THE DRUM, 18 MARCH 2016 – 8:45AM UPDATED |
There’s a philosophical shift in what luxury products mean to people that’s causing brands to grapple with whether they can remain exclusive in a world where they are expected to be more accessible.
Luxury is becoming democratised, as it becomes less about product and more about experiences. While some brands are recalibrating their businesses to exploit that shift there are others still assessing whether they should balance exclusivity with inclusivity in order to survive.
Luxury used to be having a specific handbag and now it’s about taking an Uber. Riding in a luxurious car is as easy as opening up an app now that digital is making what was once available to the elite, now for the masses. And yet these brands have never wanted to be that ubiquitous, with some like Chanel and Celine notoriously reluctant to sell their wares online, partly in fear of deviating from the traditions that have elevated them so high.
Luxury confronts digital
Four in 10 luxury brands don’t sell online but it’s not just because they’re being snobby. Playing hard to get is ratification of the category’s constituents yet there are perhaps more financially strategic reasons as to why digital isn’t top of mind.
Some were broached on a SxSW panel where marketers and consultancies Havas Luxe and Lamercatique suggested the industry’s indifference to building digital-first businesses stems from the fact that it’s not a priority in the boardrooms of many brands and that it’s too expensive to maintain an always-on presence.
“[luxury brands] may always be late to digital,” said Thomas Serrano, founder and president of Havas Luxe.
“Right now most brands [in other categories] are looking at Snapchat and most of the luxury brands are not. They think that it’s a place for generation Z, which isn’t true, because millennials are already using it. These brands are also asking ‘what can I do in eight seconds as my story is too complicated than that’. There’s always a reason why they don’t need to move into digital.”
It’s observation that could be levelled at brands like Chanel, Dior and Celine, who insist on people actually visiting their stores to purchase most of their products. Retail sits at the heart of many luxury brands, meaning online sales could cannibalise the chic, prestige in-store experiences that have been so carefully tuned over the years. And while Burberry and Michael Kors may be among the few to buck that trend, their moves to become more accessible may be in part motivated by the need to appease shareholders.
The inclusivity/exclusivity approach
However, it is possible for brands to be “super niche” on digital, said Judy Bassaly, former vice president of trade marketing and business development at Giorgio Armani.
“Digital isn’t necessarily another marketing tactic,” she continued. “It’s the way we’re going to be communicating in the future and so eventually everyone is going to have to wake up to it along the way. I don’t think you have to be the first to it but it’s important to listen and it’s important to both doubt and be smart about the approach about the medium instead of blindly jumping on the bandwagon.”
Part of that adjustment needs to cater to younger audiences. Luxury brands have tended to focus on the older baby boomer demographic because they were the ones who could afford their products, yet as the so-called millennial generation ages there’s ample opportunity now to convince them to buy.
“What we’re seeing with younger people now is that they might not be able to afford luxury products all the time but they may have one piece [from a collection],” said Gregory Puoy, chief executive of Lamercatique.
“They see products they like and want to buy them straight away. While luxury brands shouldn’t be changing everything to run through digital they need to care about the fact that people want that immediacy now; it’s a category that’s very similar to the music industry in the sense that they didn’t want to change because they’ve always done business in a certain way.”
CRM is used by some luxury brands to nurture their most loyal customers, a practice Bassaly said will play a bigger role in easing their transitions into the online space.
“Through CRM software you’re not only able to understand general demographics but also to group your customers in very sophisticated ways.
“Also through CRM there’s the idea of predictive analysis, which is what we’re moving towards. It’s a very niche way to speak to your customers, knowing what they’re buying and predicting what they’re going to want to buy and having the ability to send targeted communications.”