2020 Luxury First Look, by 2025, 50% of luxury personal goods market 50% is expected to be made by Millennial consumption, Gen Z expected to triple growing double digit p.a and Millennials expected to double.

As each generation comes of age, they change the world. Millennials and the Gen Z, who are now (or will be in a few years) at the peak of their spending power are prompting a paradigm shift. They are moving away from the concept of ownership and tilting towards (and very much propelling) the circular economy. There are a myriad of reasons for this transformation.

A. The Economic Crisis and Fluctuations

Most of this new generation is trying to stay afloat in an economy that is rapidly deteriorating. The scarcity of jobs and the rising inflation lead to less availability of spending money. They have to make choices after thorough deliberation - optimising the purchases of what they want to use.

India’s GDP was crawling at a snail’s pace even before Corona struck. In the aftermath of Covid-19, Fitch slashed India’s GDP growth rate projections for 2020-21 to 0.8 per cent (April 2020).

“The world GDP is now expected to fall by 3.9 per cent in 2020, a recession of unprecedented depth in the post-war period.”

~ Brian Coulton, Chief economist at Fitch

B. The Parent Precedent

For the global economy, the crash of 2008 was disastrous. Many people lost their jobs, businesses and even their entire life’s savings trying to stay adrift. Most millennials have seen the stress and hardships their parents went through trying to save things they “owned.”

Taking mortgage out for buying homes, they have seen their parents live in dread of monthly EMIs. The sharing economy model offers a superior standard of living - the advent of companies such as AirBnB and Uber are a testament to that. Reduced waste, genuine experiences and comfort-driven conveniences are benefits valued deeply.

With the entire target group for luxury markets looking for sustainable ways to improve their lifestyle, luxury brands have to shift their traditional strategies to remain relevant for this generation.

C. In the Pursuit of Experiences

Millennials and Gen Z value experiences over the actual buying of things. In the hierarchy of needs, purchases don’t rank very high. The way luxury brands can involve their customers is through genuine story-telling that presents a worthwhile experience.

“...this generation not only highly values experiences, but they are increasingly spending time and money on them: from concerts and social events to athletic pursuits, to cultural experiences and events of all kinds. For this group, happiness isn’t as focused on possessions or career status. Living a meaningful, happy life is about creating, sharing and capturing memories earned through experiences that span the spectrum of life’s opportunities.”

~ A study conducted by Harris, sponsored by Eventbrite

The nownership experience is derived out of all these three elements. It champions the fusion of conventional reasons to invest in luxury with the contemporary demands of the modern consumer. Luxury brands are evolving and growing with the unique approach of ownership of a commodity for now. How are they achieving this?

1.  Luxury re-commerce

The point of luxury is to indulge. It is a status-symbol that infuses in the client the same values that the brand she carries, holds. The second-hand market for luxury has always existed but has been perceived in a negative light. Now, it is dominating the luxury market with predictions that it will grow from an estimated $25 billion in revenues in 2018 to around $36 billion in 2021, according to the 2019 BCG-Altagamma True-Luxury Global Consumer Insight study. However, the  Corona pandemic might impact it differently.

Luxury brands are embracing this new opportunity as the secondhand luxury market grows in popularity. With celebrities like Kardashians (Kardashian Klosets) promoting the resale of luxury belongings, the model is gaining momentum with each passing day.

Vivrelle is a luxurious fashion website built around the concept of “nownership.” Becoming a “Member of the Club” allows women to choose from hundreds of luxury fashion accessories that they could experience as long as they liked or swap it out on a monthly basis. These luxury accessories which would have costed thousands of dollars are made available through membership plans starting from $99.

This model promotes convenience, cost-effectiveness, sustainability and environmental preservation and offers a ton of choices without being tied down to one particular luxury investment.

Read our Reselling luxury an oxymoron or an opportunity that explores luxury re-commerce in depth.

2. The transition to Digital

Digitalisation, earlier being resisted by luxury brands because of the compromise on exclusivity, are now being adopted with vigour. The luxury industry is migrating to digital platforms for an increased reach and positive engagement with their clientele. It offers a convenient and favourable environment for shopping while reaching the modern shopper where he spends his time the most - on the internet. It has led to a rapid Digital Transformation of Luxury (The digital transformation of luxury fashion shopping in India)

According to BCG-Altagamma’s 2020 Luxury First Look, between 2018-2025, 90 % out of the True Luxury growth will come from new consumers. These new consumers aspire to become a holder of luxury items. One of the major ways to inspire the ambition of these future-customers is through social media - a platform that encourages the exchange of and builds ideas and thoughts. It allows for expression and discussion driving desires, beliefs and convictions. While discussing social media, it is a must to mention the role of social media influencers in luxury business - the thought leaders of today. Vivrelle has a separate collection “Influencer’s Closets”

Chanel’s “Inside Chanel” story-telling has enraptured not just the current clientele but even the potential customers. It has succeeded in engaging even those who may probably not become investors in the House of Chanel.

3. A Holistic Adventure

The evolution of luxury (enter link of Evolution of Luxury from our website) is a result of the maturing consumer of luxury brands. With an added emphasis on the meaningful experience that their clientele wishes for, brands aim at uniting their ideology and philosophy to deliver a holistic adventure. Luxury labels are increasingly tapping into sensory branding to resonate with their customers. Oxford conducted a study on sensory sciences about how sound influences the taste of food. Based on the findings of this study, British Airways launched a list of 13 in-flight tracks to enhance the taste of the meals served during the flight. Moët & Chandon’s champagne bar in Macau mirrored the experience of enjoying of a bottle of bubbly by using Interactive projections of bubbles on the walls, imbuing the scent of champagne in the lounge and crafting a luxury bar by covering it in 18-carat gold foil. The omni-channel communication and integration of the virtual and the real is also a result of an endeavour to provide a seamless experience.

According to a Harris study, more than three in four millennials (78%) would choose to spend money on an experience or event over buying something desirable. Sixty-nine percent of respondents said they believe attending live experiences helps them connect better with their friends, their community and people around the world. Eighty-three percent of respondents said they participated in a “live event” in the past year and 72% said they’d like to improve their expenditures on experiences in the coming years.

The Last Act

The idea of Nownership is derived out of the incredible blend of the material and the intangible. It stems from “nowness” - the quality or state of existing or belonging to the present time. As customers search for a personal transformation in every transaction they make, the emphasis on the spiritual is rising. The possession of a luxury item reflects upon the character of the customer granting a status symbol and prestige within the society. However, now, it is the individuality of the patron that resonates through luxury emblems.