How to understand the German premium and luxury fashion market? And more importantly: how to comprehend German fashion buyers? The “Luxury Fashion Report 2016”, published by the market research agency Facit Media Efficiency in cooperation with the German brand association (Markenverband) provides answers to these questions.
The 125-page study analyzes the characteristics of the luxury fashion market and its target groups, identifies five different consumer types, visualizes their living environment & values and compares the performance of 60 premium and luxury brands. An interesting finding up front: The most popular brand among premium and luxury buyers is Hugo Boss.
Munich, 11 February 2016 — Based on a representative survey among more than 1,000 German fashion consumers of luxury and premium brands, the "Luxury Fashion Report" is a comprehensive report on the German luxury fashion market and its main actors: the consumers. The attitudes, values, and the role played by luxury fashion items in everyday lives of these consumers stand in the foreground of the study. Current trends such as digitalisation, sharing economy and sustainability are also a central part of the study.
"Most publications on the subject analyse the market either from the perspective of experts or simply depict the current state. In our report, however, we have taken into account all the necessary aspects for a holistic analysis of the German luxury fashion market. And, above all, we put consumers at the centre, as they determine the success of brands," said Barbara Evans, Managing Director of Facit Media Efficiency and the person behind the study.
"The Luxury Fashion Report is an impressive study, because it offers a precise analysis of the current situation of brands and the market, as well as providing clear recommendations for the future of luxury and premium brands. The Markenverband (brand association) identifies themes on behalf of its members, and promotes them as an accepted partner of the brand marketing industry. The Markenverband's Forum Luxus.Marke.Lebensstil is pleased to fully support this valuable guide for fashion brands," says Christian Köhler, CEO of the Markenverband.
60 brands compared
The luxury market in Germany is worth around ten billion euros and rising. Most market segments are increasing: luxury products in clothing, cosmetics, jewellery or perfumes are being bought more frequently. First Facit Media Efficiency identified the current top players in the German premium and luxury fashion market. For this purpose, a total of 60 fashion brands, which currently dominate the market and are characterized by a significant market share and advertising relevance, were analyzed.
For the field of fashion, accessories were counted alongside clothing. This resulted in an eclectic mix of international brands, newcomers and industry leaders. The "Luxury Fashion Report" brand index is not only based on brand awareness, but also on the emotional relationship consumers build towards them. After all, emotional factors contribute about 70 percent to purchasing decisions. These consumer-brand relationships are based on four factors or stages and aggregated into an overall index.
First Impression: The initial phase. Here the brand leaves a first impression.
Flirtation: Testing the water. "You get to know", but the situation is still unclear, as is whether the relationship will continue.
Passion: The honeymoon phase. The intensity dictates the power. Physical and emotional closeness is now relevant.
Loyalty: The loyalty phase. Past experience has shown the strength of the bond. Now the question is whether the future will be trodden together.
At every stage of a relationship, brands should strive to achieve top marks. Not all succeed in this, but some perform extremely well, as the overall results show.
The rankings of the analyzed premium and luxury brands
Boss dominated the rankings in positions 1 and 2, making it the most popular fashion brand with very above-average results. Overall, premium brands occupy the top six places, Joop, in 7th place, is the best luxury brand in the study.
Consumers in focus: luxury has a higher importance than pure ostentation
The German luxury fashion buyers participating in the study are unanimous in their view of what is important to them in material luxury products. In the foreground stand timelessness and a love for detail. The respondents appreciate perfect workmanship and fine materials, delight in the aesthetics and beauty of the products and the fact that they, thanks to their timeless designs remain fashionable (86 percent). The term "luxury" means to them in addition, to treat or to reward themselves or others (80 percent). 81 percent look forward to the first occasion when they can wear their newly acquired piece of clothing. For most respondents, luxury products are not necessarily status symbols; they generate much more a special feeling of exclusivity.
Luxury fashion buyers today mainly want high-quality products, which make them feel good. The products themselves have a high intangible value, which relates to doing something good for themselves; they are less likely used to impress others. This "stealth wealth" is a particular feature of the current German luxury market and is the classic hallmark of a saturated consumer society. This corresponds to the German virtue of elegant understatement, and is clearly contrary to some emerging countries where luxury is much more ostentatious and on presentation to the outside. "In Germany people want to make a positive impression with luxury products; they are pleased about compliments regarding clothing or accessories. But no one wants to be out of the ordinary and to stand out," said Barbara Evans.
The value of values
Brands are successful when their presentation is clear, they offer a unique brand promise and have a clear value profile. Consumers want certainty in what they can expect from a brand, and the better the value profile of a brand matches the personal values of buyers, the more attractive it is; this achieves brand loyalty.
Successful brands have to know the values of their customers, and premium and luxury fashion buyers are a very diverse group of people. However, there are a number of values that unite them and sets them apart from the rest of the population.
These values include, for example, a strong sense of tradition and solidity. In contrast to the rest of the population, luxury buyers look for fixed points in life, and place great value on safety, reliability and quality. They are also above average harmony-loving people, where friendships and, above all, the family are at heart. In most cases, they prefer a pre-planned, structured and safe life. Yet humor, lightness, romance and youthfulness are not forgotten; they also want to convey to the outside world a degree of rebellion and independence; which is also due to their lower average age compared to the total population. In addition, the theme Fascination plays a central role; luxury buyers want to be surprised and excited again.
It is interesting that even young luxury fashion buyers between 20 and 39 years of age place great emphasis on traditional values such as reliability, family and security. However, they differ in many respects from the older shoppers: The young luxury buyers appreciate (respective to their ages) independence, excitement and adventure more and also place greater emphasis on performance, prestige and self-promotion.
The high demands they place on themselves are also applied to the brands with which they enter into a long-term relationship. Values such as reliability or ethics are not (yet) as relevant as in the older generation. Sustainability efforts, however, are appreciated by the young slightly stronger than the older luxury fashion buyer.
Relevant for brands in future: more genuineness and authenticity, more print and TV
Respondents said two values are set to continue to gain in importance: genuineness and authenticity. This is hardly surprising in view of the continuing trend towards sustainability on the one hand and increasing superficiality on the other side. "For companies, this means in future that brands ensure they remain true to themselves and their character and maintain a certain openness and honesty," explains Barbara Evans.
Online and mobile communications will, in future, become increasingly important; especially the larger sized tablets and phablets offer the optimum conditions for an exclusive representation of high-quality products and brands.
Younger buyers, however, are slightly different. Their ideas about what will constitute luxury in future are strongly influenced by their fascination with luxury goods. Exclusivity, display and individualization are becoming increasingly important from the perspective of young buyers. For companies, this means the up and coming "Generation L (Luxury)" needs to convey the theme exclusivity.
This takes place not just at the point of sale. With respect to future relevance in the luxury fashion market, the print medium is, from the perspective of the young luxury fashion buyer and with an index score of 120, in first place. And although TV is not a classical channel for luxury fashion brands, the young fashion generation expects a growing presence there.
Five types of luxury buyers
In analyzing the data, the researchers at Facit Media Efficiency identified five different types of luxury and premium buyers. These reflect the views, values and attitudes of the respondents:
Almost all luxury fashion buyers are (mobile) online.
But who buys where, and why (not)?
The Internet is clearly top with regard to usage frequency with 89 percent; so luxury fashion buyers of all types have a significantly higher online affinity, with an index value of 156, than the total population.
The internet is no longer only used as an information and entertainment medium, but is, thanks to the mobile devices, a constant companion. Especially the younger and middle age segments, but increasingly, the elderly, use the mobile network to stay in touch with the rest of the world, particularly with friends, despite mobility and time constraints.
76 percent of luxury buyers watch TV, but the index value is only 82. The TV consumption of luxury buyers, compared to the rest of the population, is well below average. Radio use is also slightly below average. The situation is different when it comes to print: popular magazines are well above average (index of 173), newspapers still slightly above average
91 percent of German luxury shoppers are online using mobile Internet; via smartphone or tablet. They have been pioneering digital trends, since only 51 percent of the total population uses mobile devices. Smartphones are the most frequently (privately) used devices at 86 percent. 57 percent, more than half of luxury buyers, also use tablets privately. Young buyers, with 94 percent online, are almost completely mobile.
Social networking, news and general communication (61 percent) play a central role in the use of mobile, followed by transport & navigation (55 percent) and music & entertainment (52 percent). Half of the users use their smartphone for shopping as well. "However, most goods are still bought in store, after browsing and trying things on ," said Barbara Evans. "In the luxury sector, the sensory and personal experience in real-world stores remains unrivalled".
While online is booming and has already overtaken the traditional touchpoints in terms of research, 91 percent of offline researched goods are still purchased offline, mainly in boutiques, specialty shops and department stores.
Goods researched and bought online amount to only 61 percent. But even if the purchasing behaviour of consumers is still more traditional, it is advisable for brands nevertheless to utilize the entire range of media: "Nowadays, consumers are accustomed to an omnipresence of brands and also expect it," said Barbara Evans in all certainty. "Of course in each case, it is necessary to analyse in which channels a brand should invest heavily. But to dismiss this channel as less important, because of a reluctance to purchase online to date, would be a mistake".
For premium brands, the step into online sales is associated with a significantly lower risk than for luxury brands. In the end, a fear exists that a pervasive online availability of the brand could effect a loss of significance and exclusivity. "Exclusivity and online sales are not mutually exclusive. On the contrary, there are plenty of creative possibilities to make online presentation desirable, even for luxury brands," says Barbara Evans.
"For most luxury brands it is also less of a question whether they should be online, but more, what their online store should look like, what is brand-appropriate while not weakening the retail stores."
What distinguishes successful brands
Brands should always move closer to their consumers and be aware of their thoughts, actions and needs.
The consumers are the central focal point and, depending on their types and ages, their needs and the methods of approach to them differ significantly, even or especially in the field of premium and luxury fashion: "Young consumers want to play to the gallery and for that they need the right fashion items, but they still must pay attention to the price. They also love personalized or individualized products. For older consumers, the shopping experience itself is much more important. Full service is of utmost importance here, as is a background knowledge of the brand, its products and their production," said Barbara Evans.
"It is necessary to start thinking about the upcoming consumer base and the possibilities of long-term consumer commitment. The prerequisite for this is a clear value profile of the brand itself, a deep knowledge of what consumers ascribe to their brand, and the ability to harmonize these into a values profile".
All results can be found on our study site: www.luxury-report.info/en
About the Study
For the study, interviews were conducted with a total of 1,044 men and women, aged 20 to 69 years, and who spend at least 1,000 euros a year on fashion and clothing and already have certain luxury and premium fashion brand products.
The representative presentation of the upmarket fashion consumer base and the large sample enabled relevant, robust results, as well as providing an in-depth analysis of diverse consumer groups. The selection of the 60 brands and their classification in the premium and luxury market were made based on various market media and industry studies of the German fashion market. In addition, industry experts were interviewed and the perspective of consumers also taken into account.