A Guide to Building Luxury Brand Value Amid Geoeconomic Uncertainty
FSW examines the state of the luxury economy and how brands can use content strategy to build brand equity in a turbulent global market.
Insights
The luxury industry has become increasingly dependent on the U.S. consumer, even as the risk of U.S. tariffs on European-manufactured goods looms.
Many luxury brands still lack holistic content strategy and scalable content operations infrastructure, hindering their ability to effectively engage with their target audiences.
Content is a valuable medium of exchange that inspires, informs, and drives customers to purchase, and is a critical component in brand storytelling and differentiation.
Regionalization and localization are critical elements of holistic content strategy for luxury brands, helping them identify and engage with new and existing audiences in diverse markets without risk of brand dilution.
The luxury industry became increasingly dependent on the U.S. consumer in 2024. Though we are still waiting for the full set of 2024 earnings reports, what we have seen so far confirms that last year will be the first annual industry downturn in 20 years if we exclude years impacted by the global financial crisis and Covid. There are many contributors to this trend, but the slowdown in onshore and offshore luxury purchases by Chinese consumers is one.
Brands that performed well in 2024 were those that implemented strong and effective brand storytelling underpinned by explicit content strategies and those that were less dependent on China. But things would have been worse for the industry without a relatively robust U.S. market.
How should brands navigate this uncertainty with the risk of U.S. tariffs on European-manufactured goods looming?
The U.S. consumer represented a much more potent source of revenue growth for the industry last year than it has for the past decade. Industry bellwether LVMH reported that overall organic revenue was up 1 percent in 2024. The contribution of China (excluding Japan) to revenue fell 3 percentage points to 28 percent, as annual revenue from the region declined by 11 percent.
By contrast, the relative contribution from the U.S. and Europe held steady, with U.S. sales growing 2 percent. The contribution of the U.S. stood out even for brands that continued to grow in Asia. Hermès reported Asian sales were up 7 percent in the first nine months of 2024. Yet, this was just under half the value of sales in the Americas.
The possibility of broad-based and untargeted U.S. tariffs against Canada and Mexico will send a shiver down the spine of the luxury industry. The U.S. administration has suggested tariffs against the EU are coming, prompting a promise of retaliation from Europe. This is bad news for Europe and luxury. Luxury products account for around 5-8 percent of European exports to the U.S. The American market represents about 25 percent of the global demand for European luxury organizations, and this percentage has been growing since the pandemic.
Building Market Resilience through Applied Luxury Strategy
The resilience of luxury brands and their ability to flex and adapt for the future in shifting market dynamics should involve a combination of adaptability and long-term strategy. For luxury brands, this directly translates into how they plan, create, manage, and distribute content across and within channels.
The reality is that many luxury brands lack holistic content strategy and scalable content operations infrastructure, even if they have a strong digital and e-commerce foundation, complete with tools and platforms across the major retail tech acronyms, including PIM, DAM, CRM, and PCOS. Without content strategy, luxury brands suffer from many issues, including:
Lack of centralized content operations: Brand content teams are often siloed with too many disparate tools and disconnected, undocumented processes and guidelines. This makes executing consistent yet attenuated cross-channel campaigns hard to plan, create, personalize, and measure.
A reactive—even outdated—approach to content creation: Brands focus on immediate needs or short-term campaign tactics, instead of planning for volatility or original creative approaches.
Failure to scale globally with nuance: A lack of true regionalization and localization content strategy leads to content that may resonate with an American luxury buyer may miss the mark in other markets.
An underinvestment in data-driven storytelling: For all the attention brands give to data and analytics, many do not use consumer insights in a holistic, fully applied way to guide narrative design and content decision-making.
Why Luxury Content Strategy and Operations Matter in Uncertain Times
No brand needs blanket advice on strategy and staying ahead of trends in an uncertain global economy. Most brand strategists will tell you that what brands need is a core understanding of their own “why,” what the unique value add of their products are, who their target customers are, and how, where, when, and for what they shop. Yet, what brand strategy misses is the medium of exchange—the sharing of information and ideas—that inspires, informs, and drives customers to purchase. This is more than just marketing. It is the what, why, how, where, when, and why of content and how brands and their customers use and experience it.
Content comprises anywhere your target audiences encounter your brand messaging.
While getting content right is one among many factors that contribute to consumer purchase decisions, content is indelibly linked to brand storytelling for luxury brands and, in turn forms a key differentiating factor between luxury goods and services and other kinds of goods and services when it comes to customer value creation.
So what exactly can holistic content strategy and content operations do for luxury brands amid heighted geoeconomic uncertainty?
Here’s a handful of benefits:
1. Resilient Content Revenue Streams
With potential U.S. tariffs and shifting Chinese demand exacerbating economic volatility, content is how brands can build deeper relationships with consumers in existing markets while generating new ones.
Localized narratives can help brands identify and engage with new audiences in regions underrepresented in their sales mix without concerns over brand dilution.
Dynamic campaigns with the flexibility to scale or scale back with budget constraints can give brands flexibility during uncertain times. Basic processes like a documented creative brief intake form and workflow can help track new and ongoing projects.
2. Consumer-Centric Storytelling and Differentiation
For all the renewed attention on product-centric approaches to brand building and customer experience, luxury consumers are overwhelmed with content across channels as well as a multiplicity of ways to buy your products. To drive product discovery and purchase decisions, luxury brands need to guide consumers at every touchpoint of their shopping journey through appropriate and emotionally-engaging content.
Micro-storytelling through targeted campaigns and localized brand moments can draw in consumers through your brand’s unique value proposition and products.
Quality over quantity matters with luxury content to drive deeper engagement, product discovery, and brand loyalty, ideally in direct correlation with both customer retention and pricing strategies.
3. Operational Efficiency
Implementing a defined holistic content strategy astronomically reduces operational inefficiencies and internal spending by aligning marketing, branding, and creative teams under a single, integrated vision for brand content.
Where Brands Can Start with Luxury Content Strategy
Ultimately, luxury brands need content strategy now more than ever to hedge risks and differentiate themselves in an increasingly dispersed market environment. Yes, getting the product-pricing equation right matters to customer purchase decision-making. Yet, for high-net-worth and ultra-high-net-worth consumers, creating meaningful, truly elevated customer experiences through consistent, compelling, and channel-appropriate content and brand storytelling equally matters, particularly given the increasingly diffuse nature of most customer shopping journeys across touchpoints.
Some easy ways to start with holistic content strategy include:
Start with consumer and competitor research and targeting, using predictive modeling and consumer data to generate insights to allow your brand to anticipate market shifts and changing consumer content preferences and behaviors.
Focus on localization and personalization at scale, tailoring your content to align with cultural nuances of specific regions and locations.
Automate lower-level content functions like workflows and basic content production to integrate and streamline content operations across teams.
Create a holistic content strategy and operations model that meets your brand vision and consumer needs. This will help your brand create consistent and connected storytelling, diversified, dynamic content types, and integrated, effective content across and within channels.