• by Manfred Abraham , June 25, 2024

In the first quarter of the year, Gucci saw sales drop by 20% compared to last year. Kering, the French luxury group that owns Gucci, attributed much of that decline to poor performance in the Asia-Pacific region, a market that requires special attention. The struggle for the luxury market isn’t just specific to one region, though. In the U.S, luxury spending saw a 12% decline in March, according to Yahoo Finance.

This systemic change can be explained through a number of reasons. The cost of living crisis is impacting consumer spending worldwide across different industries. As prices for almost everything rise, consumers are cutting back on spending, particularly  on nonessential items. Buying new luxury goods is the first thing consumers cut out when looking to save. It is hard to justify buying a Gucci shirt, for example, when groceries and rent are so expensive. 

The aspirational luxury buyer

Luxury brands face a challenge with the emergence of the aspirational luxury buyer. These typically younger consumers are less loyal compared to traditional luxury buyers and more price-sensitive. They choose brands based on affordability and current trends at the time of purchase rather than practicing long-term loyalty. 

Aspirational buyers are as valuable as traditional ones, but they present new challenges and opportunities that brands need to consider. Because aspirational buyers lack brand loyalty, new competitors can emerge more easily.

Take a look at a rising brand from the UK, Che Studios. With a similar look and feel to major players in the luxury space but at a more affordable price point, it has excelled as of late. The brand is backed by an international model with experience working with brands such as Calvin Klein, Dolce & Gabbana, Versace, and more.

The brand has successfully tapped into these aspirational luxury buyers. Its price point is significantly higher than popular fast fashion brands but significantly lower than major luxury brands. Buyers get the look and feel of luxury brands, along with exceptional quality, at a price that is attainable for them.

Changing tastes and social media. 

Aspirational buyers view luxury goods as status symbols and are highly influenced by brand reputation. Their lack of brand loyalty represents a tricky challenge, requiring luxury brands to shift focus from traditional and timeless campaigns to trendy and “in the now” campaigns. Aspirational buyers are highly influenced by what is trending on social media and by celebrity brand associations.

For this reason, established and classic luxury brands can attract these aspirational buyers through the power of social media — an effective way for brands to show consumers the looks and lifestyle their merchandise can offer. Emerging brands looking to challenge the big players in the space do this with a much higher success rate than established brands. 

One reason challenger brands are finding success on social media compared to their larger competitors is they are using smaller influencers. Luxury brands make their merchandise less relatable by solely relying on global superstars. In regions such as Asia-Pacific, smaller influencers can have a large impact. Consumers are more likely to connect with influencers who look like them, live in the same area, and share similar experiences, making the campaign more resonant.