Luxury mono brands have traditionally been the denizens of bricks-and-mortar boutique stores, maintaining their exclusive allure and personalised experience through opulent décor designed to attract the ‘have’s and keep the ‘have nots’ at bay. But, with Gen Z set to make up around 40 per cent of the global luxury goods market by 2025, the target demographic has become increasingly hard to please and even harder to sell to without a real connection. These social savvy consumers are looking to engage with a story, a lifestyle, and a clear set of values – and they expect that connection to come to them directly from the brand.
Sophie Wilson, Digital Consultant at Astound Commerce, looks at how a well-honed digital experience can help luxury brands engage in a more democratic way, and make their stories more aspirational than ever.
In an increasingly unpredictable retail environment – with the rise in spending behaviour of younger and more digitally articulate customers, and the shifting of luxury consumer behaviour across all demographics – future proofing your luxury brand with a strong online proposition, underpinned by scalable and flexible technology, has never been more important.
From marketing strategies to customer service, from curated merchandising and pricing to the provision of a sensory brand experience, translating expectations of a luxury experience online is consistently perceived to be a challenge. For many – particularly more established brands – the democratisation of shopping luxury online goes against traditional notions of exclusivity and many brands still limit their transactional ranges, instead utilising their site as a marketing tool to book appointments and lure customers to physical boutiques. The result was a lag in digital adoption, with luxury multi brand innovators like Yoox Net-A-Porter, Farfetch and Matchesfashion.com swooping in to take the prize. But the tide is turning with the pandemic accelerating digital adoption across retail. eConsultancy reports that, by 2025, nearly 30% of luxury sales will be online and the mono brands are waking up to the opportunities that digital presents.
So, in this scrabble to recover ground and gain market share, where should luxury retailers be placing their best efforts to make a digital impression?
Acquiring the new luxury consumer
Social, social, social. Almost 80 percent of sales in the luxe market are “digitally influenced” where consumers hit one or more digital touch points over the course of their luxury purchase journey. By looking to social media to tell stories and create a sense of the ‘world’ surrounding the brand, luxury businesses can more effectively stand back and let their advocates create the buzz. Of course, brands don’t literally take themselves out of the process and behind a successful social media presence is a usually a clutch of hard-working PR and marketing teams. Tiffany’s #KnotYourTypicalCity campaign deployed iconic models and stunning photography, and Louis Vuitton’s highly artistic imagery played well for their 45.2 million strong Instagram following. Digital marketing can also create noise beyond a structured social presence. Campaigns such as Cartier’s ‘Luhan’ film, that generated more than 900k engagements on Weibo alone, demonstrate that a well-pitched digital presence can be highly impactful in fuelling the feeds of social influencers and fashion and lifestyle bloggers.
Just as brands chose to re-allocate budgets from store to online during and following the pandemic, they should also look to reallocate media spend to less traditional channels. Acquiring new customers at a global scale is undoubtedly expensive, however an astute approach with the right mix of above and below the line activity, and a healthy respect for the power of digital and social influence, can ultimately drive the high propensity luxury customer to buy at an overall lower CPA.
Selling luxury online
Luxury retail websites need to look and feel expensive to match the aspiration of browsing users, with high-end photography, aspirational lifestyle content, and minimal commercial interruptions in the form of pop ups and brashly designed banners. The emphasis in the design should be on demonstrating the breadth and rich craftsmanship of collections as well as showcasing that all important contextual storytelling content. Any luxury mono brand site will benefit from the presentation of a consistent brand UI that links the offline and online journey, allowing retailers to present collections aligned to their brand ascetic, already established through mainstream advertising, acquisition channels and influencer feeds.
The product mix is also a vital element to consider. We need to, once and for all, move away from the traditional luxury attitude to digital where, at best, a reduced range was offered online and often – see Chanel – no transactional range at all. Although this was perceived to drive high value customers in store and maintain a sense of exclusivity in the brand, with multi-brand luxury pureplay retailers dominating online luxury retail, mono brands need to extend their range and step up their game to maximise margin return.
With a one-to-one exchange at the heart of luxury retail, brands already have a wealth of structured data about their customers from which to build that bespoke experience. Less well tapped is the extensive amount of unstructured data that is out there in the digital space, such as engagements across the multichannel journey, or even comments on branded and influencer social media feeds. By unlocking that data, brands have the opportunity to create a feeling of exclusivity from both personalisation and loyalty experiences, such as access to new ranges ahead of general release, exclusive live fashion shows, or even virtual private viewings.
In their 2019 report on Luxury Brands, Deloitte reported that “Big data may help luxury brands to provide personalised and superior customer service through consumer segmentation, behaviour and sentiment analysis, and predictive analytics.” A number of brands, such as Louis Vuitton, Burberry, Tommy Hilfiger, Dior and Estée Lauder, are starting to take advantage of data-driven technologies to differentiate the customer experience and use AI to offer more personalised and timely customer services, such as AI-powered chatbots, voice and image recognition.
Leading the luxury ecommerce vanguard, Burberry gathered customer data from its digital channels – including Facebook, Twitter, Pinterest, Instagram, and YouTube – as well as in store touch points and enabled customers to digitally share their shopping preferences, experiences, and buying history to create complete picture. The brand can now use this data across channels to deliver premium shopping experiences, curated product recommendations, intelligent search and tailored customer communications that increase sales and retention.
McKinsey estimates that companies able to personalise the shopping journey across physical and digital channels, can achieve a 5 to 15% revenue increase across the full customer base so – for luxury brands – digital presents a new opportunity to track every customer interaction, analyse and use customer data to continually improve the experience online, and upsell to loyal customers across all channels.
There is a long-held misconception that budget constraints, and lack of resource or technological expertise prevent smaller boutique brands from scaling online. Ecommerce technology platforms such as Shopify are providing cost effective, simple to implement solutions to fast-track brands to establish a live digital selling presence quickly and effectively. Platforms like Shopify both enable digital sales and enhance the customer proposition giving scope for luxury brands to tackle perceived barriers of experience and personalisation. The ‘bought in’ aspect of these platforms can also allow smaller or growing brands to work with agility to add complexity to their offering, extending solutions to meet growing consumer expectations and reflect increased internal capabilities.
For the larger midsize to global luxury brand, the world is your pearl-filled oyster. Platforms such as Salesforce and Magento, as well as the increasingly popular Shopify Plus, deliver a vast array of ecommerce capabilities and the ability to integrate with niche digital selling tools and backend ERP systems. Even for a large, established luxury brand with an established single or multichannel retail presence, a Shopify Plus re-platform can provide everything from the basic building blocks to the customer experience differentiators, to accelerate online sales and ensure a smooth and effective digital translation for your luxury brand.