How Entry-Level Luxury Brands Offer Attainable Exclusivity

By: LiquidPixels | August 30, 2022 | 7 Min Read

Luxury brands used to stand for one thing: exclusivity for the ultra-rich.

However, in response to two decades of global socio-economic shifts and buying trends, luxury retailers have pivoted their message: attainable exclusivity for all.

The confluence of emerging economies abroad, the rise of the middle class at home, and the explosion of online commerce everywhere has created new opportunities for luxury brands. Instead of catering solely to the one percenters, luxury brands wisely created entirely new product lines as entry-level luxury brands to attract a new generation of customers.

Brands did this through the introduction of entry-level luxury products into their existing portfolios. Through the use of quality fabrics, excellent craftsmanship, and recognizable branding, these products are typically more affordable than the brand’s flagship offerings, but still provide exceptional style.

By following this augmented market strategy, entry-level luxury brands currently play a significant role in the luxury industry’s growth. In fact, after the luxury market shrank by 20–21 percent in 2020 due to the pandemic, it has since grown back approximately 13–15 percent in 2021, according to estimates from Bain & Co.

In specific markets, such as China, “affordable luxury” is expected to help fulfill consumers’ desire for luxury products.

Meanwhile, in the U.S., the luxury goods market is expected to grow at 4.6 percent annually until 2025 due to “the younger, multi-ethnic demographic that is more attracted to purchasing designer products online.”

The Major Players in the Entry-Level Luxury Brands Space

In recent years, several luxury brands have entered the entry-level luxury consumer products space.

• Gucci is one of the top fashion luxury brands that offer consumers low-cost options. On its website, customers can purchase pieces of jewelry and clothing accessories that are below $250.
• Similarly, menswear clothing line Brooks Brothers created a more affordable clothing line, Red Fleece, which is exclusively sold at their outlet stores.
• Chanel also offers affordable beauty lines, which, according to McKinsey, account for a third of its revenues.

Luxury car makers like Mercedes, Audi, and Lexus are also competing in the entry-level luxury cars market.

A McKinsey report on the global luxury car market predicts that the $80,000 to $149,000 luxury car range, which is the entry-level luxury car segment, is expected to grow by more than 8 percent per year by 2031, exceeding three million units. This number would represent a more than double increase compared to 2021 volumes.

Benefits Gained by Entry-Level Luxury Brands

There are several key benefits and advantages that entry-level luxury brands enjoy. Offering lower-priced items can give shoppers a taste of what your brand has to offer without a sizable investment.

Broader Market Reach

First, it allows businesses to tap into a new market of consumers who may not have considered purchasing luxury goods before. By offering more affordable products, companies can make luxury consumer products more accessible to a broader range of people while maintaining their exclusivity.

According to research, there is a bandwagon effect from consumers’ interest in purchasing affordable luxury products; it allows them to emulate the upper class at a lower price point. In addition, consumers are willing to pay higher costs to entry-level luxury brands for products of better quality.

Building Brand Loyalty

Introducing entry-level luxury consumer products helps businesses to build loyalty among entry-level customers who may eventually upgrade to more expensive products. These customers will never forget the company that helped them get started with luxury consumer products.

Ability to Adapt to Trends

Luxury consumer brands are successful for several reasons. They offer high-quality products that people see as status symbols. They also benefit from a strong emotional connection with their customers.

At the same time, luxury brands have had to adapt their strategies to stay relevant. For example, the rise of fast fashion brands like Zara and H&M in the apparel industry have made it easier for consumers to find affordable, stylish clothing. One way luxury brands keep up with the competition is by introducing entry-level luxury consumer products into their portfolios.

Luxury Consumer Brands Tap into Online Platforms

To stay ahead of the competition, luxury consumer brands must find ways to reach new customers and build loyalty among existing ones. For entry-level luxury brands, online presence assists with their competitiveness.

Deloitte found that luxury brands are already incorporating digitalization into their long-term strategies to meet customers’ demands.

Case in point: online shopping for luxury goods experienced a 50 percent jump from 2019 to 2020 and should lead growth in the medium term according to data from Bain & Co. This is thanks to the accelerated adoption of online shopping due to the pandemic.

These data and forecasts only mean one thing: the accessibility of luxury brands on online platforms also plays a huge part in the success of entry-level luxury products.

McKinsey’s State of Fashion 2022 report called on luxury brands to “adapt to evolving consumer demand and ensure they take the opportunities offered by new digital frontiers.”

The research company saw that the “continuing flourishing of online business models” are among the stand-out themes in 2021. It expects companies to “seek fresh approaches to online creativity and commerce” in 2022. In fact, according to its survey, 32 percent of fashion executives think digital strategies will provide fashion companies with growth opportunities.

For some segments, such as the jewelry sector, McKinsey warns that consumers “expect the same level of customer service and attention to detail online as they do in stores.”

Digital Interactions Attract Customers to Entry-Level Luxury Brands

When it comes to luxury consumer products, offering digital interactions is key to creating a memorable customer experience.

According to a study, the development of technologies that offer richer experiences in terms of aesthetics, sensory, social interactivity, and personalization, is triggering the rise of luxury consumer brands’ online presence.

The study also found that image interactivity on online platforms can lead to an increased perception of exclusivity and quality. Big luxury brands can provide this interactive experience through visual tools such as 3D product presentations and virtual tours.

Technology that allows for 360º views has already been used to present seasonal collections through online showrooms, and avatars of models have walked 3D virtual runways.

Gucci also contributes to this kind of online interaction. The luxury brand provides a virtual try-on for its sneaker collection and offers a digital showroom for its customers.

According to Statista, Gucci’s e-commerce net sales showed consistent growth from 2014 to 2022. From a mere USD 120 million in sales in 2014, it rose to USD 1.3 billion in 2022, an over 1,000 percent increase in a nine-year period.

Car makers are also joining the trend in 3D visualization. Lexus, Honda, and Jaguar are among the automotive companies that now provide virtual showrooms to their customers. Meanwhile, Genesis Motors offers build-your-own configuration tools on its website.

In fact, customers “value high-quality digital interactions and appreciate innovation,” according to a McKinsey survey.

Deloitte found that big luxury brands are making strategic partnerships with both experienced players in the digital field and with innovative startups to create new products. For example, Estée Lauder partnered with the global innovation platform Plug and Play, which is partly intended to enhance the “consumer connection and experience.”

The Future of Entry-Level Luxury Brands

Luxury brands are now adapting to the changing landscape and finding ways to appeal to a broader range of customers to remain relevant. This is partly the reason for the increasing number of brands in the foray into entry-level luxury consumer products in various industries, such as apparel, jewelry, automotive, etc.

In addition, as the world becomes increasingly digitized, businesses must find ways to keep up with the times or risk being left behind. For many companies, this means finding ways to incorporate digital interactions into their marketing strategies.

Sales of personal luxury goods online are expected to grow to €74 billion, representing a 19 percent increase, by 2025.

Bain also forecasts that Generations Y and Z will represent 70 percent of global luxury shopping by 2025, by which point the online space will be the leading channel for purchases of luxury consumer products.

Entry-level luxury brands will also continue to tap into emerging technologies. For example, according to Morgan Stanley, luxury brands are expected to take 8 percent of non-fungible tokens.

Like what we have seen in recent years, more technologies will emerge; these platforms will further luxury brands’ marketing and sales of entry-level luxury consumer products in the future.