Is Fashion Ready for the Experience Economy

In 2015, rising wealth in China produced 120 million outbound tourists, who, together, spent about $229 billion on overseas purchases. (The Japanese have even coined a word to describe the phenomenon: ‘bakugai’ or explosive shopping.) Their top purchases? Fashion and accessories.

Indeed, when Angela Ahrendts was chief executive of Burberry, she was early to recognise the impact of the "travelling luxury consumer" on the brand’s sales in Europe and the US and drove the company to cater to them directly.

Today, it’s common for major department stores, from Galeries Lafayette in Paris to Bloomingdale’s in New York, to target Chinese travellers with everything from WeChat marketing campaigns to translation services. But increased global travel, linked to new wealth creation in emerging markets, is affecting the fashion industry in other ways too.

For one, in rapidly developing economies like China and India, luxury travel is increasingly taking on the traditional function of physical luxury goods, becoming a form of social currency used to display status. Luxury is, in fact, the fastest-growing segment of the travel industry, having jumped 48 percent in the past five years. In 2014 alone, luxury travellers took 46 million international trips, worth €172 billion, according to a report by the World Travel Monitor

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Speaking at ILTM Asia in Shanghai, Shaun Rein, founder of China Market Research Group and author of The End of Copycat China, observed that spending amongst wealthy Chinese is shifting from luxury products to luxury experiences. "The new luxury is not buying a branded bag, it’s swimming with dolphins, hiking mountains, visiting far-flung amazing places — and then sharing the images on your phone," he said.

This shift is happening faster than most realise — especially as millennials, who deem ownership of stuff less important than access to experiences, have a greater impact on the economy — and luxury fashion brands would do well to recognise the ramifications.

So what happens to the luxury fashion industry as more and more wealthy consumers move their spending from products to experiences? For a start, luxury goods brands must focus on staging one-of-a-kind, immersive experiences that tie into purchases. Think about how Disney’s theme parks stage experiences that drive sales of associated product.

Fashion brands also have a lot to learn from luxury travel providers. Consider how tourists buy silk saris or batik prints when they visit markets in India or Bali. These items are signifiers to others that they’ve visited these destinations, but also function as souvenirs of the experiences they had there.

For example, what if Burberry leveraged British customs and rituals to deliver unique brand experiences that included purchase opportunities as their culmination? To achieve this, it could integrate with other historic British brands, say London’s Claridges hotel or a castle deep in the countryside. The bags, the trench coats, the shoes—they become souvenirs of the experience. Indeed, the rise of luxury travel need not be a threat to luxury goods brands, if both industries realise the rather fantastic opportunities for a strong partnership.

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