New research, from global property company Savills, has found that London is now the second favourite destination for luxury US retailers to break into the European market, despite fears that Brexit might cause international brands to look elsewhere.
The research found that overseas expansion of luxury brands spurred on Europe’s letting activity in the luxury retail market. According to the results, London and Paris are now prime points for brands looking to enter the European market.
In 2017, luxury brands grew their share of the retail market in Europe from 38 per cent in 2016 to 45 per cent in 2017.
However, the London luxury market is already highly competitive and any US brands looking to gain an advantage need to understand exactly who the luxury audience is.
When it comes to spending their disposable income, Londoners are particularly spoiled for choice. From luxury goods to hospitality, brands contending for customers’ disposable income have to consider competitors outside of their immediate sphere; when a consumer debates whether or not to purchase a Gucci handbag, they are not only judging that handbag against similar offerings from Prada and Burberry, but also weighing up the purchase against equivalent luxuries, whether it’s tea at the Ritz, a box at the Royal Albert Hall or a family holiday.
Luxury purchases are, inherently, emotional rather than functional. When you’re treating yourself, you purposefully seek out brands, products and experiences that resonate with you emotionally. With these emotional ties being such a crucial part of the buying experience, it’s more important than ever that brands and organisations build strong and genuine relationships with their customers, to encourage loyalty.
Traditional measurement methods focus on functional loyalty: that is to say, a customer returning to a particular brand again and again for practical reasons, such as an enticing reward scheme or a convenient location. Emotional loyalty, however, is more complex and hard-won. A customer will only become emotionally loyal to a brand when it corresponds with their passions, values or ideals. By enriching transaction data with third-party data sets such as social intelligence, brands can understand the mindsets that lead to purchase and begin to align themselves with what customers truly care about.
So, what are the key mindsets that define London? Starcount has conducted an in-depth study into the passions, mindsets and motivations that lie behind Londoners’ spending habits, utilising a client’s transactional data and enriching this with emotional analytics. From local trendsetters who are always up on the hottest neighbourhood haunts to the seasoned spenders who are first in line for Wimbledon tickets, Starcount understands where and why consumers decide to buy and can use this insight to help brands and manufacturers create a truly customer-centric business strategy.
Here are the five key customer mindsets in the London luxury market that brands should be aware of, taken from Starcount’s pioneering Observatory platform:
1. Suburban Commuters
Suburban Commuters are all about a healthy work-life balance, whether that’s going to an exhibition or for dinner with friends, or grabbing a quiet moment to read with a coffee. They are proud Brits and enjoy following the activities of the Royal Family.
2. Local Trendsetters
This group are active members of their different London communities, from Lambeth and Peckham to Camden and Dalston. Many of them work in the creative industries and they enjoy supporting local projects, visiting the latest pop-ups and attending art and theatre shows.
3. Affluent Cosmopolitans
These proud Londoners are passionate about fashion and regularly fork out for the latest designer pieces. Many of them have made their careers in the fashion industry, working as stylists and in luxury PR.
4. Family Day Trippers
This is a family-focused group, composed of proud wives and mothers who love entertainment, suitable for both themselves and their children. This includes everything from an episode of Doctor Who or a Disney film to a West End show or ballet performance.
5. Seasoned Spenders
Seasoned Spenders are highly educated, politically-engaged and passionate about culture. They are as, if not more, likely to spend money on experiences as they are on products, with jazz concerts, ballet productions, cinema trips and holidays being amongst their favourite activities.