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Despite the cost of living crisis and budget cuts, the luxury market continues to grow, with brands investing in active advertising and long-term strategies addressing environmental or social issues. According to Bain & Co., the luxury sector grew between 19 and 21 per cent in 2022, driven by an increase in purchases of personal goods, which ensured positive growth for approximately 95 per cent of luxury brands. A Kantar study found that 65 per cent of wealthy consumers will spend more on luxury goods and services in 2023, showing high confidence.

Saks Luxury Pulse stated that while spending on luxury experiences has declined slightly, physical goods have regained their value among the wealthy elite. Buoyed by an appetite for exclusivity, emotional engagement and a renewed interest in products, the luxury world has responded by courting very important clients (VICs) with tailored services and expanding physical shops experienced by consumers as ‘places of discovery’. The new concepts are more than just a branding exercise as they provide rich, multi-narrative opportunities for sales and engagement. With 37 per cent of luxury consumers declaring that in-store shopping makes them happy, it is not surprising to learn that to preserve their status in an increasingly competitive market, retailers are enriching the shopping experience and increasing the desirability of their products.  

Another route taken by luxury brands is to lift the veil on the creative process and invite consumers ‘behind the scenes’, a way to build loyalty and intimacy with their customers.

Luxury brands are increasing engagement using retail sales that turn into real experiences, focusing on neuroscience and new technologies that provide memorable interactions and anchor the brand to a moment and an emotion. One example of this is the Japanese luxury skincare brand Tatcha, which identified wellness as a key factor in consumer engagement and developed a 4D forest bathing experience that merges ancient wellness practices with cutting-edge technology. To celebrate the launch of its Forest Awakening body care range, in February 2023 the brand created a pop-up in Los Angeles for meditation in a virtual forest, guided by a Japanese Zen monk, along with olfactory experiences and soundscapes. Another interesting experience was the Bvlgari pop-up store called Scentsorial,  which appeared at the Dubai Mall in March 2023 to promote the fragrance Le Gemme Tygar. The olfactory experience engages customers using a wearable device that measures their neurological responses to the fragrance. Information on brainwaves, micro-movements and heart rate are decoded and transformed into downloadable NFTs. Through technology, Bvlgari fashions a personal emotional journey.

Prada Beauty’s first Lunar New Year pop-up at the Sanya International Duty-Free Mall harnessed smart technology to take visitors on a tactile journey to discover its latest fragrance, Prada Paradoxe. Equipped with interactive digital screens, an ingredient area and an AR testing tool, the pop-up immersed visitors in a multi-sensory micro-universe.

Circularity is at the centre of the narrative of luxury brands and retailers — the semantics of valuable items is used to emphasise craftsmanship, conservation and recycling. It is then easier to understand why many beauty brands use refills — customers are encouraged to refill products and keep them as precious items rather than throwing them away. But that is not all. While culture has always played a key role in building a luxury brand’s appeal and identity, there are new immersive experiences that capture a brand’s cultural DNA, increasing engagement and expanding public-product interaction. A case in point is the skincare brand Sulwhasoo, which has partnered with the Metropolitan Museum of Art in New York. 

In this perspective, packaging plays a key role in supporting and promoting the narrative of a beauty brand. While technologies enhance the perception of effectiveness and engage consumers, sustainability has become the field upon which the game is played. The focus lies on refillable solutions  with new functionalities and accessories with fresh aesthetics and uses, such as pumps and droppers, that change habits and reduce environmental impact through better choices in materials and concept design. A key part of this is mono-materials, which are easier to dispose of and recycle, along with new shapes that provide improved use balanced with environmental performance. 

What is the consumer response? Struggling with chronic global uncertainty, they expect more from brands and demand solutions to improve their lives. In the UK, 95 per cent of consumers expect brands to act; in Southeast Asia, 54 per cent of Gen Zers demand that brands take a stand on social issues. Brands are responding by investing in initiatives which engage customers, generate awareness and increase sales.