Journeying to luxury's new frontiers

With a double-digit growth and global revenues approaching US$250 billion, the future of luxury industries could not look more promising and full of opportunities.

In the next two years, luxury goods revenues are expected to grow 50 per cent faster than global gross domestic product. Importantly, luxury markets in developing countries, and particularly in Asia, represent an increasingly important part of the overall growth and develop on average twice as fast as luxury markets in developed economies.

While these figures might fill luxury leaders and managers with optimism, they also reflect fundamental changes that are going to break and reshape the "frontiers" of luxury, forcing the players in the market to completely rethink their strategies.

Together with Mathieu Trepanier from Tsquared Consulting Partners, I have aimed over the past five years to understand what will be the new frontiers of luxury, how to predict them in different markets, and what they imply for effective brand building and communication strategy. Overall, three frontiers will significantly affect the future of any luxury brand. We call them the 3S frontiers: the Status frontier, the Separation frontier, and the Societal frontier.

They capture the most important needs or expectations of consumers, the general public, and more widely, the business environment that will need to be managed to build tomorrow's winning luxury brands. Let me walk through each frontier, and offer some insights into how to manage them.

First, luxury used to be reserved for a single elite; now the elite is plural, changing, and global. For instance, there are now almost as many ultra-high-net-worth individuals (UHNWI) in Asia (42,895) as in North America (65,295) and Europe (53,440); perhaps for the first time in history, the "elite" has different values in different territories and does not share the same ideal of aesthetics.