Kathryn House
Luxury retail brands. They're in demand in Australia right now. And you might be surprised by who's buying these high- end products. Forget the Boomers and Gen X, it's Millennials and Gen Z who have a growing appetite for luxury, fueled by their favourite influencers on TikTok and Instagram. Luxury retail trade in Australia reached a record 6.2 billion in 2023, with 483 retailers, including both international and domestic brands operating nationally. While a recovery in international tourism and an inflow of high-net worth migrants has been a contributor, much of the spend is coming from younger consumers, who have ditched fast fashion to focus on premium products inspired by social media. And the smart retail landlords are taking note.
Tomi Grainger
They're really considering how social is the driving factor of their brand awareness and conversion strategy, rather than it being an add-on. A lot of brands, not even in luxury, are recognizing that social first is so important when it comes to building brand love. And with that, they're really integrating that into the full spectrum of things.
Kathryn House
I'm your Talking Property podcast host, Kathryn House, and that was a little snippet from Tomi Grainger from today's episode. Tomi was most recently the creator engagement partnerships lead at TikTok, and has an exciting new gig in the wings. Thanks for joining me today, Tomi.
Tomi Grainger
Thanks for having me. Super excited to be chatting on the show.
Kathryn House
Yes. And joining from Spain as well.
Tomi Grainger
Yes. It's nice and sunny and definitely not what I would say comes in any luxury retail stores, but definitely see a lot of people carrying and wearing luxury retail items.
Kathryn House
Ah. You'll have to go for an explore later after you finish this.
Sheree Griff
Dollars spent in fit outs have increased by 40% in the last 12 months. Not only is the cost of construction attributed to that, but we're seeing retailers put more in their store to create that opulence and that feeling for the consumer as they meander through.
Kathryn House
And that's Sheree Griff, CBRE's Head of Retail Property Management and Leasing for Pacific. Sheree, great to have you on the program as well.
Sheree Griff
Thanks, Kathryn. Loving talking about all things luxury. It's a great topic.
Kathryn House
So let's dive right in. Tomi, I can't think of a better person to chat to about influencers and luxury brands. To give our listeners a bit of background, you're a B&T 30 Under 30 winner, a Mumbrella Under 30 Achiever Of The Year finalist, and you helped build TikTok's Australian platform from the ground up, with a focus on supporting people growing their careers as content creators. Can you give us your take on how social media has been fueling this rising demand for luxury brands?
Tomi Grainger
Yeah, well, if we think back, Kathryn, five or so years ago, Instagram was the number one platform. And it still is, but TikTok is quickly surpassing that. And that was the era what we call the influencer. And the influencer was all about being aspirational. It was the girls in bikinis on beaches, people trying to aspire to look and appear a certain way and be perfect. And with that, we saw the rise of people showcasing the perfect life. And a part of that was about showcasing value, wealth and luxury consumer items. So that really solidified social media as being a grounds for demonstrating the ideal or the aspirational. Now, we're entering more of an influencer era where we're seeing that definitely taking place, and people demonstrating that wealth still, but it's becoming a lot more normalised, because we're no longer having people as considered influences, but rather as content creators. And content creators are more relatable, they're more authentic. And with that, it's normalising this consumption of these products, because people are no longer looking at it as being aspirational or unattainable, but rather actually that's something that's part of everyday life. So with people spending a lot more time on the internet, a lot of people now also spending, not as much time, especially Gen Zs out in nightlife, spending their money on things like, not as much on restaurants, or on going to bars, and clubs. They're putting their wealth into other things like Gucci products, which it's becoming a lot more normalised and not considered necessarily luxury, but rather a part of every people's staple everyday, clothing items that they own, and wear, and consume. I'm seeing that this is becoming, they're still luxury items, but they're not being perceived in the same way potentially as they were before, particularly in the Western world.
Kathryn House
Is it because people are living at home longer as well, that they've got this discretionary income to spend?
Tomi Grainger
That's a great question. Well, we are seeing, obviously, famously around the world they said avocado toast, which was actually invented by an Australian, Bill Granger, as this thing of being so expensive that people can't afford to buy a home. And we're seeing that this is across a lot of different countries and markets though, right? That attaining a home in this American or event the Australian aspiration is not something that many people want to do now, is particularly in younger age, because it is quite unaffordable, and it's hard to enter the market. So people are wanting to demonstrate like they belong, they're a part of a community, in other ways. So instead of saying, I have to have a house and kids, so they're happy, they're getting married later, they're having children later in life as well. In between that time, they are spending money on things like LV handbags, and belts, and Gucci shoes, and those sorts of things, where potentially 20 years ago that wasn't something that a lot of everyday Australians would be purchasing.
Kathryn House
And Sheree, this really did come out in this new luxury retail report that we recently did, this sort of shift in trends that are happening in the luxury space. What were some of the key takeouts for you from that report?
Sheree Griff
Yes, one hundred percent, Kathryn. The data is proving up what Tomi is saying, that Gen Z and Millennials are living at home longer. They really invest in looking good, feeling well, and traveling the world. Everyone is in Europe at the moment, and...
Kathryn House
I'm not, I'm very jealous.
Sheree Griff
And so they should be. And I think COVID's had a bit of a uptick in that as well. Gen Z and Millennials were locked up at home in their prime years, prime teenage years, and now they've really looked at life about really living in the moment, taking life by its hand, and buying, and looking good, and feeling well, and spending the money in that realm, and living at home longer. So this is having a big uptick in the luxury space in lettable areas, we're seeing here in Australia. We're seeing the luxury brands take larger spaces, and also secondary spaces in the CBD, literally two or three streets away from their primary location, they'll have a pop- up, or they'll do a secondary store, because Australia's market, with our international growth in people starting to live in Australia from different countries like Japan and Korea, we're seeing high levels of migration. So our consumer base and wealth base is increasing.
Kathryn House
Yes, it was really interesting reading that report, and the top performing luxury brands, Louis Vuitton, Richemont, Hermès, revenue growth of between 87% and 177% since 2019. It's quite extraordinary. And it's not just happening from what you're saying, Sheree, it's not just happening online, it's happening in stores as well.
Sheree Griff
Yes, the in- store experience is, we're creatures of habits. Human behaviour is all about, when you go purchase an item, you want to touch, feel, and have the endorphins of purchasing such a luxury product. So what we're seeing is that more experience is being brought in- store into the bricks and mortar locations, whether it's a bilingual customer service attendant, or the smell of the store, or the ambience of the fit out. So we're seeing dollars spent in fit outs have increased by 40% in the last 12 months. Not only is the cost of construction attributing to that, but we're seeing retailers put more in their store to create that opulence and that feeling for the consumer as they meander through.
Tomi Grainger
I find that really interesting Sheree, because we are seeing, obviously the proliferation of online shopping, and TikTok is the number one shopping platform now for Gen Zs, in multiple countries, including the UK, particularly with luxury beauty products. However, because of the purchase price of these products, people are buying not only into obviously the lifestyle, the product itself, but actually the whole experience. And I think the purchasing experience is quite unique for luxury products, and that's where this rise on retail space makes total sense to me, because those faster consuming goods like the rise of platform like Alibaba, and now we're seeing Temu as being taking over the internet, people aren't, obviously, they're very cheap products, often worn once and thrown away, or not even worn at all. So people are just used to doing that online, and now they still want to have that tactile experience, but they want to do that through products they're actually going to consume on a much more regular basis. So I find it very interesting that you've got those two sites that, as well with the rise of AI, there'll be even less in- person shopping experiences, where it will all be digital, people will be obviously able to see with their lenses, their Google glasses, whatever they're going to have, and buy like that. But with luxury, really they're saying, "well, if I'm purchasing this product and it's such a high ticket value, I want the full experience." So it almost makes physical shopping a luxury itself.
Sheree Griff
Correct. But they come into the store already researched. So they've researched on TikTok, they've researched on Instagram. And then when they go into Cartier to buy the ring, they already know what they're after. But they want to feel special in that moment of that luxury purchase.
Kathryn House
So, what are the smart brands doing to get these younger consumers through the door? What are you seeing, Tommy, some of the really clever brands are doing to get people in?
Tomi Grainger
Well, I'm particularly seeing this, again, in the beauty space, aligning them with content creators. Obviously, celebrity endorsement used to be a huge play. We see these multi-million dollar commercials with trusted celebrities that we'd see in films, and on television, talking about skincare, and the brands that they love. But we are actually seeing quite a backlash towards that. So in 2024, we saw this 2024 block out movement, where people online was sort of saying, a lot of celebrities have lost touch with the people that follow them, and make them famous, and have a career. And we're seeing more the rise of the everyday content creator becoming the new celebrity. And there it's this whole democratisation of being able to be famous and being able to have a connection with your community. So what luxury brands are identifying is that these creators are actually talking about influencer, but they're having a real gravitational pull towards people wanting to be more like them. And because these creators come across as very authentic, and trusted, and reliable, and if they're like the Kardashians, you turn on their TikTok account and you watch their Instagram reels and you're following their journey every day because vlogging is such a big part of the internet, now you're seeing that integrated into all of their content. And with that, people want to attain to be more like those content creators, and with that, purchase those products.
Kathryn House
Yes, I thought it was really interesting that YSL had that association with Noah Beck. He's got 34 million followers. And that was seen as a bit of a groundbreaking move for them. He was the only content creator that they used for that campaign. And they were looking to sort of move away, I guess, from that sort of stereotypical masculine personas with that campaign. Do you think we're going to see a whole lot more of that happening, Tomi?
Tomi Grainger
Absolutely. So, even in Australia we've had content creators collab with US luxury brands, like Gucci and Dior. And also, live- streaming, their runways as well. So it's becoming accessible to the everyday consumer to actually be a part of the runway experience, whereas before going to a New York Fashion Week was only for VIP, the elite, or your high ticket price items. But you are almost like you're in that experience in immersing yourself on that runway, and then having content creators walk in the runway as well. So creators that align with being a model, or finding models that are content creators, being a part of that experience really helps solidify that. But the other thing I think it's interesting is it's not just them doing TV commercials or finding TikTok creators or influencers from that breath, but actually integrating that into their overarching marketing campaign. So what YSL also has been doing, for example, in Australia, is they launched the YSL beauty crew, where they identified micro or nano influencers or creators that are on the rise, and basically took them under their wing and said, " Hey, if we'll send you products before it goes out even to our VIPs, you've got to use the products, make some content about that, review the products, and we'll do that on a regular basis for you." So basically what they're doing is that they're having content creators become almost like affiliate marketers, or selling things for them before their commercial goes to air. So they're really considering how social is the driving factor of their brand awareness and conversion strategy, rather than it being an add-on. A lot of brands, not even luxury, are recognising that social first is so important when it comes to building brand love. And with that, they're really integrating that into the full spectrum of things. If we look at L'Oreal for example, they have a huge suite of brands luxury all the way down to everyday consumer, and they're doing the same thing regardless of whether it's luxury or not. So we look at CeraVe, which is a more entry-level market beauty consumer for skincare, right? They use Michael Cera to integrate them into the Super Bowl commercial that they ran, right?
Kathryn House
Oh, I love the Super Bowl commercials. They're my favourite.
Tomi Grainger
Yes, amazing. Because there was this rumor that Michael Cera was the owner of CeraVe because of the name association, but what they did was they took someone who wasn't actually typically associated with skincare in any stretch, a comedian, and then had really famous content creators catch him "organically" in cosmetic stores and in retail shopping spaces, signing the CeraVe bottles. So we had this staged content that creators with millions of followers were capturing him in different stores, doing it as if it was all organic. So they built that all up on social before it came to the Super Bowl commercial that they spent millions of dollars on. So they're really seeing that integrated strategy, and luxury brands are doing the same thing. They're getting that social content out there as part of their evergreen stuff, and then that larger investment on traditional media still exists, but I think we're going to see more and more a push towards the social side because that's reaching those consumers much more directly.
Kathryn House
So Sheree, do you think that the in Australia are keeping up with these shifting trends when it comes to luxury? We had an interesting chat the other day where you talked about luggage, and that being now one of the luxury items that people are looking at. But are the retail landlords kind of across all of this?
Sheree Griff
Look, yes and no is probably an answer, and that's why where we come into play is being CBRE with our retail occupier business, or our retail leasing agents. We have to be really keeping in touch with our brands, so that we can understand the pipeline and where they need to be, not only in location but store size. And what are the new emerging brands to place in centres that will attract consumers. So yeah, July Luggage is an interesting brand at the moment that they classify themselves as affordable luxury. And it's like, okay, well, that's where they're placing themselves in the market, and they're doing a lot of collaborations with Mecca and the Olympic Games. You would've just seen the bespoke beautiful carry-on suitcases that they designed specifically for the Olympic Games, and the reach they got with their brand was astronomical. And what we're seeing, if you place a tenant in the right location, and I'll give an example, they've taken out a location at James Street in Brisbane, which is a beautiful precinct with people in the area have high net wealth, and their sales from that store are astronomical compared to other locations that are not in the right location. So getting your brand in the right location is super important to maximise sales and your brand exposure.
Kathryn House
So do you think, from what I'm hearing, we're really redefining the whole idea of luxury?
Sheree Griff
Yes, luxury is all about aspirational shopping, which Tomi has alluded to many times. And if you're scrolling in TikTok, or scrolling on Instagram, you're like, "Oh, I want that," "Oh, that looks nice," "Oh, I've never seen that handbag before. Where can I get that?" And some products are only sold in certain locations, and people will go and seek it out to get that unique experience, and that unique handbag, or piece of clothing.
Kathryn House
It's actually a good segue to a question I wanted to ask. The trends that we're seeing in Australia, are they similar to what is happening in other countries? I was reading a story about the Chinese market, and there is a bit of luxury shame happening there now from one article I read. Are we very different? Tomi, you travel the world, what are you seeing?
Tomi Grainger
Look, yes and no. I think there's two sides to this coin or argument. I definitely am seeing, particularly with Chinese tourists when they come over to Australia, they do purchase a lot of luxury items, and they like to go to the physical in-store experience as well. But then there's also, it ties into this whole backlash against brands, against celebrity culture where people are saying, we're kind of entering this emergence of an era where people are brandless, where they're ultra status, or luxury is not actually having a particular brand that you have to whack onto yourself, but rather actually you having custom-made items so that you yourself are the brand. And your decision to purchase items really isn't coming down to whether there's a particular logo on that. So it's almost like being above the brand, and we're definitely seeing that starting to come out of part of Chinese culture as well. And that's just about demonstrating ultimate status. It's like, "well, I don't need to have a particular brand to define who I am, I'm beyond that." So it'd be very interesting to see whether that trend follows suit in western markets. I'm not seeing that at the moment, particularly not online, but we could enter an era potentially, particularly with the rise of AI, and everything becoming a lot more individualistic with AI agents, really tailoring to what people's needs towards their individual attributes. This could very much be something that we are talking about on a much larger scale in the next five to ten years.
Kathryn House
So AI is going to have a pretty big impact you think on the retail sector and the luxury market?
Tomi Grainger
Absolutely. Well, Meta is already testing in the US market AI agents on Instagram, and there is already the technology that will be rolled out in the next three years where almost we will be platformless. So rather than people being say consumers of Instagram or TikTok, all of your content will be generated by your AI agent. And it'll almost be building, I guess, like the equivalent to an application in real time to service the needs of the individual. For example, the AI agent, if we're looking at the luxury space, might say, "hey, you're interested in all these kinds of products. This one might be more suited towards you." They book your appointment in at the store, there'd be no need to actually physically go in a way in a line, it would be serving you more of that content, it may be that the content then becomes brandless. It's very difficult to pinpoint what's going to happen, but I definitely know that it's going to completely change the way that we interact in the digital space, which will also completely change the way we interact in physical spaces as well.
Kathryn House
Yes. What are you seeing Sheree on that AI front? Are the landlords jumping in and really embracing AI?
Sheree Griff
Yes, look, bricks and mortar and the physical presence is still very our main spend that we're seeing in retail at the moment. But there's this watchful eye of what's next, and how do we adapt. And it's about education and understanding what AI can do, and elevate purchasing experience, or educating the consumer before they get to in store. Or even if they're purchasing online, what is the delivery experience of the product? Receiving it at your door, you can make that a luxury experience as well, with packaging, and deliverables, and does it come by a drone, or how does it get delivered to you. So I just think we've got to keep pivoting, and keep talking about it, and keep adapting the retail landscape.
Kathryn House
Absolutely. And are you seeing any other key trends emerging, Sheree, in the luxury retail space?
Sheree Griff
Yes, beauty is an interesting space that still has growth in the current economic climate that we're in today. We're seeing brands such as Mecca, and they're currently fitting out a store in Melbourne on Bourke Street, which is 3000 square metres, the largest Mecca store in the Southern Hemisphere. So Sydney was the largest at 2000sqm. Now it's going to be a 3000sqm mega store that is going to have opulence, and not only opulence in smell, feel, ambience, you're going to literally be able to walk in there in your pajamas, I think, and come out glamorous the other end to go to a wedding. It's all about the experience and having everything in store for your beauty needs. Now, this is super exciting for our market, and a big draw card to the retail environment on Burke Street, and that will open up next year into 2025 into 2026, they are targeting.
Tomi Grainger
I think that's largely been impacted due to globalisation. I know there's been a huge rise with, for example, skin care from Korea, where they are these mega stores already where on every corner there's an Olive Green, people want to go in. They want to try the product before they purchase them as well, I think that's particularly important with skin care. And people are also spending a lot more on skin care now than they were 5-10 years ago, with skin care almost considered in the luxury space. So people will pay $400-$500 for a particular product if it has the right properties. It's anti- aging, it's rejuvenating. Obviously, we still live in this culture of youthfulness. There's still that obsession with wanting to look young, and fresh, and energetic. And as we live longer, there's more of an obsession of maintaining how we look now so that when we're a hundred years old, we don't look disheveled. So I think there's still, this is very much, there is a little bit of backlash towards being natural, but there's still a strong focus on taking care of your skin now more than ever. And a lot of these skin care brands, a lot of luxury brands really playing in the skin care space now, where they potentially weren't doing that a little while ago.
Kathryn House
And I think you touched on it earlier, Sheree, the Olympics. Obviously, that's just wrapped up. And there seems to be this real paradigm shift between that relationship between luxury brands and athletics. So you had LMVH spend, I think it was 150 million euros on their Olympic partnership. You had Ralph Lauren, Dior, Baludi, clothing, the teams. What's driving that, do you think?
Sheree Griff
Look, I think what's driving that is the authenticity part of sport. Sport has this real, when you look at a sportsman, whether it's F1, or tennis, or the Olympic Games, they've got this credibility about them. So this partnership that these luxury brands are really partnering with athletes to market their brands on social media, and we as consumers really dive into that more than celebrities, because they're quite aspirational, they're very talented, and pretty amazing to watch. So the Olympic Games now in Paris, we all watched the opening, it just had opulence of luxury all about it. And the games where the celebrities, or you've got Snoop Dogg being paid half a million dollars a day to be commentating, and the followings behind that is amazing. And so Prada's sponsorship of the Chinese soccer team in the Women's World Cup. And so we're going to see more of that, I think, collaboration with luxury brands and sport.
Kathryn House
Are you seeing any trends happening there in that space, Tomi?
Tomi Grainger
Sport is huge on the internet, right? And our sports culture is not changing. So particularly we're seeing Ralph Lauren every year at the Australian Open, is a really good example. Or also eSports. We don't even talking about eSports, right? Gaming is massive, I think it's a trillion-dollar industry now across the world. But we've got all those PAX conventions every year in Australia, and brands spending big on advertising, on social, and collaborations with content creators in regards to that where it is, I think eSports is kind of taking over the world right now. It's crazy the amount of people making millions of dollars as content creators in the eSports space particularly.
Kathryn House
And any other trends that we really need to be looking out for, particularly in the Australian market?
Tomi Grainger
In terms of online trends, I would definitely just say the rise of AI. We all hear about AI, and it feels like it's this world away. If we look just back to 12 months ago when we started hearing ChatGPT and how far that has gone in 12 months time, I mean, AI is getting to the level where everything in the next five years will be hyper-personalised, everyone will have an AI agent. It's just something to keep in mind out for every industry, not just social, definitely not just social. I think it's going to completely change the retail space particularly, and how that is really actually going to benefit brands and organisations with making our lives easier, and a sort of hesitation towards AI, and it's going to take our jobs. But rather it's actually going to aid our lives. So I think just embracing AI right now and reading up on and becoming more knowledgeable, how it may be impacting, particularly the retail space, I think is definitely worth investing a few hours in.
Kathryn House
And Sheree, anything key that you are seeing?
Sheree Griff
Yes, I think we're just going to see luxury brands take more space. They'll take that secondary space in a city, or the third space. I just think the rise in population that we have here in Australia, there's more demand for luxury products, and we're just going to be seeing larger footprints taken, and more stores taken. And range, even the luxury range in store is getting greater than what we saw in Australia five years ago. We had a very limited range in certain brands. But we're seeing there's a lot of confidence in our market, in our spend with the rise of Millennials and Gen Zs, really leaning into the luxury purchasing. So I just think we're going to see more.
Kathryn House
Well, I think I'm going to have to get myself down to Melbourne, to the new Mecca store. Thank you so much for joining today, Sheree, it's always great to talk to you about the retail market. And Tomi, I really appreciate you taking the time out, particularly when you are overseas. Looking forward to getting my own AI agent in the future.
Tomi Grainger
Me too. It's going to save us a lot of time.
Kathryn House
So thank you for joining today. And to our listeners, thanks so much for tuning in. If you'd like to read CBRE's Luxury Retail Report, you can find the link in our show notes. And as always, I'd love it if you could rate or review Talking Property to help spread the word. And if you have any questions or feedback about the episode, drop me a note at any time via
[email protected]. Until next time.
