The global online luxury goods market size and share nearly doubled over the last two years, from €33 billion in 2019 to about €62 billion in 2021, according to the 2021 Bain Luxury Goods Report. Concurrently, the number of ultra-high-net-worth individuals has increased by 9.3 percent globally between 2020 and 2021, according to Knight Frank’s latest The Wealth Report.

Less likely to be impacted by the cost of living crisis gripping Europe and North America, the “core” luxury consumer is also less price-sensitive. Luxury brands increased their prices on average by 10.7 percent in 2021 and have already increased their prices by 10.3 percent this year, according to Jefferies, with little pushback from shoppers.

Opportunity remains, but forging a strong connection to the consumer cohort that drives the most profitability is critical. Today’s wealthiest consumers are shopping online with a new set of expectations, such as prioritising experiences that are engaging, efficient and personalised — and those which offer an emotional connection to their favourite brands.

Since its inception in 1924, the Saks Fifth Avenue brand has sought to offer personalised shopping experiences for this consumer. Today, Saks is a digital luxury platform – its website and app provide access to professional stylists, editorial content and interactive events, combining online experiences with in-person services through an exclusive partnership with the Saks Fifth Avenue stores, which now operates its network of 40 stores independently from Saks’ online sales channels. The two work together to deliver a seamless experience for customers across the full Saks Fifth Avenue ecosystem.

In a recent BoF Live event, Kristin Maa, senior vice president of growth at Saks, joined Lydia Pang, chief executive and co-founder of digital strategy studio Mørning, working with clients like Calvin Klein, Nike and Maison Margiela on the future luxury consumer and what motivates them. The two discussed the new winning strategies for companies to attract and, critically, engage luxury consumers online.

Below, BoF shares condensed insights from the conversation.

Rethink Definitions of High Lifetime Value Customers

KM: “One of the things that we have tried to do is use a lot of data science to understand first purchase behaviours, from whether or not they subscribe to our emails, whether or not they create an account, and what channel they come in through. From a marketing perspective, we have built a model to assess a number of clues that tell us if a customer could have high lifetime value potential.

“Years ago, we would have waited for a customer to cross a high spending threshold before recognising them. Today, we can’t wait for those customers to identify themselves. If someone shows signs based on our modelling that they might be a high lifetime value customer, we’ll treat them as such. We have to build and retain those customers from the get-go.”

Years ago, we would have waited for a customer to cross a high spending threshold before recognising them. Today, we can’t wait for those customers to identify themselves.

LP: “I think we’re in an interesting new phase for luxury. The luxury consumer of tomorrow will continue to deepen connections with brands who value realism and shared anxieties. There’s a lot of potential for connectivity and [deeper] relationships if brands rebuild from a really sincere place.

“Customers are now asking the luxury category to bare its values and commit to open communication. And the consumer will reward that bravery with commitment and loyalty to the product. That’s essentially how I think you can build relationships with customers — baring that realism. It creates receipts — evidence of brands showing up for their customers and community in a way that is incredibly tangible.”

Prioritise Personalisation to Deliver a Luxury Experience

KM: “As a multi-brand retailer, we have the ability to really curate things for different people across aesthetics, price points and occasions. We are using data science to fill in a lot of blanks in terms of what we think customers might be interested in, in terms of brand and category behaviour. Internally, we call that [combination of observed and predicted customer preferences] our customer DNA, and we marry it with actions we see the customer take in real time to determine the best personalised experience.

“We have developed more ways for shoppers to tell us what their preferences are. We have something we call the preference centre where, in someone’s account, they can save their favourite brands, categories and sizes as well. If you can tell what customers do and don’t care about, you can easily provide more relevant content for them.”

LP: “I believe that personalisation right now is table stakes, because individualism is inherently about respecting the customer. As the Internet has democratised access to products, narrative and craft is more critical than ever before.

“I spent years at Refinery29 before I started my own agency. We used to build editorial worlds around shopping experiences, giving them a lot of story and meaning. But we would also give the audience the tools and information, and a degree of transparency. It still had to be a very honest transactional moment.”

Build a Two-Way Communication Strategy With Customers

KM: “There is going to be more of an expectation for two-way communication, where brands are listening just as much as they are pushing out content onto consumers. Brands and retailers will have to respond, adapt and adjust to be part of a community, rather than have the consumers just come to them.

“I think the future of luxury engagement really is going to be about customisation that is dictated by the consumer, so a customer being able to express themselves, give feedback and have more control and input in the way they experience brands, rather than brands pushing a narrative.”

The future of luxury engagement really is going to be about customisation that is dictated by the consumer.

LP: “I’m finding new corners of the Internet to be the most exciting — areas where you wouldn’t expect these conversations to be happening, such as Whatsapp groups or the comments section. When we think about Web2, social is still where everything is happening for brands. Those are really authentic interactions — that is where true feedback is for the brand, as well as debate and dialogue around products.

“I feel like the comment section is a really important space that we often disregard. We have always disregarded the value of community managers and copywriters. We think of social as visual platforms and tools, but actually that is where all the information and feedback can be found.”

Diversify Content for Different Channels

KM: “We see different channels — particularly on social — as primarily a listening place. Of course, it is also a place for us to put out content, and there are more and more ways for people to find content and interact with us. Over the last few years, we have continued to join more of these platforms and spent time on really understanding how to engage communities on these platforms. Brands and retailers can’t just utilise the same content on all channels and see what happens. You have to adapt your strategy to be a part of the community.

“When we consider Web3 communities, there is significant opportunity for brands. At Saks, we will consider how we can join communities and bring value, rather than just putting content out there and backing off to see what happens.”

Brands need to explore content that builds these one-to-one intimate interactions. It feels like a long game, but it is worth making the investment upfront.

LP: “Web2 is an inherently transactional space right now. With the rise of Web3, we are seeing a lot of that philosophical underpinning setting new expectations for consumers in that bridge phase between Web2and Web3 — resource sharing, flat hierarchies and more niche interests being celebrated. There is this distinct emergence of more private spaces and tighter communities, [with] platforms like BeReal and Discord rising in popularity, private accounts and closed groups. It is almost like we are craving that intimacy and specificity, which has kind of been watered down.

“Brands need to explore content that builds these one-to-one intimate interactions. It feels like a long game, but it is worth making the investment upfront now as this is still rising and building and defining itself.”

Build Consumer Trust to Futureproof Your Brand

KM: “We are giving up a little bit of control on our brand narrative to partner with people who can authentically connect with different communities. There is an element of us having to become less precious about our brand and let it evolve and let people interpret it in the way that they want to and [...] give up a little bit of that tight control around what the brand is. To really build consumer trust and connection, not everything should be glossy. Quick, creative, informal content often fits better and feels more authentic and meaningful.”

LP: “We’re in a different place now, societally. The customer rightly demands to be seen and heard as an individual. Brands have a responsibility as marketers and as big, powerful platforms of influence to advance culture with their decisions. I believe that context needs to be more strategically and consciously [...] thought through.

“Brands should never cloak intention or let a brand mission moment conflate or sit too tightly next to a product-pushing moment. When the two sit too closely together, it feels a little disrespectful. We owe the consumers more than that. As we push further into a world of personalisation, brands must challenge themselves to choose contexts, and craft them appropriately for the audiences. It needs to be inherently much more human.”

This is a sponsored feature paid for by Saks as part of a BoF partnership.