Luxury is a category defined by a set of principles that have been crafted and refined for decades, and in some cases, centuries. Its principles—vision, rarity, mystery, obsession, origin, emotional intelligence, exclusivity, appearance, and expense—are still as relevant to the consumer today as they have ever been. Likewise, they’re proving as relevant in the digital world as they were in the analogue.
Luxury has always been about controlling every aspect of the customer journey. Control over manufacturing processes, retail environment, and how the brand communicates with customers. This control has been foundational to luxury brands’ success. With control, one can fully manage the experience that is being crafted for the customer.
Given this, some luxury brands have limited their e-commerce presence in the past. Chanel, Hermès, and Céline are notable examples. However, even they are now making the shift toward digital, albeit in a carefully constructed manner.
According to McKinsey, digital sales in the luxury space are outgrowing offline sales by four to one. They will hit $70 billion by 2025 (or 18 percent of total luxury sales) before flattening out. This is too much of an opportunity for luxury houses to miss. But it also signals that consumers are, and will continue to be, more readily accepting (and possibly expectant) of luxury digital experiences in the future.
Keeping the mystery alive
In an e-commerce world where brands must relinquish aspects of control in favor of greater consumer relevance, how do luxury brands retain their mystique?
A useful example of how luxury businesses can retain some control over their experience comes from LVMH’s recent announcement. It is creating its very own e-commerce site. With 70 of its own brands, plus some non-LVMH offerings, the company can control far more of a user’s experience than with other multi-brand e-tailers. This is the second time LVMH has explored e-commerce, the first being its launch of Eluxury in 2000, subsequently relaunched as the editorial platform Nowness in 2009, which has built a strong community of luxury lifestyle followers.
Some luxury brands are choosing an app-based strategy where they sell their products on proprietary applications. This, of course, means greater control over user experience, but it also comes with its own set of drawbacks. Consumers may be less likely to download specific apps in favor of choosing to shop at multi-brand retailers.
Partnerships lead the way
Other brands are adopting a partnership strategy. Galeries Lafayette and Condé Nast recently relaunched Style.com as an e-commerce platform. Yoox and Net-a-Porter merged in 2015 and Nieman Marcus acquired MyTheresa.com in 2014.
In March, watchmaker Vacheron Constantin announced that it is partnering with New York–based Hodinkee to sell its Cornes de Vache 1955 timepieces online only. The 36-piece limited edition will sell for $45,000 each. This is a 260-year first for the business and a signal that some luxury brands are starting to place their trust in e-commerce as an important channel.
Regardless of the strategy, one thing is becoming clear. For the brands that dare, the digital world is providing ample opportunity for the creation of increased consumer relevance, unlocking new potential for building communities of brand advocates.
Telling greater stories through content
Arguably, stories are the most important aspect of any luxury experience. From video to editorial, many luxury brands like Hermès offer digital content that cannot be found inside brick-and-mortar stores. One of the differentiators for luxury brands is their heritage. Decades of history provide rich ground for differentiation, and thus content creation. It is possible for brands to tell their stories digitally in far more compelling ways than can ever be achieved in stores alone.
Building exclusive communities
One of the greatest opportunities in the digital space is the potential for community building. Many luxury brands are actively using their digital platforms to create exclusive communities. Bentley introduced highly stylized road trips that customers can upload and share with one another—or choose to keep to themselves.
In 2009, Burberry built the Art of the Trench microsite which encourages consumers to upload images of their trench coat looks. To date, the site has received over a million submissions.
By relinquishing some control and carefully placing aspects of the brand in the hands of the consumer, luxury brands have the opportunity to give customers a sense of mutual ownership and create stronger emotional connections.
Free shipping, customer service live chats, and related product recommendations are no longer enough for the luxury e-commerce buyer. Brand managers need to focus on how they can replicate the same sense of prestige online as they do in store. If you linger for an extended period on a specific page of the Fendi website, a pop-up tells you how many other users are viewing the product as well as how many items are left in stock. If the item is moving fast and has great interest, shoppers are more likely to rush to add the item to their cart. This reflects the sense of urgency shoppers might feel in-store.
Gucci and Fendi (among others) have useful help tabs on product pages that lead to customer service contacts, online reservations, and store collection information. Burberry has an instant callback feature to help guide consumers through their purchasing journey. By studying the e-commerce service journey closely, marketers can find opportunities to serve customers in ways that heighten uniqueness and amplify, rather than lessen, the sense of prestige associated with the brand.
Online-only customization options are adding a new dimension to the luxury experience. Coach, for example has an online gifting platform that allows customers to buy a product and send it to the recipient who can select color or size while adding other customized embellishments. Louis Vuitton also offers online customers the opportunity to monogram their items. These gifting personalization options could not easily be replicated in traditional retail environments.
Entering the digital realm
There are many opportunities for luxury brands moving into the e-commerce space. Marketers should carefully consider the right entry strategy for their business and how their respective brands can leverage the unique advantages of digital to create moments of disproportionate impact with consumers.
Ultimately, the eight principles of luxury branding haven’t changed. However, moving into the digital space requires a reassessment of how to best leverage these principles. Historically, luxury brands have used their prestige as a way of saying no. The shift to digital requires a fundamental mindset change toward saying yes. Yes to transparency. Yes to understanding customers better. Most importantly, yes to relinquishing some of the control luxury brands have historically coveted when protecting their mystique.
This piece was originally published in The BrandLaureate (May/June 2017, Issue No. 41). Republished with permission.