How Luxury Travel Is Changing the Fashion Industry

In 2015, China produced 120 million outbound tourists—who spent an estimated US$229 billion on shopping overseas, leaving the rest of the world way behind. Their top purchases? Fashion and accessories.

The effect of this wave is serious additional business for luxury fashion brands, which, for several years, have already maintained far higher profits on their products in China—prices there are often 40—68 percent higher than in Europe or the US. Little wonder that the Chinese traveller is on a mission to shop when traveling internationally. (The Japanese have even coined a word to describe this phenomenon: ‘bakugai’ or explosive shopping.)

When Angela Ahrendt was still CEO of Burberry, she insightfully recognized the impact of the ‘traveling luxury consumer’ on the brand’s sales in Europe and the US, and spoke of the need to cater to them directly. Today, major department stores, from Paris’s Galeries Lafayette to Bloomingdale’s in New York, attract the Chinese traveller with a variety of special offers, targeted WeChat marketing campaigns, personal shoppers and translator services. But capitalizing on this demand requires a shift in product and merchandising. In 2014, J. Crew came under fire for introducing 000 and XXXS sizes in its US stores, but the brand had simply made the logical—and smart—decision to tailor to its petite Asian customers.

But travel is affecting the fashion industry in other ways. Increasingly, high-end travel is taking on the traditional role that hard luxury goods have played in rapidly developing economies—that of being a form of social currency, an indicator of one’s socio-economic status. So, today, a skiing vacation to St Moritz or a culinary journey to Japan’s top restaurants is equated with the sort of privilege once reserved for products such as an Hermès Birkin or a Rolex timepiece. Luxury is, in fact, the fastest-growing segment of the travel industry, having jumped 48 percent in the past five years. In 2014 alone, the world population undertook 46 million international luxury trips, worth €172 billion, according to a report by the World Travel Monitor.

Wealthy Asians are increasingly setting new travel trends—after China, India is the world’s fastest-growing travel market. The World Travel and Tourism Council estimates that the 20 million-strong Indian outbound market will touch 50 million by 2020. So it’s no longer surprising to see crowds of Asians in destinations that were once considered the exclusive haunts of European aristocracy or Middle Eastern barons. Young Indian and Chinese millionaires are looking to expose their children to the privileged pastimes of the ‘white elite’—taking them skiing in the Alps and dragging them to the Met and MoMA in summer. Money has, after all, flooded into China and India in the past two decades, coinciding with the opening up of their economies—and the rise in air travel.

The elite are jet setting more than ever, forcing luxury fashion brands to rejig their calendars and strategies to take advantage of those deep pockets. Across the world, luxury travellers are making multiple short trips all through the year, as well as extending business trips into leisure getaways—a concept unimaginatively termed ‘bleisure travel’. The fashion industry has also taken note: after all, Asian travellers looking to shop abroad don’t want to be restricted to boring black and grey winter wear when they’re simultaneously planning to go to Thailand for Christmas or to Dubai for a destination wedding. The rise in resort collections (and significant investments in high-end swimwear and resort brands) is a direct result of this pattern, as is Christopher Bailey’s game-changing announcement last month, of Burberry’s forthcoming ‘seasonless’ collections.

But where luxury travel is heading, perhaps, holds the most fascinating lesson—or warning—for the fashion industry. Just as aspirational consumers evolve and move from logocentric fashion to more discreet, quality items, international travelers are increasingly moving from package holidays to bespoke, authentic, luxe experiences—and away from fashion.

Speaking at ILTM Asia in Shanghai, Sean Rein, founder of China Market Research Group and author of The End of Copycat China, observed that current Chinese trends are leaving luxury products behind to focus on 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.” This desire for authenticity—and people’s need to derive it from and share it with other communities of people—also explains the soaring popularity of ventures such as Airbnb.

So what happens to the luxury fashion industry as more and more wealthy consumers move their dollars from product to experience? How should luxury brands evolve and deliver a feeling of authenticity, when they’re presently attached to the belief that they must replicate their signature retail environments everywhere they go? To compel consumers to stay excited about shopping, luxury brands need to focus on creating one-of-a-kind, immersive experiences that tie into purchases. Think about how Disney’s theme parks bring alive their movies in a seamless, genuine and profitable way. Brands need to do more to come alive not only digitally, but also in their flagship stores across the world, offering curated and exclusive experiences to the well-heeled and worldly. Niketown in New York, for instance, has succeeded in becoming something of a tourist attraction. One lost opportunity is already evident: Armani, Versace, Bulgari and Missoni hotels around the world convey a certain aesthetic, but fall short of providing more.

Here is where fashion brands must learn from luxury travel providers: By participating in a particular experience, a consumer feels closer to the brand; a symbol of this is owning the brand’s handbag or clothing. It is similar to tourists buying silk saris or batik prints when they visit markets in India or Bali—they’re signifiers to others that they’ve visited these destinations, but there’s also a sense of identification and a memory attached to a place that they love. So, if Burberry, a brand that is quintessentially British in its inspirations and craftsmanship, went further by incorporating British customs and rituals in a meaningful way in all its touch points, it could deliver a truly unique brand experience—and the purchase is its culmination. Its connections must extend to other historic British brands: London’s Claridges hotel, or a castle deep in the countryside. The bags, the trench coats, the shoes—they’re practically souvenirs. Of course, it must all be made into compelling content—print, video, digital—but the essence is not online. It is intimate, bespoke, authentic—all key terms in the luxury travel industry.

This shift from product to experience is happening faster than most realize, and luxury fashion brands would do well to recognize the ramifications. Moreover, if European and US markets continue to decline, there will be increased spending on experiences versus goods because there is less guilt involved.

Millennials will force brands to evolve in this direction as they gain spending power. Already, studies indicate that ‘stuff’ is unimportant to this generation; they value access over ownership. Luxury travel need not be a threat to high-fashion brands, if both industries realize the (rather fantastic) opportunities for a strong partnership.

About the Author: Divia Thani is the editor-in-chief of Conde Nast Traveller India, and a former editor at Vogue India. She lives in Mumbai. Follow her on Twitter @diviathani.