The history of luxury retail has proven that some brands have maintained a distinct level of status and demand despite global, economic, political shifts. However, as companies are forced to respond to an increasingly demanding consumer, some luxury fashion houses such as Chanel, a considerably late adopter to digital marketing, are now challenged to connect and engage with customers in new and innovative ways, namely social media and other forms of digital marketing. Louis Vuitton and Burberry have also felt the push to level up their digital marketing and e-commerce strategies; these two iconic brands once rested solely on their timeless luxury statuses. That was then. So this is now and analysts, strategists, and industry insiders are left with the game-breaking question: what is the future of luxury brands and will these brands reach a point where the name alone no longer sells itself?
The Tech Effect
Luxury brands and fashion houses have enjoyed timeless appeal, adoration and impressive sales due to their superior quality, expert craftsmanship, attention to detail and exclusivity. This luxe marketplace is defined by integrity, loyalty and trust, all characteristics that are perfected and nurtured over time. And time is the underlying factor that defines the intrinsic value of luxury items. Time is necessary to collaborate, conceptualize, create and design. But the value currency today is not time, but speed. The speed, expediency and immediacy delivered by digital is the polar opposite of what has defined the unique value of luxury products. So the visionaries behind these luxury houses and retailers must be quaking in their bespoke suits as they figure out how to move forward in a digital marketplace and grow their bottom lines without sacrificing their brand DNA.
After maintaining a stubborn position of resisting the digital marketplace in an effort to maintain the brand’s exclusivity, Chanel most recently embarked into new e-commerce territories, beginning with the online sales of perfume, beauty and accessories. While there are no immediate plans to include ready-to-wear or handbags, Chanel is taking the slow plunge into the tech world exploring products and services that make the most sense for the business model. Chanel has accepted the challenge to up their creativity and serve their existing, loyal consumers while at the same time embracing the digital shifts to connect with new audiences. Bruno Pavlosky, president of Chanel global fashion shared his strategy with British Vogue, “Rather than use digital reach to sell products, we’ll use it to gain insight into what the customers want from the Chanel experience”.
LVMH is another luxury conglomerate taking a careful, yet steady approach to digital marketing and e-commerce. As a start, they are developing a website that would combine all of their brands (including Louis Vuitton, Fendi and Chandon to name a few) to take full advantage of promoting their powerful portfolio of brands online. This company has the resources and the drive, largely led by the nextgen Arnault family members, to recruit and hire top digital strategists to ensure an effective and ongoing push into the digital realm.
But both Chanel and LVMH are running late to the digital party, and no matter how exclusive their brands are, no matter how stunning their products are in-store, younger luxury shoppers and customers outside of the brick-and-mortar retail centers demand the same accessibility to luxury online.
Socialization and Customization
Shifts in the economy and buying habits have considerably impacted consumers’ relationship to the luxury market. Loyal consumers who once consistently preferred and purchased luxury goods at insanely high full price are now much more open to the notion of discount and off-price retailers. While Chinese luxury customers may still frame their Chanel and LVMH sales receipts and display them in their homes as proof of provenance (makes sense in the land of knock-offs), just look at the rise and popularity of consignment retailers and etailers that have made it much more socially acceptable to purchase high-end brands at much lower retail prices. While luxury brands continue to hold themselves back from accepting the inevitable digital reality and develop aggressive online strategies, they are losing consumers who are now fleeing to sites like TheRealReal or Tradesy for convenience and quality.
At a higher level, maybe it’s time to redefine what luxury is and how it is delivered. This entire sector can’t be a major player in the future if it stays in denial. Successful brands have accepted the fact that innovative marketing concepts and advertising campaigns must consist of integrated social media and online engagement. Luxury brands that historically never “advertised” or developed highly commercial marketing strategies are now tapping into social media, video and interactive media to reach new, and in many instances, millennial consumers. Here’s the playbook for the future of luxury: From social engagement to customization, luxury brands need to capture the attention of new audiences through creativity and innovation without sacrificing the integrity of the brands. How are they going to do that? It is time to redefine luxury and how it’s delivered.
Back To The Future
So what does the future hold for the iconic luxury retailers of yesterday and today? Are brands that sell themselves truly a thing of the past? Absolutely not. It’s going to take vision and prescience to reinvent status and relevancy. And this re-engineering is going to be based on customer demand and expectation at the risk of irrelevancy. The value of luxury goods is a constant, but the customer base and its expectations changes with the times. Chanel understands the difference between their established consumers and her daughters and how to market to each group. Just take a look at Karl Lagerfeld’s edgy videos online featuring millennial celebrities. Gucci has taken a stellar approach to targeting millennials through consistent storytelling, social media and in-store engagement and has reaped the benefits in sales.
Versace took a similar approach and reinvented their brand by featuring celebrities Karlie Kloss and Gigi Hadad in their campaigns. Millennials are drawn to the young influencers and seek to connect with them through the brand’s social media content and digital experiences. Bloggers Leandra Medine of The Man Repeller and Chiara Ferragni of The Blonde Salad are among a select group of influencers that have been tapped by key luxury brands to collaborate in effective ways. Medine has partnered with Ralph Lauren, Gucci and Tamara Mellon, while Ferragni, in addition to launching a brand of her own, has enjoyed successful collaborations with Louis Vuitton, Christian Dior and Max Mara. All this social media movement proves that more and more brands understand the importance of having a strong, millennial-focused digital strategy in order to remain relevant and competitive in the market.
Overall, luxury brands are not in danger of losing their relevancy and exclusivity if they strategically monitor global, economic shifts within the industry and respond to what customers want with the innovation, creativity and brand uniqueness that has kept them in business for centuries. The future of luxury dictates that brands must be equipped with the perfect blend of speed and strategy and committed to understanding and maintaining customer relationships — while creating long-lasting and memorable experiences.