Redefining Luxury: Moving Past Ownership into Experience

Out with the free champagne and in with an exclusive yacht charter. The standards for the luxury industry are evolving with industry-spanning changes in consumer sentiment. As self-identification and alignment with brands increases, luxury customers are looking to create a lifestyle of their favorite companies. Consumers no longer want to simply own items from a luxury brand, they aspire to represent and embody the brand’s identity.

“Experiential luxury is poised to become the ultimate distinguishing factor in the luxury market. In today’s landscape, customers seek more than a mere transaction; they yearn for a transformative journey that enriches their lives as much as the product itself. Here at department stores like ours, we are dedicated to curating tailor-made, exclusive events, such as immersive in-store experiences, enlightening talk shows, masterclasses by industry big names, and invitation-only gatherings, all designed to provide our cherished VIP clients with unforgettable moments.”

As stated above by a Luxury Retail Professional, moving away from perceiving shopping as a mere transaction, experiential luxury strives to transform it into an immersive journey. A new era of luxury has emerged: welcome to experiential luxury.

ELEMENTS OF EXPERIENTIAL LUXURY

Experiential luxury is fueled by the emergence of an experience economy, which describes an economic condition in which consumers prioritize experience as a commodity. The Harvard Business Review coined the term in the late 1990s, foreseeing the economic progression from services to experiences. It is largely contributed to by changing consumer preferences and attitudes, characterized by the idea that experiences are more unique and exclusive than goods. The science and theory of the emerging experience economy suggests that the most valuable experiences are those that are “inherently personal” for an individual that “has been engaged on an emotional, physical, intellectual, or even spiritual level”. As such, companies within varying industries are creating brand-aligned experiences for their customers, largely to engage around their core products and services. The key opportunity for businesses is to foster and deepen customers’ connection to their brand through their fundamental interest in experiences.

The luxury industry is and always has been uniquely experiential. The practice and ritual of purchasing luxury goods canonically involves complimentary beverages, personalized service, and private showings, ensuring customers have positive associations with their purchase. This is a cornerstone of the luxury industry. However, in a new trend, consumers are increasingly interested in the luxury brand itself, using brand identities to forge and define their own identities. This development and the emergence of an experience economy align to create demand for luxury-brand formed experiences. It is no longer sufficient to be solely goods-based: the brand must extend to create an ecosystem or world that the customer can identify with and live in.

Luxury brands can capitalize on economic progressions and changing customer preferences by creating methodical and involved approaches to customer experience. Developing these moments allow brands to target existing customers and those who are interested in the experience itself. With loyal customers, it is the brand that attracts a customer to invest in an opportunity that extends beyond the products offered. Alternatively, the crafted experience can attract a customer to the brand — this group will be drawn to the excitement, creating familiarity and connection to the advertising brand. In both cases, luxury companies should pursue customer-aligned experiences, which can be categorized into the following:

• Accessible Experiences: This tier allows the consumer to experience a brand and its offerings through a more cost-effective medium, allowing continued engagement with existing shoppers and an introduction for new demographics. Examples include coffee shops or free in-store experiences.
• Elevated Experiences: This tier allows brands to further connect with existing consumers and entice new demographics to experience their products and values through mediums that portray “glamour” and “exclusivity”. Examples include fine dining and hotel brand extensions.
• Bespoke Experiences: This tier offers “one of a kind” opportunities to brand loyalists. While new consumers may participate in these unique excursions, the goal is to further emphasize the connection between a brand and longtime buyers. Examples include private jet and yacht charters.

It is paramount to approach experiential luxury with a methodology that ensures the target market will be emotionally, intellectually, and financially drawn to the experience. This framework ensures that luxury experiences are developed in accordance with brand identity and an understanding of target markets.

The following examples showcase luxury brand experiences and their corresponding categories, highlighting the importance of brand alignment in successful experiential luxury.

ACCESSIBLE EXPERIENCES: TEMPTED BY LUXURY

The key focus of accessible offerings is to widely broadcast brand identity and engage with customers in everyday, public mediums. While less intimate and personal than elevated and bespoke experiences, staging accessible experiences is an effective way of to engage with aspirational and entry-level luxury customers.

Louis Vuitton — London Flagship Store

Louis Vuitton, an esteemed Fashion Maison, unveiled its prestigious Flagship store in London. It is a multi-story exposition that seamlessly integrates the works of 25 artists, inviting customers to immerse themselves in a gallery of opulent interiors and sculptures. The store’s ambiance is elevated with a wall of customizable luggage tags and live artists adorning Louis Vuitton luggage with Siberian huskies and initials. By emphasizing a narrative of culture and, Louis Vuitton’s initiative achieves a unique accessible experience for consumers. This approach is a cost-effective way to foster an emotional connection that transcends product acquisition and serves as an introductory point into the realm of luxury goods for new consumers.

Gucci Garden XR Experience

Gucci, another renowned fashion house, showcased their innovative prowess by crafting a virtual art installation in collaboration with Roblox. With the rise of extended reality (XR), Gucci recognized the opportunity to draw in a new demographic. This collaboration paired art, digital identity, and Gucci’s ethos, as it guided participants through immersive 3D murals created by emerging digital artists. Gucci establishes a pathway for new consumers to become more aware of the brand’s offerings, exemplifying how ‘Accessible Experiences’ act as a pivotal steppingstone to explore high-end brands. Gucci’s venture into the realm of XR has sparked inspiration for other renowned brands such as Balenciaga, Vogue, and Ralph Lauren, leading to the development of similar XR offerings.

The draw of accessible offerings is not to be underestimated. Beyond the traditional cafes and in-store experiences, staging accessible experiences through web2 and web3 platforms can ensure this tier of experiences remains competitive and appealing.

ELEVATED EXPERIENCES: ENTHRALLED BY LUXURY

Elevated experiences offer consumers a slightly more immersive and committal option to engage with the brand. By providing a more personal experience, luxury brands can strengthen their existing customer relationships while increasing interest amongst a demographic of new shoppers.

Blue Box Café by Tiffany — New York

Tiffany, renowned for its artisanal jewelry, introduced ‘The Blue Box Café’ — a unique culinary experience embellished with Tiffany jewels, amazonite stone details, and meticulously crafted Tiffany motifs. The café is dedicated to delivering three signature experiences — Breakfast at Tiffany’s, Tea at Tiffany’s, and an à la carte menu — each designed to create an unforgettable journey that embodies the timeless and eternal values synonymous with the Tiffany brand. Immersed in an ambiance that mirrors the brand’s legacy, customers can celebrate special milestones with a carefully curated selection of jewel-like sweet and savory treats. By exuding an aura of refined charm, this elevated experience fosters a profound connection with existing patrons who resonate with the essence of the Tiffany brand. Simultaneously, it allures new demographics to partake in a memorable experience, weaving a story of luxury and sophistication that transcends the boundaries of time and trends.

Vivrelle and Four Seasons Collaboration

Vivrelle, a designer clothing rental company, and select Four Seasons locations partnered together to bring luxury accessories to the hotel. Guests of the Four Seasons can borrow any item from a selection of designer accessories, including Louis Vuitton, Chanel, Gucci, and Prada, completely free and without requirement of a Vivrelle subscription. The initiative to freely borrow not only elevates the guests’ stay but also creates an atmosphere of sartorial elegance and grandeur. It serves as a powerful medium for these brands to showcase their values and craftsmanship, creating a tangible and memorable connection with the consumers. It also effectively entices new demographics to engage with these renowned brands, fostering a desire to experience the luxurious lifestyle and the high-end products associated with it.

Offering elevated experiences can strengthen the relationship between luxury brands and existing customers. Personalization is key to executing effective customer service in the luxury industry. In comparison to accessible experiences, elevated experiences provide more personalized, attentive care to customers.

BESPOKE EXPERIENCES: WOOED BY LUXURY

Bespoke experiences represent the epitome of luxury. These tailored, wholly personalized experiences are designed for luxury brands to intimately engage with loyal customers.

Macallan Private Jet Charter

Macallan is a world-renowned whisky company, largely considered to be one of the more premium liquors available. Adjacent to its whisky sales, the brand offers an exclusive, once-in-a-lifetime experience: a private whisky tasting, onboard a private jet and yacht. Passengers board a chartered plane in New York, sample master series whiskies accompanied by hors d’oeuvres, land in a private hangar north of Miami, and end on a private yacht excursion to South Beach. The experience is designed to deliver an unforgettable memory to its participants, leveraging the charters to contribute to the prestige and exclusivity of the whisky. By offering this experience, Macallan effectively associates its whisky with the highest luxuries available.

MyTheresa Private Shopping Experiences

Luxury e-commerce platform MyTheresa offers its top buyers access to the most prestigious events and places in fashion. In 2022, prolific purchasers from the site were invited to attend a private dinner at the Schiaparelli salon with MyTheresa’s CEO, just days after the fashion house debuted its runway collection in Paris. The efficacy of this experience is rooted in the access it delivers to its participants: it provides a community of similar individuals who hold similar purchasing power. Additionally, the prestige and power associated with being at the Schiaparelli salon are compelling for those with virtually every luxury offered.

Bespoke experiential luxury offerings should be a cornerstone of every luxury brand’s strategy. Given the target demographic is generally composed of high-net-worth individuals, this tier is least sensitive to economic pressures and uncertainties. Brand investments into staging such experiences will ensure lifelong customer memories.

THINKING AHEAD

The experiential luxury framework provides an operative roadmap for luxury brands to create engaging experiences in accordance with their identity and customers. It is currently an emerging trend, existing in its early stages largely for non-financial reasons. Because of this, the more mature future state of experiential luxury will be impacted by changes in the industry landscape and larger economy. Luxury industry forces are less predictable, but economic headwinds foreshadow a potential contraction in the global economy. As such, luxury brands might understandably make fewer investments in experiences during more difficult economic times. The future of experiential luxury will be shaped by individuals, companies, industries, and, notably, global forces.

An economic contraction will likely impact the investments into particular categories of experiential luxury because of changes in consumer purchasing power. Consumer spending will decrease broadly during a downturn, which impacts market trends for all industries. However, luxury consumers generally hold more purchasing power than average, and some have essentially unlimited power. The latter group with unlimited purchasing power will almost always gravitate to bespoke experiential luxury: an economic downturn will not change their preferences, nor their ability to acquire their preferences. As such, luxury brands should continuously offer bespoke events, like yacht charters or exclusive event access, because there will always be enough demand for the limited supply. Experiential luxury investment becomes more complicated with luxury consumers who have purchasing power that might be impacted by a recession. These consumers are actively involved in the luxury industry, but their willingness to spend on non-essential experiences is somewhat dependent on their economic sentiment and outlook. This effectively decreases consumer demand for mid-luxury experiences, like those that command high price points in the elevated category. This theory suggests that luxury brands should invest more heavily in accessible experiences during economic downturns to retain engagement and customer relationships, forgoing the higher-end experiences. A potential contraction outlines the likely upward trend of experiential luxury investments within the accessible and bespoke categories, and a rebound would indicate the re-inclusion of the elevated category.

FINAL THOUGHTS

Experiential luxury offers brands a compelling and profitable method to engage customers and build brand identity. The amalgamation of the emerging experience economy with a luxury consumer preference for experience highlights an important opportunity. Companies can implement the experiential luxury framework to target customers and maintain alignment with core value propositions. In a world where distinguishing between brands and products is increasingly difficult, luxury brands can and should use experiential luxury to develop sustainable competitive advantages.