Flip through this month’s issue of American Vogue – chances are you won’t find any actual editorial content until halfway through. But that’s not surprising anymore as fashion ad dollars is the mainstay of most magazines.
Despite painting an attractive photo op, most of these beloved brands – majorly owned by LVMH and Kering – are struggling.
The world’s most powerful luxury brands are owned by six companies.
Under the pressure to digitize, luxury brands are choosing to sell online while others fear the risk of having their products appear too mass. However, it’s impossible to deny that the onset of digital platforms has changed how luxury brands market to consumers across the world.
Earlier this year, Deloitte surveyed over 1,300 luxury consumers across 11 countries to find out how consumers digest luxury goods.
Key highlights from the report:
The consulting company found growth in the sector is driven by consumers in ‘emerging’ markets such as China and UAE, whose spending has increased by 70% in 12 months compared to 53% in ‘mature’ markets such as the US and EU.
The majority of shoppers ranging from baby boomers to even millennials are still buying their luxury handbags and shoes from a physical store.
When asked how they see the luxury sector developing in their respective countries, 48% said that ecommerce and mobile commerce will become more widespread, while over 37% said that luxury products and technology will become more closely linked.
But a significant roadblock for luxury brands going digital is to preserve the same quality and heritage online as offline. Some brands are already tackling this challenge like Louis Vuitton brand.com for example.
Louis Vuitton home page of official webstore
The brand has created a strong narrative through web design and content on its ecommerce site to highlight its long history, and quality craftsmanship.
LVMH, the multinational luxury goods conglomerate, recently launched its very own online luxury marketplace called 24Sevres.com to feature 150 labels that include rival brands Gucci and Prada. The website also serves as a hub for videos and innovative visual merchandising in addition to the typical editorial content.
This way, the e-marketplace doesn’t become another platform to buy from, but also drive traffic from those looking for inspiration and discovery.
The emergence of omni-channel distribution
Deloitte finds that multi-brand e-stores for luxury goods account for 78% of online purchases but mono-brand stores dominate in the physical retail environment.
How can brands ensure a ‘luxurious’ omni-channel experience – the same quality of customer service excellence, store ambience, packaging, and personalization through a website? How do brands exchange the in-store champagne for a digital equivalent?
There are actually a number of ways:
- Quick and attentive customer service through chat functions on the site and/or an option to receive a call from an experienced salesperson
- Standardized packaging in the warehouse for delivery or offer pick up in-store
- Allow registration as a premium user to personalize all emails, send birthday gifts, etc.
As the report states, digital channels are creating a demand for large scale quality personalized content – 45% of consumers surveyed are asking for more personalized products and services.
This has led to some luxury brands opening up dialogue with consumers and having them involved in the marketing process.
Luxury brand Burberry became the first brand partnered with Pinterest to let users create customized make-up boards to promote its new ‘Cat Lashes Mascara’ product. The campaign gave more ownership of the product to the customer – making them feel important.
Product packaging is also an extremely important part of the ecommerce experience that brands often overlook. The box that lands on the doorstep of a shopper, especially one that has spent over $5,000 on a purse, should emulate the same in-store packaging.
A significant portion of respondents are also seeking extra perks.
44% are asking for rewards for loyalty in the form of small gifts.
However, loyalty rewards for luxury consumers is different from say, loyalty rewards given at Starbucks or Wal-Mart. Brands cannot give coupons or offer a buy-one-get-one-free deal.
But expedited checkouts, personal concierge services, free beauty consultations, and other micro-services can create a more lasting impression than 10% off the next visit. Department stores in the US such as Neiman Marcus offer loyal shoppers with invitations to events, fashion shows from their hotel partners.
These services are typically less costly to the retailer in the long run and at the end of the day, all shoppers, want to feel valued.
Back in 2013, Céline’s creative director Phoebe Philo was quoted saying, “The chicest thing is when you don’t exist on Google.”
Fast forward to 2017, and the company has its own online catalogue.
Not only do customers want to be able to find your brand on Google, they want to click buy and have it arrive at their front doorstep (39% of Deloitte’s respondents ask for home delivery).
McKinsey’s assessment of ecommerce in luxury retail also argues that once online sales hit around 20% of overall revenues, there will be a plateau. Ecommerce won’t overtake offline because in-store retail remains an essential component of the luxury business but online will make up a big chunk that’s becoming increasingly hard to ignore. Luxury omni-channel ftw.