Earlier this month, forecasting consultancy The Future Laboratory hosted a webinar to discuss innovation and future trends in the luxury and hospitality industries. Foresight editor Kathryn Bishop shared some thought provoking insights into how the composition and demands of luxury consumers are changing, what the world's biggest innovators are currently doing to stay ahead, and some predictions for what we're likely to see next.

There are many drivers behind the changes in these industries and, as to be expected, technology and climate change are up there. Technology has accelerated in such a way that we are now hyper-connected, both to brands and to each other. Technology therefore has a huge role in the way we discover brands and become immersed in their world. Climate change is also rapidly changing the landscape for the luxury and hospitality industries as we become increasingly conscious of resource scarcity. Consumers are demanding transparency about the environmental impacts and responsible production of goods, resulting in an expectation of innovation across the supply chain. The third key driver for change is evolving demographics. Future consumers are now composed of Millenials and Gen Z, who demand that brands are relevant and that they adopt authentic narratives and honest cultures.

With these drivers of change in mind, the Future Laboratory refers to the "Five States of Luxury" in their future trend forecasting for the luxury and hospitality industries.

1. Acquisition and value

This state refers to how brands are discovered in this day and age. One of the key trends here is to strategically engage in unexpected collaborations. This works both for smaller upstarts who are looking for a marketing platform, as well as for older brands who are looking to find new life and new fans. The older brands will need to break free from traditional comfort zones to explore these new partnerships and drive exposure in unexpected ways. This could allow brands to enter new markets with designer-meets-high-street collections (such as Alexander Wang x H&M), disrupt its current market (such as the collaboration between iconic rival houses Versace and Fendi), or even to create new products (such as Apple and Hermès' AirTag bag charm). Whilst brands must be careful to avoid dilution and ensure there is a synergy in entering into such collaborations, next year is expected to see much more of the letter "x".

2. Discernment and worth

Maximalism, eclecticism and culture are all having a moment in luxury and both brands and consumers are embracing it as a demonstration of who they are. Brands are increasingly communicating greater global and cultural understanding through craftsmanship and the celebration of artisans. An example of this is in a recent Dior runway in Marrakech where an expert in African textiles was employed and cushions were embroidered by local weavers for guests to sit on. From this, we might expect to see the emergence of unexpected cultural fusions, which in turn is seeing long-standing centres of luxury shifting towards places like Africa. The balance here, as Bishop points out, is ensuring cultural appreciation rather than cultural appropriation.

3. Emotion and experience

One of the trends arising from the pandemic is that we are seeing a shift towards conscious deceleration, escapism and balance. Goods and services are being shaped by more considered and slower daily routines as an antidote to fast paced and demanding lifestyles. Travel in particular is evolving into a healing activity. An example of this is the Bahamas offering a two year work visa to change the rat race lifestyle. Technology is also enabling people to virtually experience the benefits of exotic spa destinations via phygital realms (such as wearing a virtual reality headset transporting you to a virtual hot spring whilst soaking in your bathtub at home). The rise in high quality VR experiences will enable the blurring of lines between reality and illusion, so that customers can be transported on-demand to calming surroundings without leaving their homes.

4. Responsibility and awareness

It's no surprise that a pro-planet and socially responsible attitude is pervading luxury. There is a rise in "uneasy affluence" which is essentially a backlash against the ostentatious spending typically associated with old luxury. Brands therefore need to transform by rethinking their products and services to be more social, accessible and supportive. Companies' operations are also under pressure to be more inclusive - both in terms of who is feeding into and influencing the brand via research and development, as well as diversity and inclusion within the company. Traditional luxury brands are likely to face competition from a new generation of upstart companies who are building loyal brand communities by demonstrating they care about social capital (such as access, design, culture and sourcing). An example of this might be ethical fine jewellery brand upstarts which are priding themselves on their transparency, local collaboration and skilled craftsmanship.

5. Intellectual and poetic

The forecast is for the blurring of lines between physical capabilities and fantasy. The two big areas of focus for this are space travel and deep underwater expeditions. Luxury experiences are increasingly focussed on the element of discovery and the uniqueness of going where no one else has. Travel therefore requires a more adventurous mindset to push boundaries, for example the Poseidon Undersea Resort in Fiji (an underwater hotel). Consumers are also leaning towards more personal experiences, examples of which are perfumes based on DNA and travel based on family trees. Exclusivity has always been a key component of luxury and such intangible products and experiences lean into this desire to have something no one else has.

Conclusion

Three of the recurrent themes from the Five States of Luxury seem to be exploratory mindsets, phygital realms, and appreciation of nature and people. This reaching out across both the physical and digital worlds will bring with it endless opportunities for brands, but it will need to be carefully curated to ensure synergy and relevance.

As ever, The Future Laboratory has shared some fantastic thoughts for the year ahead so a big thank you to Kathryn Bishop for the insights.

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