The Luxury Consumer’s Evolving Persona

Luxury goods continue to resonate with discerning individuals across borders. And while their traditional elements—namely craftsmanship, heritage and exclusivity—remain relevant, a complex interplay of economic, technological and societal factors is causing luxury brands to focus on other aspects to meet the evolving demands of their discerning clientele.

These factors—chief among them digital innovation, personalization and sustainability—reveal the everevolving desires and aspirations of consumers.

“The luxury consumer has certainly evolved, shaped by a complex blend of economic trends, technological advancement and a growing emphasis on sustainability and personalization,” says Mauricio Umansky, CEO of The Agency. “Today’s luxury buyers are incredibly tech-savvy.” The luxury consumer’s interest in bespoke experience is something that The Agency carries into the real estate realm as well. “Our clients expect a bespoke experience, and we achieve that by truly understanding their individual needs and preferences. Whether it’s a turnkey luxury home or a property with unique architectural elements, we curate options that align with their lifestyle and aspirations,” Umansky says.

Sustainability for high-net-worth individuals spans everything from their clothes and accessories to their homes, he says.

“Sustainability is becoming an increasingly important factor for luxury consumers,” with many of Umansky’s clients looking for eco-friendly homes, energy-efficient designs, sustainable building materials and smart-home technology that minimizes environmental impact.

One constant among the luxury retail industry specifically is the continual need for brands to reinvent themselves. In recent years, the industry has embraced new trends with cutting-edge technologies to entice a younger clientele. According to Bain & Co., Gen Zers and Millennials are predicted to account for 70% of luxury spending by 2025, surpassing Gen X and Baby Boomer consumers.

PERSONALIZATION

Customer personalization has quickly become a critical focus for luxury brands, driven by the ever-growing demand for tailored experiences. (According to McKinsey, 85% of luxury shoppers expect a personalized experience.) Successful luxury brands are leveraging data analytics, AI, and innovative customer engagement strategies to deliver it.

Gucci, for one, utilizes an AI-driven recommendation engine that analyzes customer data, including browsing history, purchase patterns and social media activity, to offer personalized product suggestions.

“The luxury goods industry continues to push digital product passports to connect and re-engage with their customers,” says Graham Wetzbarger, a luxury appraiser and consultant. “Brands are wagering that connected products create value, personalize interactions and story-tell values like sustainability.”

Luxury brands have also been adopting AI to implement dynamic pricing models that adjust based on customer behavior and demand. (Chanel was among the first brands to test AI-driven pricing strategies for its limited-edition items.) Luxury brands using AI-driven personalization have reported up to a 30% increase in sales, according to Deloitte, while AI-driven personalization reduces cart abandonment rates by 30% in luxury e-commerce, according to Accenture.

The use of organic, recycled and eco-friendly materials has become widespread, with Gucci a notable example of a brand that has committed to using 100% sustainable materials—including organic cotton, recycled polyester and eco-friendly dyes—by 2025.

Often referred to as the “circular economy,” the resale and second-hand markets for luxury goods have also been gaining traction. According to a Bain & Co. report, the global secondhand luxury goods market is expected to reach $64 billion by 2025, with an annual growth rate of 10% to 15%.

It’s widely expected that more brands will take control of their secondhand markets. Burberry and Stella McCartney have launched their own resale platforms, where customers can buy and sell pre-owned items.

Recycling and upcycling initiatives are becoming more widespread, too. Cartier operates a jewelry recycling program where customers can return old or broken pieces to be repurposed into new designs.

Many luxury brands have also set ambitious goals to achieve carbon neutrality. Hermès is committed to becoming carbon neutral by 2030, focusing on

reducing emissions across its entire supply chain, including transportation, manufacturing and retail operations.

Consumers are increasingly demanding that brands not only implement sustainable practices but also report on their progress. In response, luxury brands are publishing detailed sustainability reports—e.g. Kering Group’s annual environmental profit and loss (EP&L) statement, which showcases the environmental impact of its brands, including Gucci, Saint Laurent, and Balenciaga—a level of transparency that is becoming standard across most luxury-adjacent companies.

To build trust with consumers, many luxury brands are obtaining third-party certifications for their sustainability practices. For example, in an effort to confirm its commitment to ethical sourcing and environmental stewardship, Bvlgari seeked and received certification from the Responsible Jewellery Council (RJC).

Sustainability is no longer a peripheral concern for luxury brands; it is now a core element of their business strategies.