It’s estimated that online sales of personal luxury goods will make up 25% of the market by 2025. And an additional 40% of luxury purchases are in some way influenced by a digital experience. This might include online research of an item that is subsequently bought offline, or a social media post that eventually leads to an in-store purchase.
The benefits of digital cannot be ignored. And, in luxury, the stakes are particularly high. To capture this potential, luxury brands must overcome their reservations, play digital catch-up, and enhance their digital direct-to-consumer (D2C) efforts.
Authenticity & Brand Storytelling
Until recently luxury goods markets – high-end watches, fashion, accessories, cosmetics, alcoholic drinks, automobiles, travel, and experiences – held back, and many brands are still to fully embrace digital or are playing catch-up.
Online D2C selling is the real untapped opportunity for many luxury brands. The ability to curate personalised, on-brand customer experiences online and in-store is key. Heritage, quality, and a personal relationship with the product and brand are vastly more important here than in standard retail sectors. And the only way to fully manage this experience end-to-end, is by selling direct to consumers.
Authenticity & Brand Storytelling
Fortunately for luxury brands, their stories are very compelling. Think about the hundreds of years’ meticulous engineering behind a watch crafted by hand in a village in Switzerland. Or a line of luxurious skincare derived from caviar. These products and their brands have intrigue in abundance.
But the luxury industry is no longer about restricting the brand to exclusivity or shrouding it in mystery or rarity. Modern customer behaviours are pushing luxury brands to offer more authenticity and personality. To engage with their audience, brands need to tell their stories across various channels. And new technologies allow fresh, exciting opportunities to do so, from social media and augmented reality, to cross-sector collaborations and in-store experiences.
For some brands, the physical store still plays a vital role in selling direct to consumers. Experts say that more than 90% of luxury sales still take place in stores. But the new focus is on experiential retailing. It’s all about ‘who I am’ rather than ‘what I have’.
Of course, a high-quality product still plays its part, and this is central to the in-store experience. Consumers want to try and touch luxury items. They can feel and see the difference. They want unique items that no one else has. They want a shopping and product experience that they can share with their friends.
Experiential retailing needs to offer luxury consumers a place to not only shop but also listen to music, eat luxurious foods, touch and try products, and most importantly, hang out with their friends and share the experience. Brands need to refine their commerce strategy, and re-imagine in-store experiences, to keep consumers coming back to brick and mortar.
High-end brands have traditionally approached online selling with caution, as they feared it cheapened their brand or made it less exclusive. There are reservations as to whether purchasing high-value items online would be feasible, and how a luxury shopping experience can be replicated online. But the early movers have seen demand, whilst learning from online experiences delivered by luxury marketplaces like Mr Porter and Farfetch.
In a similar way to physical experiences, online and on mobile users need to be delighted and engaged by the product and the brand. Shopping these days is an activity people indulge in at work, in front of the TV, and in the bath. We are used to shopping for books, small electronics, and cheap clothes, in a few easy taps. But buying a luxury product is different.
If spending several thousand pounds on a handbag or a watch, most consumers would want to experience the quality of the product with their fingertips, and try it on to see how it feels. Many online retailers in the fashion and beauty sectors have successfully delivered solutions that allow customers to virtually try products.
This in some ways bridges this gap of seeing how products look. But the basic fact is, you can’t touch the product online. And this is an obstacle that will never be fully hurdled online. But, instead of merely accepting defeat, some brands are providing other memorable online experiences.
Burberry focused on this opportunity for growth, and have reaped the benefits. Customisation and personalisation of products, with photo-realistic virtual images of bespoke products such as scarves and jackets have been very popular. Burberry was one of the first luxury brands to open a Facebook page, and was one of the first to trial social selling, allowing customers to buy nail polish colours worn by the models directly from a tweet.
The brand also launched a made-to-order catwalk product service, where customers can place their bespoke orders as soon as looks hit the catwalk. Burberry realised before its competitors did that today’s luxury customers want to select their items before all the others.
As we have seen with many successful direct-to-consumer brands, a key factor behind their success is data. The D2C model gives brands unparalleled direct access to consumer data. And data must be central to a commerce strategy to create the kind of fluid and exceptional customer experiences mentioned above. Data needs to be collected, analysed, and interpreted in the right way to anticipate customers’ preferences, and surprise them with personalised suggestions, and guided selling experiences, which will in turn bring brands closer to their customers.
Selling a £10,000 watch is not the same as selling a T-shirt. Luxury products are more than an object – they are feats of the most painstaking engineering and craft. And that level of detail needs to be displayed. Luxury marketplace Mr Porter led the way with the imagery on its product pages to illustrate the unique details of such luxury items, investing in specialised photographic equipment to capture every miniscule element. Every watch image on the site is actually a composite of photographs, each focusing on a component of the face — the second hand, the date, the hour hand etc., to portray the detail and quality of the items in their finest light on the product page.
Regular content, such as news and blog articles and native advertising, is something with which millennials are familiar, and often rely upon for education and inspiration. And why should luxury consumers be any different? However, a wholesome content marketing strategy is often overlooked by luxury brands, possibly believing the churn of regular PR or blog articles might cheapen the brand.
Hodinkee proved the worth of digital marketing in the luxury space. Originally a luxury watch blog, became an online retailer in 2017, having built an authoritative online presence and loyal audience. Luxury watch fanatics looking for the latest products, technologies, and trends would follow Hodinkee’s blog, which became a promotional avenue for many leading brands, and eventually a retailer.
Social media is the number one means of discovering new luxury items for millennials, ahead of websites and magazines. Social channels offer unique factors that appeal to luxury customers, over other channels, such as immediacy, dialogue, and influencer content.
Actually before it had a website, Omega became the first watch brand to sell via Instagram, with a post promoting a limited edition model. All 2,012 watches in the series sold out in 4 hours. Things continue to evolve, and, with the recent move to allow full purchase in-app in Instagram, there is an opportunity for luxury brands to sell directly to consumers through a channel where they discover new products. Burberry are one of the few brands currently using this feature, but expect many more to follow.
Delighting consumers online doesn’t end with a frictionless purchasing journey. We know that, with luxury products, the quality of service is part of the luxury experience. In real terms, this means speedy delivery, particularly in the advent of Amazon Prime and other same-day or next-day delivery models. In short, if your pair of £10 headphones can arrive the same evening, maybe you should expect your £10,000 pair of shoes to arrive within the hour?
And, in the age of experiential retailing and social media, the ‘unboxing’ experience should be something to behold. Omega’s latest limited edition watch – inspired by the 50th anniversary of the 1969 moon landing – offers the perfect explanation here:
“Unboxing the watch will be as much of a joy. The package features ceramic panels with 3D prints of the moon surface – no two boxes are the same since the panels are structured differently. The top of the box is printed with the image of the Sea of Tranquility, the landing position of the Apollo 11 on the moon.”
That’s no tear-and-throw Amazon carton.
In the same way that consumer expectations have been raised in regards to delivery speed, services like free return shipping, easy return in-store (even for items purchased online), and quick returns processing are now the norm. And, while that may be an expensive exercise for the retailer with the service and insurance required for carrying luxury goods, this is necessary to build customer retention over the long term.
We know that the overall experience is equally as significant as the product in luxury. So if a brand does not deliver on core eCommerce processes such as returns, it is compromising its customer experience. With the stakes in luxury so high, this has to be a priority for brands.