With the luxury goods market expected to reach US$418bn by 2028, the evolving market presents significant opportunities for the logistics supply chain, according to DHL’s latest white paper.
The Logistics of Luxury: Unveiling Luxury Supply Chain Opportunities for Success white paper is designed to empower brands in optimizing their supply chains for the evolving luxury market considering changing consumer behavior, emerging market trends and technological advancements.
“The global luxury market’s robust growth underscores the critical importance of luxury logistics,” explained Katja Busch, chief commercial officer and head of DHL’s customer solutions and innovation unit. “The global luxury goods market reached US$355bn in 2023 and is projected to grow to US$418.93bn by 2028. As this market expands, luxury goods logistics goes beyond mere transportation; it’s about seamlessly blending premium products with impeccable delivery standards.”
Trends and challenges
Focusing on personal luxury goods such as designer fashion, high-quality watches and jewelry and premium cosmetics and fragrances, the white paper explores current trends and challenges shaping the luxury segment, detailing their impact on supply chain and logistics strategies. It also investigates logistics requirements across the entire value chain of luxury companies, focusing on five key areas:
- Supply chain visibility: Advances in digital technologies such as IoT, RFID and serialization enable control tower solutions to improve supply chain visibility and security, leading to better customer experience, profitability and sustainability.
- Security: Luxury goods logistics faces significant security challenges, including physical threats, insider threats and e-commerce fraud, necessitating enhanced packaging, customer education, streamlined claims processing, thorough investigations and advanced technology to ensure safe and reliable delivery.
- Premium delivery: As online retail grows, luxury brands must invest in premium delivery services to replicate the in-boutique experience at home, enhancing customer satisfaction and reinforcing brand identity through features like flexible delivery timing, eco-friendly practices, personalized packaging and streamlined returns.
- Fulfillment centers: Luxury brands must transform traditional fulfillment centers into omnichannel processing centers to manage business growth, meet evolving customer demands and comply with regulatory changes, integrating activities like re-commerce, circular processing and sustainable practices.
- Sustainability: Championing sustainable logistics, such as using sustainable aviation fuel for air freight to minimize the risk of damage to luxury goods, is essential for brands to enhance consumer perception and meet evolving environmental responsibility expectations.
Tailored strategies
Mirella Muller-Wuellenweber, sector president e-retail and fashion at DHL, added, “The dynamics of global supply chains are perpetually in flux, especially for luxury goods originating from key European markets like Italy, France and Switzerland. To navigate these changes, brands must understand their market profiles – whether mature or emerging – and tailor their supply chain strategies accordingly.”