Digital Transformation E-Commerce

Luxury Brands and Digital Technology: The Inevitable Alliance

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Written by Anaelle Thomas

Who said the luxury market could live without taking the digital transition? Who? Phoebe Philo. Céline’s previous creative director has been quoted a few years ago as having said  “I’d rather walk down the street naked than join Facebook”. She might think the future will tell. And time proved her wrong! Céline has digitally integrated itself in many ways: an e-commerce platform, social media strategy, a website improving the overall online customer experience, as well as content strategy, among other things (digitization not being limited only to an online shopping platform). The various methods paved the way for the brand to achieved a fully digitized marketing strategy.

Céline was one of the last luxury companies to make the digital transition; a necessary step due to the onset of new luxury sociology. Aside from some remarkable exceptions, luxury brands remain sluggish in establishing an online presence.

Are they fearful of losing their untouchable status? Are they hoping to preserve their exclusiveness? After having lost many opportunities, brands seek to conquer the proverbial “goose that lays golden eggs,” A.K.A., “Millennials.”  

Opposites’ Alliance

For decades, the two realms of luxury goods and digital technology have progressed without ever overlapping each other. Nonetheless, the digital revolution has been ongoing. Now all market sectors, including luxury goods, are influenced by new technologies which in turn enable new products and services.  In 10 years, the internet transformed the marketing and commercial landscape to such an extent that the relationship between a company and its prospects/clients has drastically changed. The digital revolution merged accessibility with transparency and conveyed an ideal of the mass market. Digital technology is about “anywhere, any time,  on any device”.

”Luxury is a necessity that begins where necessity ends” said Coco Chanel.

The luxury market in essence evokes symbolism, creates inspiration and stimulates desire. Iconic, timeless pieces, rarity, preserving exclusivity and an air of  mystery—this is how the luxury market could be defined. Luxury goods and e-commerce have continued to expand the market. Indeed, according to Deloitte, the sales of luxury goods in 2017 grossed US$212 billion.
In 2017, retail e-commerce sales worldwide amounted to 2.3 trillion US dollars and e-retail revenues are projected to grow to 4.88 trillion US dollars in 2021. With 8,5% of luxury sales done online, market growth is on the horizon. 2022 is anticipated to a 6% growth for the luxury market and 18% for the  e-commerce market: the latter metric is the newest challenge facing the industry.

78% of sales that were influenced by the internet along with new fully digital retailers—Baume, Net-a-porter, HudaBeauty—have given a boost to this timeless sector. The desire is now for brands to preserve their ability to inspire and trigger the “impulse buy” reflex by enhancing psychological attractiveness.

The Emotion Appeal of Luxury  

Why do people buy luxury products? Studies have shown that our decisions are driven by the emotions associated with our judgment. Purchase behavior is the outcome of how a consumer perceives the emotional benefit delivered by a brand through its products while buying them. Luxury brands understand this challenge and use myriad ways of manipulating this psychological appeal in order to drive people to buy their products through this emotional phenomenon.
According to a study conducted by Bain, by 2025, Millennials will represent 45% of the global luxury goods market. Millennials want a new shopping experience: one more personal and tailor-maid. To reach this new clientele, brand are implementing new strategies.

How to become more attractive?  

Luxury brands had to think twice about their strategies in response to their new target, the Millennials. They knew that they had to generate key emotions in order to hit the target. What is better than storytelling? Storytelling allows them to enter a world, to take part in a brand’s creations and to escape their life. Storytelling speaks to young people and all of the strategies implemented regarding the branding, such as inbound marketing, have shown really high return on investment. More strategies were developed since—for example—new jobs like “online promoters”emerged thanks to social media visibility.
Companies changed their schemes in order to implement digital marketing: traditional 4p was scrapped and made room for 4E: Evangelism, Experience, Everywhere, Exchange.
All these strategies required more investment from companies, and now, investments in digital marketing are superior in those in traditional marketing.

Omnichannel Experience

“Consumer-centric,”“consumer insight”— I am sure that you have heard these words before. Even today, experience is paramount and companies are trying earnestly to put the client at the heart of their strategies. To implement the online/offline or “drive to store” concept they use a huge asset: data. Turning data into consumer insights is one of the keys to taking advantage of this digital transformation. Data enables the creation of a consistent relationship between the client and the brand. At any time and on any device (or even in store) the brand can access a client’s preferences and past purchases in order to better assist the client.

Between digital and luxury brands it is only the beginning of a long story.
This relationship will improve in the future due to the ever-increasing demand from millennials.


 

 

 

 

 

 

 

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Anaelle Thomas