Luxury brands and increasingly turning to digital channels like social media to power their marketing campaigns and reach younger consumers.
According to a new study from Gartner examining brands benchmarked in the 2019 Luxury Index, the number of paid social media impressions across the sector jumped 27 per cent last year.
The number of Instagram stories from brands featured in the index jumped 54 per cent year-on-year while investments in informal content like behind-the-scenes videos, which have recently outperformed more traditional brand campaigns, also increased.
This increased spending on social media advertising is driven by luxury brands’ attempt to reach Gen Z shoppers who now have an annual spend of $143 billion (£111 billion).
The report highlights that 46 per cent of Gen Z shoppers prefer to purchase premium goods, compared to 35 per cent of the general population, making them a key target for luxury brands.
While social media is a key marketing destination for reaching Gen Z, Gartner points out that influencer saturation has peaked forcing luxury brands to reconsider their influencer portfolios.
Smaller influencers, which account for 59 per cent of analysed posts, have a 3.5 per cent engagement rate compared to the 3.1 per cent engagement rate of big-name profiles.
Retailers like Calvin Klein who have utilised smaller (fewer than 100,000 followers) influencers effectively benefit from both better engagement rates and lower fees.
Furthermore, Gartner suggests that perhaps the most important strategy for luxury brands to increase their direct sales is to offer exclusive products.
Product customisation options across index brands has risen 12 per cent in the past year, with 33 per cent now offering some form of personalisation.