As a new era emerges, our Strategy & Sustainability Lead delves into the luxury landscape to provide strategic insights on future-proofing your brand through insightful case studies and expert analysis.

We will uncover the challenges and opportunities that brands face, examine key consumer behaviours and emerging principles reshaping the concept of luxury, and provide actionable guidance along the way, covering the following principles:

• Exclusive Salons
• Cultural Powerhouses
• Luxury Landmarks
• Beyond Reality
• Net-Positive Luxury

In 2025, the luxury market will continue to deal with many challenges. Economic ups and downs, political tensions, and other issues will make consumers hesitant to spend.

China, Europe, and the U.S. all face unique problems. China is seeing changes in regulations and a slowdown in the economy. Europe is dealing with a recession and fewer tourists. Meanwhile, the U.S. grapples with a growing demand for ethical and sustainable products.

Against this doom and gloom, brands must go even further to connect with consumers, offering elevated, escapist and personalised experiences with authenticity, quality and sustainability at their core. In this era, luxury brands must adapt and experiment with new and exciting ideas to stay relevant.

Against this unsettled backdrop, we can see many complex and conflicting key consumer behaviours. Here are the key ones to watch out for:

Millennials and Gen Z expect to make up over 60% of the luxury market next year. These generations aren’t interested in most traditional codes of luxury; instead they prioritise sustainability, escapist experiences, and digital engagement.

The number of HNWIs (High-Net-Worth Individuals) is increasing globally, particularly in regions like Asia and the Middle East, contributing significantly to luxury market growth and demand for exclusive “IYKYK” spaces.

Many consumers are now leaning towards spending on experiences instead of buying goods, especially when it comes to exclusive travel, fine dining, and wellness retreats. These areas could make up nearly 55% of the market by next year.

Finally, according to a BCG survey of 2,000 luxury clients, around 80% still care about a brand’s sustainability practices when deciding what to buy, leading to a steady rise in demand for ethically made and eco-friendly products and experiences.

Exclusive Salons

According to Business of Fashion, the ultra-wealthy drive luxury growth, with the top 2% of consumers driving 40% of sales.

Brands are now focusing on these VICs, but getting their attention is more challenging than ever. Claudia D’Arpizio from Bain & Company highlights that these high-net-worth individuals “are more short on time than money. It’s easy [for them to] buy products; it’s more difficult to convince them to spend some time with you”.

Brands are stepping up their game with more innovative and unique ways to connect with top clients, resulting in the rise of the ‘Salon’. Within these secretive, invitation-only shopping havens, top clients receive a unique, personalised experience that speaks to the pinnacle of luxury.

Case Study: Gucci’s Salon Concept

Gucci’s Salon is a prime example of how luxury brands are evolving to cater to their most affluent clients. These spaces look and feel more like five-star hotel apartments than retail stores, with interiors that boast plush carpets, rare and eclectic furniture, and pieces by renowned artists like Lucio Fontana.

Private butlers are available to serve canapés and cocktails, and some clients use the brand’s limousine chauffeur service to get to and from their appointments. Others can stick around for a meal prepared by top chef Massimo Bottura from the Gucci Osteria restaurants.

Gucci also pays attention to the little things, such as ice cubes heat-pressed with Gucci’s Kingsnake insignia and custom menus featuring each guest’s name. The space is flexible, with furniture and fittings that adapt to different events or client needs.

As luxury retail becomes more about experiences than just products, other leading brands are creating immersive, temporary spaces to draw VIPs in to see collections in person. Brands like Chanel and watchmaker Audemars Piguet have also opened salons that offer private, luxurious experiences for their top clients.

Blurring the lines between library, museum, and social hub, Audemars Piguet’s AP House offers an invitation-only, appointment-only space designed to redefine the brand’s relationship with their most treasured enthusiasts by offering intimate events and personalised consultations.

Their recently launched New York House features a detailed, exploded view of a watch’s caliber, which showcases every component of the movement for close inspection. This embodies the VIC’s fascination with craftsmanship and innovation.

Strategic Inspiration:

Bring new depth to the brand experience for this latest crop of ultra-wealthy VICs, focusing on creating highly personalised and exclusive moments that blend rich, opulent interiors with unforgettable, intimate details.

Cultural Powerhouses

The luxury sector is branching out into new areas, lending its knowledge of craftsmanship and strong brand identity to new facets of culture.

This adaptability enhances brands’ status as influential cultural icons and versatile trendsetters. By venturing into fields like film, literature, and music, luxury houses are not only diversifying their portfolios but also deepening their cultural influence.

Case Study: Miu Miu Summer Reads

Literature took centre stage as Miu Miu continued to demonstrate their dedication to contemporary culture with ‘Summer Reads’. Tapping into Gen Z’s fascination with reading, evident in the popularity of ‘BookTok’, Miu Miu invited visitors to special events held in cities worldwide, from New York City to Milan.

In anticipation of the summer season, visitors received complimentary copies of feminist works by authors such as Alba de Céspedes and Jane Austen at customised newsstands or newly created locations. To add a signature twist, each book was marked with a Miu Miu rubber stamp and accompanied by a branded ice lolly to beat the heat.

Luxury houses are using their branding and craftsmanship skills to produce films that echo their aesthetic values, publish literary works that resonate with their brand narratives, and curate music events that reflect their sophisticated tastes.

These endeavours are not just about expanding market reach; they are about cementing the brands’ roles as multifaceted patrons of the arts, seamlessly blending high fashion with cultural and artistic expression. This strategic shift allows luxury brands to remain relevant and revered in a rapidly evolving market landscape, positioning themselves at the forefront of cultural innovation.

Strategic Inspiration:

Lean into your brand’s understanding of craftsmanship and brand identity to venture into new cultural fields like film, literature, and music to create collaborative, inspiring experiences that connect with the luxury consumer’s fascination with the arts.

Luxury Landmarks

Leading luxury brands are going big with their flagship stores, transforming them into immersive brand temples. According to Delphine Vitry from luxury consultancy MAD, these megastores are essential for creating a solid brand presence, contrasting with the ubiquitous presence of smaller retail outlets, adding that “you don’t want Louis Vuitton having as many stores as Starbucks.”

This shift is about more than just size; it’s about turning flagships into landmarks. These megastores are becoming part store, part gallery, and part hospitality space, creating unique and memorable experiences celebrating the brand’s past, present and future.

Case Study: Maison Diptyque London

This spring, Diptyque opened its largest-ever flagship in the UK. Its stunning 400 sqm London space epitomises the luxury French perfume brand’s commitment to art and design, immersing each visitor into the refined world of Diptyque.

A highlight of the vast boutique is ‘The Ephemeral Space,’ an ever-evolving cultural hub curated by Colette’s Sarah Andelman. We collaborated with Diptyque to create the space’s two inaugural experiences: the quaint Café Verlet and a recent exhibition celebrating Villa Noailles.

Café Verlet brings a slice of Parisian café culture to London, complete with charming illustrations by British artist Clym Evernden. Meanwhile, the Villa Noailles exhibition, kicking off on June 28, 2024, is a nod to the iconic modernist villa’s centenary.

Chanel’s new flagship in Beverly Hills, which opened in May 2023, also exemplifies this trend. Spanning four floors and 30,000 square feet, it features a celebrity penthouse, exclusive products, one-of-a-kind artworks, and a rooftop terrace with views of the Hollywood sign. Chanel’s president of fashion, Bruno Pavlovsky, emphasised that these grand spaces are “more a question of image than return on investment.”

According to The Future Collective, the “power of the flagship in today’s cultural currency is centred on building exceptional, inimitable experiences”, where stores become the epicentre of the brand’s identity in today’s retail world.

Strategic Inspiration:

Lean into the idea of a flagship as a brand beacon that blends retail, art and hospitality to create a unique experience that solidifies your presence as a luxury leader.

Beyond Reality

Our recent Hyperphysical Experiences insight report explored the emergence of experiences that engage consumers through next-level sensory stimulation and emotional connection. This trend will evolve in the luxury sector to explore how spaces can transport visitors to other dimensions.

VML’s Age of Reenchantment Report states, “Channeling the otherworldly is about presenting a unique shopping experience that is wired with intrigue; a world that is different to our own, a vision with a different perspective.” This approach explores going beyond everyday reality, offering a form of escapism that allows customers to delve into their imagination.

Case Study: Van Cleef & Arpels’ “Time, Nature, Love” Exhibition

This groundbreaking exhibition at Singapore’s Marina Bay Sands Museum demonstrates how luxury brands can harness sense and emotion to transport visitors to unexpected worlds.

The exhibition, which showcased over 400 jewellery pieces, watches, and precious objects, was divided into themes of Time, Nature, and Love. Each theme was presented in a unique, sensory-rich environment with lighting, soundscapes, and scents to create an intimate atmosphere.

Beyond displaying Van Cleef & Arpels’ craftsmanship, the exhibition told a deeper story of heritage and inspiration through interactive displays and AR experiences. Each space tapped into a specific emotion or sentiment, with the Love section evoking nostalgia and intimacy through romantic narratives.

By offering these transportative, memorable experiences, Van Cleef & Arpels strengthens its cultural significance and solidifies its leadership in the luxury market.

According to luxury foresight expert Carlota Rodben, “The ultimate luxury in fashion and beauty transcends the physical. It lies in creating value that resonates with our emotional and psychological landscapes.” Today’s luxury experiences are multi-sensory and designed to captivate and elevate, inviting consumers into a dreamlike state of beauty and wonder. This highlights the importance of creating profound emotional connections with consumers.

Strategic Inspiration:

To capture this emerging trend, focus on creating immersive experiences that transport visitors to another dimension, using advanced sensory and emotional engagement to foster deep yet unexpected connections.

Net-Positive Luxury

Consumers increasingly prioritise sustainability when choosing brands, leading to the emergence of a key trend known as ‘net-positive luxury’. Rodben states, “There’s a shift towards net-positive luxury, emphasising sustainability and circular business models as central tenets.”

This transformation is not just a response to changing consumer expectations but also a proactive strategy to lead by example. In this new landscape, Rodben notes that “transparency and traceability need to shine as paramount virtues, offering consumers a profound understanding of the product’s journey from inception to creation.”

Case Study: Pangaia, Carnaby Street Store

Founded by LVMH alumni, the premium loungewear label Pangaia knows a thing or two about fusing luxury know-how with sustainable innovation. Designed to immerse visitors in nature, the brand’s first-ever standalone store on Carnaby Street emphasises its commitment to the planet.

The store features vegan paint, recycled metal structures, and an innovative heat control system. Every interior element reflects intentionality. An eye-catching cobalt blue sphere in the window symbolises Mother Earth and is complemented by a bed of native plants.

Pangaia’s signature colourful products are displayed against light earth tones, oak wood tables, and natural aromas, creating a serene atmosphere contrasting with the bustling streets.

Strategic Inspiration:

To resonate with today’s eco-conscious consumers, luxury brands should embrace ‘net-positive luxury’ by crafting spaces that showcase commitment to the planet and inspire customers to become part of the solution.

As luxury navigates the shift from its historical roots to an innovative, adaptive future, how will your brand respond? StudioXAG is poised to help unlock the opportunities this new era presents.