Luxury brands have a proven track record of selling experiences. Their customers stroll into the opulent spaces and come out with a £10,000 jacket and a feeling of exclusivity. It is one of the reasons the luxury sector has typically lagged behind the rest of the fashion world when it comes to embracing digital. But with the pandemic halting international travel, and consumers’ shopping habits changing for good, luxury needs to rethink its strategy. In the post-pandemic world, innovation and seamless digital experiences will be central to winning over gold-collar consumers unable to head in-store for high-end apparel, jewellery and fashion.
The online world, giving the impression of abundance, contradicts the image of luxury retailers who pride themselves on scarcity. Luxury brands have typically relied heavily on their reputations, but this is no longer enough. Now, digital needs to be at the forefront of brands’ strategies if they are to stay relevant, and Elliott Jacobs, EMEA Commerce Consulting Director at LiveArea explains why it is vital for the luxury sector to kickstart their transformation journeys.
Luxury in the pandemic world
Luxury brands were hit hard by the pandemic. The market was estimated to be worth €281 billion in 2019, but the impact of COVID-19 saw sales shrink by up to 30% – and forecasts suggest the market is not set to return to 2019 levels until 2022 or 2023.
The sector depends on a broader base of aspirational shoppers, with up to 30% of industry revenues generated by consumers travelling overseas. The European luxury market, for example, is heavily reliant on Chinese shoppers, with a large percentage of purchases made by tourists looking for cheaper tax-free prices. While the Chinese market recovered earlier than the rest of the world, borders remained closed and Chinese nationals, unable to travel abroad, purchased from their favourite brands domestically.
With the pandemic pushing 24% of shoppers in Europe and the US online for the first time, there is little doubt that store closures and lockdown have been a shot in the arm for online spending. You only need to look at the numbers to realise the power of online: 42% of millennials, 34% of Generation X and 28% of Baby Boomers tend to acquire luxury goods online, with an additional 40% of luxury purchases influenced by a digital experience in some way. Clearly, a progressive digital strategy is key for luxury brands to win the hearts and minds of the next generation – so how should this be done?
Emulating premium experiences
The pandemic has forced luxury brands to engage and experiment with immersive technologies, from virtual clothing to virtual catwalks. For the market to succeed in the digital age, brands will have to emulate the premium experience they’ve created in-store, online. And they’re up against the rise of pure-play brands like Farfetch and Net-a-Porter, who are pioneering data-driven luxury experiences.
At the very basic level, luxury brands must ensure their online journeys are personalised for each customer’s experience; tell a story to help convey the brand’s dream idea; include iconic imagery to help the brand differentiate itself, which is pivotal in a market so dependent on social media; have clean interfaces to provide a premium experience to match the quality of the product; and offer interactive experiences which expand upon a simple product page, whether it’s through 3D imagery or augmented reality.
Net-A-Porter and Farfetch have both successfully demonstrated that digital luxury purchasing can work well. Both have proved that consumers are both able and willing to shop online at undiscounted prices, which are on par with in-store premiums. But that doesn’t signal the end for the physical store – stores are no longer simply points of sale, but alluring, digitally enhanced destinations promoting luxury experiences. Brands must therefore continue to innovate their in-store experiences to keep them safe, relevant and engaging.
Going forward, luxury brands will need to leverage data to offer more personalised content and experiences. Since data is disparate in the luxury sphere, drawing information from various customer touchpoints, via both physical and digital channels, will be crucial. And this is where unstructured data, AI and machine learning come into play to help luxury brand deliver personalisation en masse.
Playing digital catch-up
Luxury retailers have slowly been introducing themselves into the world of digital, and the pandemic has given them all the more reason to do so. Luxury brands were built on exclusivity and it is essential for them to preserve this level of allure – protecting the brand is a top priority. To this end, they must continue to offer similar experiences to what consumers would expect in-store while still delivering value. Here, brands must ensure they deliver a frictionless experience regardless of the channel and maintain the highest level of service in the absence of stores. Only through innovating can brands be sure to keep up in a crowded space and drive growth in the digital age.