Tensions create opportunities for the luxury sector

Yannis Kavounis, director of Insight & Innovation at The Futures Company, laid out three tensions that dominate the luxury sector at a breakfast briefing that Bates CHI & Partners organised last week. The dynamics of human production versus technology; materialistic versus post-materialistic values; and creation versus consumption are all tensions that indicate opportunity, he said.

Craftsmanship and rarity are among luxury’s core pillars, which is at the core of the tension between human versus technological production.

“The authentic human and historic element of craft in luxury clashes with the emergence of new and fast technology in luxury such as artificial abundance of lab-made diamonds,” Kavounis said. “That poses questions over what is really meant by true luxury––can craft in luxury be handmade and lab-made?” He expects craft and expertise to hold ever more cachet in an era of increasingly scarce resources.

Consumers have typically sought to define achievement and success through tangible material possessions, which had a profound impact on the luxury sector for the past few decades. But, Kavounis adds, the industry has seen a shift to post-materialist values that emphasise autonomy and self-expression.

“Success is defined in a more holistic way, where intangibles, such as emotions, family, and giving back are as equal as material achievement,” he noted.

“Most significantly in the developed markets but with China and Brazil changing faster than you might think. Millennials are more likely to follow this ‘silent revolution’ and it is not merely a case of a life-cycle change, rather it signifies a genuine example of intergenerational value change.”

On the other hand, Kavounis also warned that there is a real need to rebalance cultural engagement, away from a one-sided engagement that skews towards mindless consumption. This shift might lead to less passive consumption and more active participation in creation, be it for culture creation; shaping the environment; or cultural events.

These tensions, Kavounis said, are opportunities for luxury brands to step in and lead the debate:

• Masterful technology: Scientific and technological expertise opens a whole new frontier, from craftsmanship to craft-tech-ship. There is opportunity to apply new technologies in production, process and materials without replacing human expertise but enhancing it instead. Firms should look to invest in digital technologies and applied sciences.
   
• Cultural creation: The role of a true luxury brand can elevate to cultural patronage, preserving knowledge for future generations and creating objects that celebrate timeless cultural identity. Kavounis says companies should become patrons and curators of local culture.
   
• Duty to give back: Leadership results when a duty and passion for a higher purpose replaces mere expectation for social contribution. Look at redefining success and its symbols to find supportive business models.
   
• Fresh take: All this requires a mindset shift: luxury doesn’t have to be about the past, the tradition, the exclusivity, the ‘heavy’ imagery––it can be about the future, new scarce resources, connectedness, innovation and breaking conventions. To seize the future, Kavounis emphisised, luxury brands need to build with Generation-Y and their aspirations in mind.