The luxury market has been a stable and growing market, even in times of crisis. Proof of this is the position of Bernard Arnault as the new richest man in the world*. Arnault is the CEO of the LVMH group (Louis Vuitton Moët Hennessy).
Looking at Portugal, we have another inspiring example of success in the luxury market: Farfetch, a luxury fashion e-commerce company.
If this is your path and if you have or are developing a Portuguese luxury brand, follow this article and discover how e-commerce is changing this market and how you can leverage this tool to position your luxury brand internationally.
The luxury market has evolved over the last 10 to 15 years at the pace of technology. If in the past, the typical consumer was Anglo-Saxon and in their 50s, today they are Asian, digital, and in their 20s.
This new consumer, in addition to seeking what has always been sought in a luxury brand, adds two new requirements: digital presence and sustainability. The new luxury, if we can define it thus, is more inclusive, democratic, and sustainable. Therefore, if you want to reach the right audience you have to navigate towards it, creating a sustainable and digital luxury brand.
The tip comes from Stefania Lazzaroni, general manager of Altagamma Itália (Italian Association that studies luxury brands): when smaller brands join forces and work more cooperatively, they position themselves better.
The idea is to enter the international luxury market as an “ecosystem” of Portuguese brands and one of the fastest ways is called “e-commerce”. This is where technology comes in. Even if your business idea does not involve founding a national luxury brand, it could involve creating technological solutions that help these brands position themselves in the digital world.
The “internationalization via e-commerce” incentive is a perfect support line for businesses related to the luxury market that want to grow beyond borders. Among other objectives, this line directly supports the creation of online stores. So, take that idea out of the drawer and bring it to life. Learn more about this incentive here.
In an interview with Jornal de Negócios, José Neves, CEO of Farfetch, in addition to reinforcing the resilience of the luxury market, which should resist inflation and times of crisis, pointed to China as the main market. According to José Neves, Chinese consumer demand has fallen in recent years due to consecutive lockdowns, something that has now ended, opening the doors again for the growth of Chinese demand.
In addition to China, other Asian powers that have “new rich” every year should be considered. This is the case with India and South Korea, which, according to Stefania Lazzaroni, are increasing their luxury market purchases at a rate of 6% per year. Finally, we look at Brazil, which in 2022 saw luxury product sales grow by 50%, largely thanks to luxury e-commerce platforms that continue to emerge and grow in the country.
The Support for Research & Technological Development measure aims to finance projects with innovative technological solutions that originate new products or services, in the experimental phase. If you are developing a technological solution for the luxury market, this non-refundable support line may be the right incentive for you. Learn more here.
Portuguese luxury footwear is already recognized abroad and of the fashion items, it is the one with the most potential.
A good example that attested to this growth potential was the partnership between the Portuguese brand Josefinas and the world’s most influential fashion blogger, Chiara Ferragni. Through this partnership, Josefinas launched an exclusive footwear edition available only through Chiara Ferragni’s e-commerce platform. The result? Worldwide reach with exact positioning in the target audience.
In addition to the potential of footwear, there is the alliance between the mastery of Portuguese artisans and furniture designers. Portuguese furniture, recognized for its quality, will also greatly benefit from e-commerce to reach a larger audience, going beyond the European markets where it is better positioned.
One of the biggest challenges for Portuguese design luxury brands is facing competition from Italian or French luxury brands.
This is where the best that Portugal can do comes in, and where competition, although present, is well leveled for us: luxury wines and olive oils. If wine is already a niche, luxury olive oil is even more so.
These are two market niches where e-commerce is very underrepresented, with partnerships gaining more relevance. However, respecting the value of strategic partnerships, what would be the final value if you could reach the customer directly through an e-commerce platform? Normally, you would reach a larger audience, while simultaneously increasing your profit margin.
In addition, these two specific niches can add something unique: the experience factor, through packages that include more than just a bottle of wine or olive oil, a visit to the estate, a tasting experience, or a stay at a luxury rural hotel & spa.
Luxury market: exporting via e-commerce is the way
Portuguese entrepreneurs have more and more room to launch products in the international luxury market. They can and should do it digitally, positioning their products with the new consumer of this market, focusing their strengths mainly on emerging countries. This is the path for Portugal to have more luxury brands recognized worldwide.
*According to the Forbes list published in April 2023