Experiential Luxury: Experience, Not Product, is the True Status Symbol

In the early days of luxury, elite customers were welcomed in their boutiques by none other than Coco Chanel or Christian Dior, offered a glass of champagne, measured, and designed unique creations in which they could flaunt at elite parties. Today, of course, deep-pocketed customers receive special treatment in fashion house boutiques, but they also enjoy fine craft drinks in cafes like LC Café, dine, and visit exhibitions at locations like Gucci Garden in Florence or immerse themselves in the virtual universe created by Givenchy, Burberry, Prada.

In recent years, due to rapid technological advancement and new consumer preferences, the luxury landscape has been completely transformed. Its definition is no longer limited to high-end products and services, nor even the shopping experience, but rather the experience of living, so to speak. With premium brands, one drinks, eats, travels, entertains, spends leisure time, and even travels to space. This so-called experiential luxury has gained momentum in the post-pandemic era, and if the Knight Frank Wealth Report is any indication, the number of its consumers will grow in the near future. By 2025, the number of ultra-wealthy individuals (those with more than 30 million dollars in their accounts) is expected to increase by 27 percent, reaching 663,483 individuals. During the same period, the number of millionaires will increase by 41 percent. It is worth mentioning that experiential luxury will not only be enjoyed by the wealthiest but also by the upper middle class, and as consumer appetite grows, brands in this industry will offer more dynamic, diverse, and creative experiences that stimulate all senses and provide pleasure on various levels.

Unique Projects

For the wealthy (or wealthier), luxury is no longer synonymous with exclusivity and material wealth, and owning luxury items is no longer a status symbol. From a material aspect, it has evolved into experiential and emotional, into stories that someone has lived and experienced. Instead of products, status symbols have become emotions and experiences. As Pietro Duchi, the Director of Innovation at the consulting company EPAM Continuum, told The Drum magazine, when it comes to experiential luxury, the product is an anchor, and the real value lies in the ability to remove the worries that occupy space in the customer’s mind and then fill it with elements that inspire curiosity, allowing them to feel alive.

It is about creating, as Duchi describes it,’the right feeling at the right place at the right time with the right product.’ How this looks in practice was demonstrated by the fashion brand Jacquemus, which offered its fans a unique shopping experience. During fashion weeks in Paris and Milan, it set up vending machines where customers could swipe their credit cards at any time (as they operated 24/7) and purchase a Jacquemus bag. As he announced on his Instagram profile, his pop-up vending machine is not a new sales point but a new concept, a new experience aimed at breaking boundaries within the world of luxury. Jacquemus has undoubtedly succeeded in offering fashion lovers something they have not seen before, and that is precisely what experiential luxury aims for. As The Drum notes, it is important that the experience offered is as unique as a fingerprint, because if it can be replicated and imitated by another brand, it easily turns into a commodity.

Luxury Hosts

A good example of this is the famous restaurant in Copenhagen, Noma. The head chef and co-owner, René Redzepi, once stated that he does not see himself in the restaurant business. Noma does not engage in it. Noma is a hospitality brand or, better yet, a brand that hosts. And precisely because of the insistence on such an experience – you are a guest, not a client – the chefs of this three-Michelin-star restaurant welcome guests at the door, even if something is burning in the kitchen. Thus, the restaurant does not offer food but an experience, a feeling of welcome and comfort. The Equinox brand, on the other hand, offers a premium experience in the gym. It is not (just) a space where you sweat and build muscles but also a meeting place for deep-pocketed clients who socialize and network there. In addition to employing top trainers and experts, their focus is on activities that encourage the socializing of exclusive members.

They are a gym on paper, but their true role is to offer an experience, to be akin to LinkedIn in a physical space with exercise equipment. However, most brands recently offer experiences in their newly opened hotels, restaurants, wellness centers, and many other hospitality establishments, and, as the numbers show, it is likely that investments in this industrial sector will grow in the coming years. According to the Global Fashion & Luxury Private Equity and Investors Survey 2023, as many as 49 percent of investors believe that the restaurant and hotel sector will grow the fastest this year. Of all the mergers and acquisitions that luxury companies have realized this year, the largest share, 33.6 percent, pertains to the hotel business, with a total of 98 business deals concluded, 16 more than in 2021. Other sectors in the hospitality category have also recorded an increase in the number of acquisitions and mergers, and interestingly, investments by luxury brands in private jets are also on the rise.

The Magic Must Last

Deloitte has also recorded the boom of experiential luxury in the so-called hospitality industry. Participants in its research indicated that the hotel business, or investments by luxury brands in this industry, will grow the most in the next three years. How this merging of hospitality and luxury brands looks is already demonstrated by a number of strong players like Audemars Piguet or Tiffany & Co. The renowned watchmaker leads Hôtel des Horlogers, built in 1857, which the brand took over and renovated in 2003. The hotel, as they describe it, breaks the boundaries of nature and architecture, offering a space of pure harmony. In addition to being able to sleep in luxuriously equipped rooms, dine in fine restaurants, and enjoy spa facilities, guests can visit a nearby museum dedicated to high-end watches.

Tiffany & Co. has offered customers an experience of immersing themselves in the world of the iconic film ‘Breakfast at Tiffany’s‘. At Harrods in London, visitors can enjoy afternoon tea and meals surrounded by the brand’s jewelry and recognizable Tiffany blue boxes. The displayed products, of course, can be purchased, or one can, at least for one afternoon, live like the unforgettable character Holly Golightly, portrayed by Audrey Hepburn. In the end, when it comes to experiential luxury, once is not enough because, as The Drum concludes, when the magic is initiated, it is not worth interrupting it.