Insights

“Tech advancements are influencing luxury strategy, investment and marketing, while L + Tech startups are spurring innovation and leveraging the replatforming of the broader luxury market.”

John F Lambros, President of GCA US and Managing Director

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Sector Snapshot: Luxury Technology

Contact: John F Lambros

Our latest sector snapshot highlights how technology is impacting the luxury market, and what trends and opportunities these changes present

With $1.3 Trillion in annual worldwide sales, luxury is one of the biggest and most diverse global market opportunities. Leading luxury houses have pursued aggressive M&A plans to build global scale and are transacting at a pace and size that continues to accelerate.

Technology – from CRM to data targeting to social media – offers an enormous, yet vastly untapped, opportunity for luxury. There is huge potential for newer luxury brands to attract customers and take share away from the incumbents at a fraction of the cost to brand, build and grow globally.

TRENDS FOR THE FUTURE OF L + TECH

  • Technology breaking down barriers
    • By 2025, online purchases will contribute to 25% of total luxury market value and nearly all luxury purchases will be influenced by online interactions
    • E-commerce will enhance distribution and introduce even more transparency into the luxury goods market
    • CRM, social media and associated tools will fuel future sales growth by enhancing engagement with core customers and driving repeat purchases
  • Younger consumers seeking connectivity with brands
    • Millennials and Generation Z will represent 55% of the overall buyers of luxury goods by 2025
    • Younger audiences expect more engagement with brands
    • For Millennials and Generation Z, brand sensibility and “values alignment” are more important than “in association with” brand imaging
  • Digital story is everything
    • Digital penetration will foster store network consolidation and lead to radical changes in physical stores’ roles
    • Physical stores will serve as experiential marketing vehicles to drive connectivity and sales
    • Executives viewed consumer shifts enabled by technology as one of the most important trends in 2018 and beyond
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