The future of a sector starting to run fast again and to communicate in a new way.
In recent years, the luxury perfume market has rapidly grown and evolved. Making full use of inspirations from the world of art, fashion, design and culture, new fragrances and luxury perfumes have been created.
Today, the sector boasts the presence of numerous and sought out perfumes created to satisfy both the most refined noses and the increasing number of collectors of the beauty, and all those who, also by spending a lot, wish to find their own social identity in the globalized world.
Hence the success of signature and niche fragrances with creations targeting at being true works of art, crafted for an audience aspiring to wear something unique.
If you are looking for niche fragrances and expensive limited editions or even tailor made perfumes, there must be certainty and the guarantee that ingredients of towering quality are used, with safe manufacturing processes and in compliance with the preservation of environment and people.
Among the super-luxurious perfumes we should mention Shumukh, which in Arabic translate to “deserving the highest” created by The Spirit of Dubai Parfums by Nabeel and launched in 2019 that redefined the concept of luxury fragrance with the most expensive and precious scent in the world: a record-breaking perfume worth 1.070 million euro.
The bottle is decorated with 3,000 set diamonds, giant pearls, precious stones, 2 kilograms of 18-karat gold and more than 5 kilograms of pure silver. The new essence was the result of three years of research and 494 tests on perfume compositions so as to tell the story of the Emirate of Dubai. Notes of amber, sandalwood, musk, rare Indian argarwood, Turkish rose, patchouli, ylang-ylang, and frankincense fuel the three liters of unisex scent, reckoned to last on the skin for more than twelve hours.
In addition to the sophisticated olfactory paths for those who want to wear something without compare, capable of characterizing these persons by telling their story through the “essence” most recalling their memories and emotions, there are also examples of evergreen perfumes which, like money well invested, continue to pay off over time. A significant example is the modern version of a classic like the timeless Chanel N°5 with its highly sought-after limited edition, Eau Grand Flacon Crystal, that currently costs, if you succeed in getting hold of it, somewhere around 9,500 US dollars
Signs of growth beyond the crisis
The crisis triggered by the global pandemic has affected all sectors and has not spared a resilient one like that of luxury. According to the latest analysis by the Institute for Policy Studies, based on the rankings of Forbes and Bloomberg, after ten years of uninterrupted growth, the sector closed the year 2020 with a negative number resulting in a decrease of 23%.
The most affected sector, as predictable, was the hotel business, while the only one to resist was indeed the world of cosmetics and accessories. With the restrictions on travel and deprived of the possibility of going to the cinema or to cafés, restaurants and clubs, consumers have turned to those products, much more correlated to everyday life and extremely “comforting” in a time of generalized stress and uncertainty about the future.
It is true that, despite the economic difficulties bound to the pandemic, consumers have not abandoned luxury, but have turned their attention to quality, values and authenticity and, on a global level, it is precisely for this reason that the “made in Italy” is confirmed as the winning distinctive element of the Italian Soft Power, the identity core of an image recognized across the world.
In any case, as reported by the Altagamma Observatory, global luxury will start to grow again in 2021: + 14%.
Different luxury sectors will show dissimilar growth rates with cosmetics registering the highest one, + 16%, and they will be able to reach pre-crisis levels already within the present year, while other fields will have to wait until 2022/2023.
A recovery that will be accelerated by various factors, first of all the digital world, which will be crucial for the future of the sector.
Already in 2020, the digital channels management was pivotal to adapt to the new global scenarios and its weight on the market has grown from 12% in 2019 to 23% in 2020, and it is estimated to account for 30% by 2025. Physical channels, on the other hand, will have to completely revolutionize their approach, as current forecasts see declining both direct and indirect sales, respectively -21% and -40%.
The second most important factor is the Chinese market, which has grown from 30 billion euro in 2019 to 44 billion euro in 2020: by 2025 it will be the first luxury market in the world, with a share of 26/28%.
In accordance with the picture emerged from the Altagamma Bain 2020 Worldwide Market Monitor, some factors will be accelerated too, such as the shift in consumption towards new generations, the online and local purchases. Generation X and Millennials will make up 65/70% of the market by 2025, and it will be necessary to adapt to their values and their buying habits.
And it is precisely in this direction that the world of fragrances is heading, proposing values and lifestyles which recall immediacy and dynamism. The established custom of sticking to the same scent for years is no longer followed with the rigor of the past. Changing perfume often, having the opportunity to own many, allows you to relate your sense of smell with mood, occasion or time of day as it happens with fashion accessories. It allows you as well to play with your own identity and the social role you want to occupy in society in a given context.
Anti-laws of marketing to communicate the authenticity of luxury
If, as we have seen, the digital world will play an important role even in the commercialization of luxury goods in the near future, its fruition methods must be rethought.
The difficult period experienced during the pandemic has transformed the communication of the most important luxury “houses” and it is newsworthy to learn that, at the beginning of the year, Bottega Veneta, the Italian fashion luxury company belonging to the Kering group, has decided to remove its company profiles from Facebook, Instagram and Twitter.
In July 2020, as well the world leading cosmetics company L’Oréal declared its intention to cut the advertising budget spent on TikTok.
Tired of struggling with the Instagram algorithm, also LUSH, a company of natural “handmade” cosmetics, used the strategy of absence from social media in 2019.
The real reasons for such choices, only apparently paradoxical, deserve a particular consideration. As explained in the book The Luxury Strategy, by Jean-Nöel Kapferer and Vincent Bastien, this sector has always followed anti-laws of marketing: timelessness and total control over the entire value chain, are two of the key principles of strategic choices.
And that is because, as the two French authors argued, luxury “is not a simple word, but a true sociological concept; it is not just a craft, a know-how typical of certain car or fashion manufacturers, but a different and global way of understanding customers, of managing the brand and the company: a management approach subverting the rules of conventional marketing.”
Being masters of the game and standing out on the market by following clear rules while maintaining the ability to differentiate.
And it is precisely by reconsidering all aspects of marketing management that we find an answer to this distancing from social media. As claimed by those academics, the luxury strategy is designed to create maximum value for the brand and full dominance in determining prices by exploiting all the intangible elements connected to the brand identity, such as tradition, country of origin, artisanal history of the production, limited runs linked to the scarcity of valuable raw materials, prestigious customers, etcetera.
The ability to play upon the price lever typical of great, renowned and desirable brands is an example of how there are special laws governing this market. Experts define it “pricing power,” and as a way to explain it, they refer to the Veblen effect, an economic law basically saying that “the increase in the price of luxury goods, contrary to what normally happens, will increase the product desirability.”
In a space where everyone eagerly tries to cause a stir in order to get noticed, perhaps what makes people talk the most is silence. Even the marketing guru Seth Godin agrees on this and, on the occasion of the launch of his book This is Marketing, in an interview released in 2019 to the Italian business daily Il Sole 24 Ore, declared: “We ought to make brands get off the social media merry go round that goes faster and faster, but never gets anywhere. It is time to stop hustling and interrupting, or spamming and pretending to be welcome. We are living an accelerated historical phase that does not, however, allow shortcuts and we need to focus on a long and sustainable path, to return to authenticity which necessarily passes through experiences. Unless you are selling mathematical theorems, you are selling emotions. Then again, we are human beings, not cyborgs. At least for now.”
A line of thought that has gained strength and is reiterated in a recent interview, always published in Il Sole 24 Ore, where Godin stated that “the future of influencers already belongs to the past.”
“In my opinion, the only trend to follow is to be human in the relationship and management of the customer,” said Godin. “On the other hand, customers do not choose a brand because it is the cheapest,” he continued “but because it takes care of them, works tirelessly for them, defends them and take up a stand to do so.”
A wish that has always been a marketing practice for luxury brands and goods which cannot afford weaknesses in terms of that superior quality aimed to reinforce the value chain. By overcoming the conventional levers of marketing, it is with “silence” and the right physical, but above all symbolic distance that the relationship with customers is nurtured and lasts over time.
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