Five talking points from the FT Business of Luxury Summit 2024

Coming hard on the heels of the Walpole British Luxury Summit, the FT’s 20th Business of Luxury Summit offered a powerful opportunity to explore some of the macro themes emerging in luxury – not least against a background of market normalisation after the post-Covid boom. Taken as a whole, there was a strong indication of a return to a forensic focus on luxury fundamentals; for example, putting the emphasis on the finest materials and exceptional craftsmanship as pillars of luxury, an awareness that the difference between success and failure depends on maintaining a finely tuned balance between brand management and creativity and on a need to create exceptional and memorable experiences with customers, whether they’re entry level or VIP.

Walpole was also able to celebrate the strength of its relationship with Altagamma, particularly important as Walpole holds the presidency of the European Cultural and Creative Industries Alliance (ECCIA) this year. Walpole and Altagamma co-hosted a private supper at Hotel Cipriani, A Belmond Hotel, Venice for Italian and British luxury CEOs, preceded by a private tour of the Buccellati exhibition on Guidecca.

Keep reading for my five main takeaways from the FT Business of Luxury Summit...

According to the FT’s Martin Wolf, the "liberal trading system on which the global economy is built is going through agonies" and "geopolitics really matter". Whilst huge economies like China and India continue to grow - and India was talked about as the "most important growing economy over the next 10-plus years" - politics and protectionism play a huge part, in the US as well as in China and India, and may present risks for luxury brands that are hard to mitigate against. The spectre of trade tariffs continues to be a conversation at Walpole, knowing as we do how easy it is to make luxury the collateral damage in a protectionist trade dispute. That being said, luxury brands continue to demonstrate resilience despite global economic and geopolitical uncertainties. Strategic adaptability and a deep understanding of consumer behaviour is crucial for navigating these challenges. 

Go high or go home seemed to be the line of travel within luxury brands, with a focus on elevating both product and experience. Whilst entry level is still buoyant and a space for experimentation, commentators at the Summit talked of an ‘hourglass’ shaped market, with a profoundly squeezed middle. The luxury consumer is evolving, with increased demand for personalisation, sustainability, and unique experiences. Brands must innovate continuously to meet these heightened expectations. Understanding the specific customer behaviour within your brand is key.

At the very top end of luxury, as Alberto Galassi of Ferretti Group illustrated, the mindset must be customers as ‘friends’ not ‘clients’, though Ferretti Group’s customers are clearly very special friends indeed, with Galassi creating experiences like a private concert at La Fenice with Elton John after he had said he would never perform live again, or taking over the whole of the Venice Simplon Orient Express. In high-end beauty, ultra-premiumisation of fragrance, skincare and beauty is driving distinction and market growth at the top end, whilst indie brands (eg The Ordinary) continue to appeal to an aspirational customer. At Vuitton, under Francesca Amfitheatrof, innovation, craftsmanship and creativity in super-high jewellery – not least with two unique and patented diamond cuts in iconic Vuitton shapes - has created a whole new market for a highly engaged VVIP customer. Even in the luxury spirits sector, which experienced substantial Covid driven growth – or ‘revenge conviviality’ – the prediction was ‘ the high-end will grow, low end will have a place, middle squeezed.’

Significant growth in emerging markets, particularly in Asia and the Middle East, is reshaping the luxury landscape. Brands are concentrating on localised strategies to cater to these diverse and dynamic markets. Stephane de La Faverie of The Estee Lauder Companies highlighted that at the accessible end of luxury - and beauty is a good example of this segment - the focus should be on an emerging middle class, not least in India and China, because by 2030 an additional 900mn around the world will be joining the middle classes, presenting an opportunity for aspirational luxury brands and those who may not be well known in India, for example. He also noted that the Generation Alpha consumer will be the first predominantly non-white consumer segment in US history, an important demographic shift with a big impact on product development. 

The seamless integration of digital and physical retail experiences is now just an expectation from an ever more sophisticated consumer. Whilst investment in technology and data analytics is driving personalised and immersive consumer experiences, the importance of developing strongly experiential, high-touch retail moments is a clear trend. If customers are giving their time to a brand, they expect to a memorable, authentic and involving experience en route to purchase. Leo Rongone of Bottega Veneta talked about the importance of opening the first Bottega Veneta residence in a palazzo in Venice’s Canareggio district, with artists in residence, as well as their focus on sharing the craftsmanship within the product.

The ‘slowification’ of luxury was discussed in a number of contexts. Dan Ruff, Bemond’s CEO, spoke of the group’s ‘slow luxury’ concept, incorporating a literal slowing down in travel experience that includes train and boat travel, but also a slower more mindful approach to environmental impact.

Environmental, Social, and Governance (ESG) initiatives continue to be integral to brand identity. Consumers, especially younger generations, demand transparency and ethical practices from luxury brands: it has become a luxury fundamental. There was a sense from several speakers that brands have a responsibility and an opportunity now to ‘train’ younger consumers into responsible modes of consumption.

Balancing brand heritage with innovation is key. Leveraging historical brand narratives while embracing modernity can create a compelling brand story that resonates with today's consumers. Andrea Guerra, CEO of Prada Group, Francesca Amfitheatrof of Louis Vuitton and Bottega Veneta CEO, Leo Rongone, all spoke about the 'responsibility to protect your future' in buying or supporting small artisanal companies for craft skills, to help protect their skills for the future and to protect your future as a  brand by doing so. It was also clear that, as brands continue to develop their offer into non-core categories (e.g. fragrance for Bottega Veneta, high jewellery or hospitality for Vuitton), a clear sense of brand heritage and iconography is essential. 

> With thanks to the Financial Times for inviting us to attend the Summit and to Hotel Cipriani, A Belmond Hotel, Venice for their hospitality in hosting our opening night dinner for Walpole and Altagamma members.

> Photos courtesy of Helen Brocklebank and Charlotte Keesing