What Defines a Luxury Product Today? | Transforming Luxury

In 2021, in a special six-part series, BoF spoke to 22 pioneering thinkers from the worlds of business, technology and luxury, creative leaders and renowned ecologists, to investigate the forces driving transformative change in the $300 billion luxury goods market.  In this episode, Transforming Luxury’s host Robin Mellery-Pratt shares the most actionable insights for the industry from the series, discussing its three salient themes: market disruption, shifting consumer sentiments and technological innovation — with BoF Content Strategist Alice Gividen.

Over the Transforming Luxury podcast series, as we discussed market dynamics, product strategies, customer experiences, emerging technologies, new retail channels and our imminent entry into the metaverse, the pressing need and increasing demand for systemic change to create a more sustainable industry was a consistent theme. In this final episode of Transforming Luxury, a special six-episode series presented by Klarna, we confront the distinct uncertainty and disruption facing the luxury industry and us all, as a result of the climate crisis. In 2020, BoF reported that the fashion industry’s greenhouse gas emissions range from an estimated 4 percent to 10 percent of the global total. Without significant intervention, the industry will not align with global goals to limit global warming to no more than 1.5 degrees Celsius. Failure to do so is predicted to have catastrophic consequences for civilisation, outlined in the UN’s IPCC report 2021. However, if bold enough leadership is willing to reimagine how the industry operates, equipped with the deep pockets of market leaders and further enforcing the existing, rigorous quality controls already in place, luxury would be " uniquely positioned to transform itself,” as stated by SVP of supply chain innovation at the Savory Institute, Megan Meiklejohn. To hear more about the role sustainability must play throughout the luxury goods industry, BoF gathered four global authorities to discuss how luxury can become more responsible with host Robin Mellery-Pratt. Follow the series to ensure you never miss an episode and discover actionable insights into the opportunities and challenges a redefined industry will bring and how luxury’s transformation will impact your business. Sign up for BoF’s Daily Digest newsletter. For comments, questions, or speaker ideas, please e-mail: [email protected]. For all sponsorship enquiries, it’s: [email protected].

The metaverse — a term originally coined by the author Neal Stephenson in his sci-fi novel ‘Snow Crash’ — is now widely used to describe how our physical realities will be augmented and overlaid by ambient and accessible digital experiences and services. Luxury’s entrance into the metaverse was expedited by many brands’ leverage of new technologies to speak to consumers when lockdowns removed physical interactions in bricks-and-mortar stores and in-person events. But the impact of virtual and augmented reality on consumer behaviour preceded 2020: Forbes reported in 2019 that 40 percent of consumers were willing to spend more on a product they can experience through augmented reality technology first. From stores that guide you from the street to luxury items designed exclusively for the smart glasses that every major tech platform is working on, the future of luxury is already here — it’s just not evenly distributed.To discover what impact the metaverse will have on the future of the luxury goods industry, BoF spoke with four global experts to share their insights with host Robin Mellery-Pratt. Expert Commentators: Ommy Akhe is one of the breakout stars of this first generation of AR. The creative technologist specialises in augmented reality, making experiential software and AR prototypes through tools such as Facebook’s Spark AR software.. Previously working as an ethical hacker in information security, the London-based developer has now created dozens of filters for platforms such as Instagram Stories and Facebook. “In the digital space, there’s obviously a high profit margin because digital products are infinitely scalable. You write one programme or you have one object, and obviously this can be duplicated, whether it be a million times or one time.” Sergey Arkhangelskiy is the founder and CEO of Wanna AR solutions, having previously worked as a lead engineer in Google’s search ranking team. Wanna has collaborated with the likes of Gucci, providing the technology behind their virtual try-ons and the creation of the brand’s first virtual sneakers. “Digital fashion is for younger people, for Gen-Z, for millennials, for the people who are mobile, native or digital age [...] These people are critically important for those brands — this is the new generation of consumers, they’re becoming the purchasing power.” Alissa Aulbekova and Paula Sello are co-founders and creative directors behind Auroboros, the first digital collection shown in London Fashion Week’s DiscoveryLAB. Auroboros is also part of the Sarabande Foundation. Aulbekovas previously worked at Dazed magazine as a fashion stylist, while Sello held previous roles as an archive assistant at Chanel and at Vogue as a fashion stylist. “Since coming from this gaming generation, we’re really understood drop culture and how these games are becoming so hyperreal. It’s more a gamified experience [...] it’s all blurring lines between digital fashion and what you wear on your social media.” Follow the series to ensure you never miss an episode and discover actionable insights into the opportunities and challenges a redefined industry will bring and how luxury’s transformation will impact your business. Sign up for BoF’s Daily Digest newsletter. For comments, questions, or speaker ideas, please e-mail: [email protected]. For all sponsorship enquiries, it’s: [email protected].

Today, the channels that consumers can now use to connect with brands to elicit a range of interactions have multiplied, dramatically. With major new platforms emerging all over the world, the retail networks utilised by luxury brands are evolving at an unprecedented pace to include a huge number of customer touch points — each a distinct opportunity for growth but requiring an idiosyncratic strategy for success. Due to mobile-commerce and social-commerce, when, how and why a consumer transacts with a brand has been reimagined entirely. The linear paths to purchase with which we are so familiar are being replaced by new conduits that combine digital content with customer-centric retail strategies to make transacting as engaging, enjoyable and instantaneous as possible. There is one region responsible for the lion’s share of retail innovation: China. The engine of the luxury industry’s growth for decades is now the epicentre of the most significant retail innovation in the market. From buy now, to swipe up, unboxing to bounce houses, KOLs, KOCs, shoppable video, live streaming, digital clienteling, resale sites, marketplaces, macro and micro influencers — luxury’s retail channels have been reimagined at scale. Now, that innovation is beginning to shape global retail strategy. Follow the series to ensure you never miss an episode and discover actionable insights into the opportunities and challenges a redefined industry will bring and how luxury’s transformation will impact your business. Sign up for BoF’s Daily Digest newsletter. For comments, questions, or speaker ideas, please e-mail: [email protected]. For all sponsorship enquiries, it’s: [email protected].

In recent decades, the race to attract and retain customers saw dizzying amounts of money spent on clienteling — the industry term for building a 1 on 1 relationship with customers. Today, for major players of scale with the resources to invest in it, successfully digitising personalised in store service, which generates much high conversion rates through recommendations and experience, is being looked to as a key driver of future competitive advantage. Indeed, the luxury service revolution is now rooted in creating a single customer view, enabling businesses to guide an individual consumer to the products and services it offers that match their specific needs. An opportunity that stems from significant shifts in generational attitudes towards data sharing and its use. To discover what this means for the future of the luxury goods industry, BoF spoke with three global authorities to share their insights. Sebastian Siemiatkowski is the CEO and co-founder of Klarna. In 15 years, Siemiatkowski has grown Klarna into one of Europe’s largest financial institutions, which provides alternative payment services to over 90 million shoppers, partnering with over 250,000 retailers globally and its own direct-to-consumer shopping app. “The whole purpose of digitalisation is utilising data to create value. It’s the information that allows us to create richer experiences. If you sit down and have a [...] conversation with a consumer and you say, ‘yes, you are in control of what data is being shared and you have full transparency, and if you then would be willing to share some specific aspects of your data in order to get a better experience, a better price, a better whatever it might be,’ then the answer is always going to be yes.” Holli Rogers is chair of renowned concept store Browns and chief brand officer of its parent company, Farfetch. Rogers quadrupled Browns’ business while CEO between 2015 and 2021. Previously, Rogers held roles at Chanel and Neiman Marcus before joining Net-a-Porter as a founding member in 2002. “In the past as everything has been separate and disparate in terms of the different technologies. When you speak to different businesses everyone talks about, ‘yeah, I’ve got a client telling app. We use WhatsApp.’ But actually if you break it down, none of them are connected one to the other. So you don’t get a single customer view. It’s this idea of how do you pull all of these pieces together in one space, collecting all of these hundreds of data points that allow you to give the customer what they want when they want.” Melissa Morris is the founder and designer of Métier, an independent leather maison best known for its logo-free handbags, travel bags and accessories. Prior to launching Métier in 2017, Morris studied sculpture and business at Emory University before working for Armani, Helmut Lang and Belstaff. “The bespoke aspect of our business is such a great way for us to deepen our relationships with our clients and also get a really clear understanding of what’s missing in the assortment and gives me a clear direction on what to make next. What I’ve found is when I’ve gotten one bespoke request, what’s good for one is good for everyone. So a lot of our bespoke requests that I’ve been brought into the line have turned out to be big successes.” Follow the series to ensure you never miss an episode and discover actionable insights into the opportunities and challenges a redefined industry will bring and how luxury’s transformation will impact your business. Sign up for BoF’s Daily Digest newsletter. For comments, questions, or speaker ideas, please e-mail: [email protected]. For all sponsorship enquiries, it’s: [email protected].

In Episode 2 of Transforming Luxury, BoF’s new podcast presented by Klarna, we investigate what will inform the luxury product mix of the future. Indeed, the definition of a luxury good has expanded dramatically in recent years to now include a host of disruptive new categories, from the luxury sneakerhead culture that dominated the past decade, to collectibles, curios, NFTs and even some mass produced products capturing attention in the luxury market. Evolving consumer sentiment is also increasingly influencing luxury’s manufacturing process. Today, customers demand brands and businesses authentically represent global cultures in a way that serves the communities themselves and not the industry’s shareholders. They also hold brands accountable for the impact of their supply chains and production processes. Yet, workers’ rights was among the worst-performing categories in BoF’s Sustainability Index. Follow the series to ensure you never miss an episode and discover actionable insights into the opportunities and challenges a redefined industry will bring and how luxury’s transformation will impact your business. Sign up for BoF’s Daily Digest newsletter. For comments, questions, or speaker ideas, please e-mail: [email protected]. For all sponsorship enquiries, it’s: [email protected].

Critic Robin Givhan, analyst Luca Solca, author Dana Thomas and Métier founder Melissa Morris discuss how luxury became a winners-take-all market and how growing consumer scrutiny is driving change. BoF is investigating how market disruption, new technology and increasing consumer scrutiny are driving transformative change in the $300 billion luxury goods market, in an exclusive new podcast series presented by Klarna. As the extraordinary events of 2020 — from the global pandemic, lockdowns and economic downturns to the accelerating climate crisis and social justice movements — impacted the luxury industry, scale-driven advantages widened the performance gap between the industry’s super winners and the rest of the market. In 2020, BoF reported that 75 percent of companies did not generate enough economic profit to cover the cost of their capital. Yet, the leading mega brands and conglomerates reported record sales. However, a growing dissonance is emerging between luxury’s traditional values of scarcity and exclusivity, and the emergence of a more inclusive, egalitarian and sustainable global consumer culture, making the luxury industry vulnerable to shifting consumer sentiment. Today, businesses must respond to growing consumer scrutiny around the sociological and ecological impact of how they operate and what they produce. Follow the series to ensure you never miss an episode and discover actionable insights into the opportunities and challenges a redefined industry will bring and how luxury’s transformation will impact your business. Sign up for BoF’s Daily Digest newsletter. For comments, questions, or speaker ideas, please e-mail: [email protected]. For all sponsorship enquiries, it’s: [email protected].

BoF speaks to 22 pioneering thinkers from the worlds of business, technology and luxury, creative leaders and renowned ecologists, to investigate the forces driving transformative change in the $300 billion luxury goods market over a special six-part series, presented in partnership with Klarna. The series explores the future of the luxury industry, from what really drives success today to the changing definition of luxury products and the evolution of luxury customer service and shopping channels, as well as the next generation of technological innovations and the pressing need for systemic change to create a more sustainable industry.  The Transforming Luxury Podcast launches on 13th September. Subscribe now to never miss an episode. Sign up for BoF’s Daily Digest newsletter. For comments, questions, or speaker ideas, please e-mail: [email protected]. For all sponsorship enquiries, it’s: [email protected].