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For years, luxury brands and loyalty programs seemed like distant relatives, rarely crossing paths. The question has always lingered: Are luxury brands ready to embrace loyalty strategies? Then came COVID-19, shaking up everything. To add to the chaos, 2022 began with a global economic downturn triggered by unexpected geopolitical tensions. Despite these challenges, the personal luxury market witnessed a rollercoaster growth. Starting with a booming $301 billion in 2019, it took a sharp dive in 2020, only to surge by 20% in 2022, hitting an impressive $373 billion, as reported by Bain and Company. This tumultuous journey has sparked new conversations about the future of luxury branding and customer loyalty.
This guide captures the intricate detailing of the luxury goods market for 2025 & beyond to see how the digital progression is fostering a loyalty-first environment globally, even in the luxury retail market.
2020 & beyond presented extreme challenges – with every industry taking a hit, every sector retreating, and every luxury shopper changing once and for all. The luxury goods market saw its imminent slowdown. Globally, both brands and designers struggled to overcome the newly self-conscious behavior of more mindful consumers. For legacy brands it was, then, about finding new ways of recreating the brands’ physical universe online. But are all the brands ready to ride along? Let’s look at 3 major challenges that stand upfront for marketers:
Luxury goods are products that nobody really wants but everybody needs. The predicament for marketers selling luxury products is to determine whether loyalty programs would devalue or enhance a premium brand’s image. Many brand marketers often feel that rewarding freebies like discounts and other related offers might downsize their otherwise high-end products or services.
You own a Louis Vuitton and that stays with you. You wear a Prada and well, that too lasts forever. Most luxury retailers do not interact with the customer for a year or so after having sold a high-priced item to them. This leads to a lower shopping frequency and poses a huge challenge for marketers.
Knowing that luxury brands already offer a high-end experience to their customers, understanding the next level of experiential benefits in this category is no child’s play. The challenge is then to think of rewards that are beyond the unthinkable for their customer groups.
Luxury brand loyalty is all about capturing the brand’s cultural ethos and creating a space for creativity and innovation. Let’s look at what we term as the 4Es of creating a luxury brand loyalty program.
Shoppers don’t come to a brand for mere discounts and rewards; they look for exclusivity. An exclusive preview of the celebrity collection, signed merchandise, offering coalition loyalty benefits by partnering with high-end partners like five-star diners, and travel escapades could uplift the positive persona of a luxury brand. Luxury shoppers look for a world beyond discounts and rewards. Your brand must clearly reflect why your premium shoppers are offered a set of privileges that are exclusive only to a specific number of shoppers.
The biggest premise for any luxury loyalty program is to customize experiences for their shoppers by creating surprise and delight. Dolce and Gabbana reframed the majestic architecture of their stores through the virtual boutique experience project.
Loyalty is about building an entire rewards portfolio and diversifying it. The American cosmetic luxury retailer, BlueMercury, has partnered with high-end cosmetic and skincare brands like Bobbi Brown, La Mer, Jo Malone, Yves Saint Laurent, and many others to offer an exclusive and fulfilling rewards experience. For their most loyal customers, the glam retailer offers an annual gift package to its members.
Singapore’s Kris Flyer Program allows flyers to redeem their points not only on air tickets or travel-related offerings but other premium partners like five-star dining and shopping with other luxury fashion brands.
Similarly, if your brand focuses on using sustainable products, your loyalty program must resonate with how sustainability is core to your brand values and larger organizational purpose. Moncler has a dedicated sustainability tab on their webshop, while UK’s Stella McCartney created new labels that encouraged taking better care of clothing for longer lifespans.
The brand also launched its first global game to enchant young luxury consumers on their website. With “b Bounce”, a new puffer collection was launched to use gamification as an effective engagement strategy. All products are tagged with QR codes for scanning to receive a social currency. The same currency can be traded for rewards and discounts. Further, customer interaction is captured on social channels by building a tangible digital dimension to traditional retail channels. Through a dedicated WeChat mini program, customers can unlock exclusive content and personalized experiences and share them with their communities.
The LVMH-owned store in Paris opened an in-store digital customization segment for the hyper-personalization of its product offerings. Customers have access to over 80+ international brands and can customize clothes, shoes, and other accessories, or even draw their own t-shirts.
Saks Fifth Avenue also offers an option to shop a look from its New York store through a video chat feature. This seamless plugin of web chat capabilities paired with in-store appointments before or after hours – packs an impactful customer engagement strategy for its loyal fan brigade.
Since makeup is an industry that is largely driven by recommendations and referrals, Sephora’s Beauty Insider Community program personalized its experience for its loyal customers perfectly. Their live community allows customers to join exclusive beauty community meetups based on their individual beauty interests, and offers credible product recommendations, tutorials, and expert opinions.
The luxury brand has portrayed an excellent example by setting up an equally promising website that offers the provision to book in-store as well as virtual appointments. It also offers a collect-in-store option to some of its exclusive loyal members at different locations, thereby abiding by global safety norms.
The priorities have been reset across luxury fashion brands, and five strategies clearly stood out for every retailer. As the world is dominated by Generation Y and Z, these generations are expected to account for 55% of the overall luxury sales market by 2025.
Did you know that Gucci livestreamed a 12-hour-long digital fashion show? Now is the time for brands to switch to live-streaming platforms. Here, luxury shoppers can not only see but experience how suitable or relevant a product is for them. 800 Mn+ people watch live videos daily across Instagram and Facebook, resulting in a new rollout of features to enable brands to get the most out of their live broadcasts. In addition to Instagram Live Shopping, users now have the option to view the broadcasts live on desktop computers along with their smartphones.
There is now a pressing need for brands to catch hold of a customer’s attention across the right channels. Luxury fashion brands have, thus, shifted their focus to analyzing and acting upon omnichannel shopping behavior. For the prediction and capitalization of present and future luxury shopper analytics, an omnichannel integration is a key expectation for luxury retail digitization.
Amongst all, GUCCI tops the list of omnichannel digital presence. The brand remains one of the industry’s best-in-class digital performers, by leveraging digital storytelling, omnichannel experiences, eCommerce, and, of course, a constant drive to innovate online. From digital gifting with split payments to AR-powered try-on features on Snapchat and the Gucci App, the brand is constantly experimenting like there’s no tomorrow.
An everyday example of phygital retail would be a typical consumer who always shops with a smartphone in hand, often checking product details to help them choose offline. In the retail sense, the term has gained prominence recently, referring to the blending of the best online and offline features of the shopping experience. Nordstrom is a U.S. luxury fashion retailer that recognizes that the foundation of a phygital strategy is the seamless ease and convenience of the customer experience.
A. The brand’s Neighbourhood Stores allow the customer to touch and feel the products they browse online.
B. The integrated-app experience with the stores offers a seamless shopping experience to shoppers by using a combination of both physical and digital stores.
C. Their Instagram and Pinterest accounts allow users to click on a posted photo and take them straight to the Nordstrom online shop where they can order online or reserve the item in-store.
Subscriptions not only ensure that your consumers are updated about the latest offerings but also promises consumer loyalty upon delivering the brand promise.
Ralph Lauren introduced The Lauren Look – the company’s first subscription apparel rental initiative. Starting at $125 a month, subscribers are able to access a constantly changing range of Lauren Ralph apparel: including dresses, pants, and tops. Pieces are accompanied by suggestions from personal stylists on how to wear them.
Aptly shared by John Federman (CEO of JRNI), “Appointments allow you to keep the lights on and effectively schedule staff. It also keeps the staff more productive. If an associate can spend time with someone with a high propensity to buy, they can use their time more effectively.”
Lululemon leads the frontier to allow consumers to book appointments to browse before, during, or after regular store hours. Giorgio Armani also opened around 100 of his stores with a new system of booking appointments online. This practice was immediately adopted post-pandemic, ensuring social distancing was practiced as the new norm.
When we also look at how online luxury sales are broken down, we see that the multi-brand marketplaces are expanding to reveal how the digital luxury customer is seeking an ecosystem offering more value than points. Luxury brands, thus, need to overhaul their loyalty game for the luxuriously affable GenZ and barge out of their closets to offer experiences building an element of exclusivity in their offerings. The conventional earn and burn won’t fit into the high-end luxury world.
Given the many trends that have shifted in the last few years, the key to designing a loyalty program for a luxury brand has completely been revamped. Therefore, luxury loyalty is not just about rewards, it is how brands leverage data to understand the customer buying patterns and build memorable customer experiences. However, for luxury brands to deliver this benefit, they must invest in extracting and analyzing customer data to derive meaningful insights. This is where many luxury brands shy away but as the field of data science progresses and more luxury brands come on board, there will be significant improvement in the times to come. Many brands have already begun to evolve their existing loyalty programs to cater to the changes in the luxury industry.
Capillary’s seamless and intuitive loyalty platform effortlessly enhances customer engagement and retention for luxury brands, allowing them to use data effectively and evolve with the industry effortlessly. Talk to our Luxury Brand Loyalty Experts to explore more.
Luxury loyalty programs are specialized offerings by high-end retail brands that provide premium rewards and experiences to their members, extending well beyond traditional transaction-based incentives. These programs are strategically designed to encourage ongoing purchases by positioning benefits that require continual engagement from members, thereby fostering deeper lasting brand connections.
Our pick for the top 5 brands with innovative luxary rewards programs are Louis Vuitton, Sephora, Saks Fifth Avenue, Burberry, and Le Bon Marché.
As the landscape of online luxury sales shifts toward multi-brand marketplaces, luxury brands must innovate their loyalty strategies to cater to the value-driven Gen Z by offering exclusive experiences beyond mere point accumulation. Traditional earn-and-burn models no longer suffice in the luxury realm where understanding customer buying patterns through data and creating memorable experiences are crucial. Capillary’s comprehensive and intuitive loyalty framework seamlessly drives customer engagement and retention strategies for luxury brands, enabling them to leverage data and evolve with the industry without breaking a sweat.
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