The luxury market surprisingly proved resilient to this period of great anxiety caused by the pandemic. Deloitte's latest Global Powers of Luxury Goods report shows, over 50 per cent of top 100 companies made profits during this period with 13 posting double-digit net profit margins even as the FY2020 revenues of the top 100 companies declining to $252 billion from $281 billion in the previous year.

An annual publication featuring the world's top 100 largest luxury goods companies and the trends shaping the market, the Global Powers of Luxury Goods ranking is based on consolidated luxury goods sales in FY2020. Although the brands listed in the ranking have built their reputation on the basis of the quality of their products, they are shifting to more sustainable practices in order to respond to the growing urgency to act on climate change.

Many of these companies are incorporating sustainability into design and production of their goods. For instance, Salvatore Ferragamo, Paul Smith and Hugo Boss among others are using food waste to produce sustainable materials.

Digital solutions and products

Brands are also adopting digitalization as a part of their long-term strategies. They are refining or developing new digital solutions and creating new products like the non-fungible token (NFT), which represents ownership of a digital (cryptographic) item or asset created through blockchain technology

Louis Vuitton has designed a customized travel case for its world championship cup trophy along with other assets. For this, the company has partnered Riot Games the creators of League of Legends. The brand has also launched a real capsule collection inspired by the video game. Gucci has partnered with auction house Christie's on a four-minute NFT video called ‘Aria’ as a part of its Fall 2021 collection. These creative expansions into the digital world are providing an opportunity for luxury brands to market their products to the next generation of clients known as the Gen Alpha.

Strong sensibility to sustainable lifestyles

Born in the digitalized and globalized 21st century, Gen Alpha clients comprise over two billion consumers across the world. Most are digitally literate and use gamification in daily lives. These customers are also keen social media users and reliant on the influencers' opinions. They are expected to develop a strong sensibility towards a sustainable lifestyle. To engage these digital natives, luxury companies will continue to grow their e-commerce businesses. They will form more partnerships with e-commerce players and social media providers while embracing the changing preferences and habits of their target markets.