Luxury and digital, a unique relationship

Treated with wariness by the big names in luxury for a long time, the Internet is now used by brands in the industry to draw footfall into stores and as a way to engage with generations Y and Z. 

Magnificent points of sale, products of the highest quality, impeccable customer services... Purchasing a luxury product is clearly an experience in a class of its own. Can the magic created by luxury brands around the world be recreated online? This is the challenge that the industry has been working on for a number of years. 

When it comes to digital, another question related to the customer base is raised: Is it possible for a major luxury brand to maintain the values that are so dear to its historical customers while attracting generations Y and Z? Following more than a decade’s presence on the web, it is time to look back and ahead. 

A late and tentative arrival in the digital realm 

The luxury industry likes to be different and it was a digital latecomer, arriving with small and slow steps. Seen as running against the value of exclusiveness, the idea of creating an online presence was for a long time inconceivable for the industry. Digital technology was not immediately able to provide luxury brands with the innovations they needed to offer their consumers the desired experience. However, as the range of digital opportunities open to brands widened over the years, it became impossible for them to ignore it. 

Another factor encouraging them to make the transition was a younger customer base. Generations Y and Z now represent nearly 30% of luxury product purchases. And this trend is set to continue: according to a study carried out by the firm Bain & Company in November 2019, their share of the luxury market is forecast to leap to 80% by 2035. The growing importance of youth for the industry is reflected by the fact that e-commerce now represents 23% of luxury product purchases, according to another study by Bain & Company in 2020. 

Digital: an essential tool for physical points of sale 

So, how do physical outlets fit into this transition to digital? While brick-and-mortar stores have seen a sharp fall in their share of luxury product sales, they remain central strategic pillars. For the luxury industry, digital now serves more as a kind of bait to attract shoppers into stores. This is demonstrated by the many brands that offer a limited catalog of products online, with the aim of encouraging web-to-store as far as possible. The web now enables luxury brands to tell a story to a wide range of customers. However, for many brands, the end goal – the act of purchasing – remains exclusively reserved for physical points of sale. 

Digital is also a precious aid today for sales advisors, who are known as brand ambassadors. Advisors are now able to access a comprehensive and unique profile of the customer through various clues left online, such as wishlists, purchase histories and physical measurements. Another revolutionary aspect in stores that has been brought about by digital is improvement of the sales ritual. Cartier has integrated digital technology with a dedicated app for making appointments and connected mirrors in its changing rooms, for example. 

The way customer relationships are managed on the web must be the same as in stores. Hyper-personalization, one of the key features of the luxury industry, is the watchword here. How can it be achieved? Through adaptive web browsing and product personalization services, for example. Some of these innovations can be found in the jewelry sector. They include the online jewelry engraving services provided by many brands today. Such a service would have been unthinkable in this sector just a few years ago. 

Elsewhere, digital innovations that reproduce the in-store experience have become innumerable. One of them is provided by Galeries Lafayette, with its app My Personal Stylist, which connects users of its website to a professional stylist, who provides advice throughout the purchasing process. 

Social networks and video games: tools of choice for innovative brands 

Despite a poor understanding of these new communication channels, social networks have rapidly become strategic tools in their own right. The presence of brand ambassadors, another crucial communication tool for luxury brands, has played a huge role in speeding up their entry into these channels. 

Social networks, which are highly adaptable to individual brand values, are key to capturing a new, younger audience. Are they adopting a strategy aimed at the general public through social networks? This does not seem to be where the industry is headed. As part of an omnichannel strategy, luxury brands’ social network accounts are upholding an image and customer service that is every bit as exclusive as on their official websites or in their physical points of sale. 

For luxury brands in the digital vanguard, another area of opportunity has recently opened up: video games. The prospect of a limitless, virtual world is inspiring some brands to come up with trailblazing innovations. Balenciaga, for example, has created virtual fashion items and accessories for players of the game Fortnite. All the ingredients are there to grab and hold the attention of generation Z. 

In this constantly changing digital ecosystem, what lies ahead for the luxury industry as it embraces the very latest innovations? Luxury brands are showing an interest in NFTs and the virtualization of fashion. It seems likely that the fight against counterfeiting in luxury will be stepped up through increased use of digital technologies, in particular blockchain with the rise of NFTs, where luxury items are given a digital certificate proving their authenticity. Some brands are already experimenting with innovations in this area: With its e-warranty technology, Hublot is making it possible to verify the authenticity of its timepieces with a simple photograph. 

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