Modern luxury is being redefined. No longer strictly for the elite, luxury brands and exclusive couture labels are now assessable to another echelon of consumer.
“Millennials spend $200 billion annually.”, FastCompany reported earlier this year. But this major demographic is not spending their hard earned cash in the traditional format. This transitional change is not only about spending, but of the entire concept of buying with reselling and percentage of return calculated into the purchase. Retailers, both digital and bricks and mortar are taking note of this shift in the market and are changing their business models accordingly to remain successful.
“I just want access to luxury — I don’t want to own it,” noted a young financial services executive in a recent interview for AdAge Magazine. This statement echoes the sentiment of the generation and the codes of modern luxury: attainability, service, timeliness and experience.
This attitude is what defines the sharing economy in the luxury industry.
The popularity of sites such as Rent the Runway and Eleven James gives one access to luxury goods that one normally could not afford, or simply does not want to invest a large amount of money in. It is this understanding of the altered concept of ownership that retailers are exploring in new business models.
Interestingly, even high income socialites who can easily afford a €10.000 couture dress or luxury watch, are now choosing to rent instead of buy. Why? With the social media aware consumer, she realizes that she will be photographed and seen in the couture dress on all of the prominent social media sites. Being brand identity savvy, she cannot be seen in the same garment or watch more than once, or perhaps twice; thus renting becomes more cost efficient than purchasing.
The Sharing Economy has also penetrated into the luxury travel industry, replacing standard locations with meaningful experiences as the single most essential factor.
“The reason for companies to invest in the Sharing Economy is really demand driven. As sharing products is becoming more commonplace, and users increasingly trust that services will be of a high quality, the demand is strongly increasing, also in the luxury industry.” Wouter Geerts, travel analyst at Euromonitor International, told CNBC.
Contributing writer, Diane Weisbeck