"Luxury and digital, a special relationship", Bruce Leduc (SQLI)

Tribune24/01/2022 - by Bruce Leduc, business analyst at SQLI

Long viewed with suspicion by the big luxury houses, the internet is now used by brands in this sector as a source of in-store traffic and a way to reach generations Y and Z.

DR

Bruce Leduc, business analyst at SQLI

Majestic points of sale, high quality products, impeccable customer service... Everyone knows that buying a luxury product is a unique experience. Can this magic maintained by these brands around the world be reproduced on the internet? This is the challenge that the luxury sector has been tackling for several years.

However, with digital, another question arises around the clientele of this sector: is it possible for a large luxury house to retain the values ​​so dear to its historical clientele, while attracting generations Y and Z? After more than 10 years of presence on the web, it's time to take stock and look forward.

A late and timid arrival on digital

Luxury does nothing like the others, its arrival on digital was late, timid and above all slow. Considered contrary to the exclusive values ​​of luxury, it was for a long time unthinkable to position yourself on the internet. From a technical perspective, digital has not immediately been able to provide the luxury sector with the innovations that allow consumers to have the desired experience. But digital diversifying its range of opportunities for brands over the years, it has become impossible for these brands to do without it.

Another variable favoring installation in this sector: a younger clientele. Generations Y and Z account for almost 30% of luxury purchases today. And it's not about to stop: their luxury market share is set to jump to 80% by 2035, according to a study conducted by Bain & Company in November 2019. The breakthrough of the youth within the sector explains that e-commerce now represents 23% of purchases of luxury goods, according to another study by Bain & Company from 2020.

Digital, an essential lever for physical points of sale

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What about physical points of sale with this evolution towards digital? Even if the boutiques are seeing their share of turnover fall sharply within luxury purchases, they nevertheless remain central strategic pillars. For the luxury sector, digital is now more of a lure to the store. As proof, there are many brands offering a limited catalog of products online with the aim of encouraging web-to-store as much as possible. The web today allows luxury to tell a story to a wide range of customers. However, the purpose, the act of purchase, remains for many brands an exclusive stage at the physical point of sale.

Digital is also of great help today for sales consultants, called brand ambassadors. From now on, it is possible for these advisors to obtain a complete and unique profile of the customer through various indices left on the web: wishlists, purchase history, physical measurements... The other revolutionary aspect in store thanks to digital is improving the sale ceremony. For example, the Cartier house has integrated digital with appointment booking via a dedicated application or in-store fittings using a connected mirror.

On the web side, the way of managing the customer relationship must be identical to that in store. Hyper-personalization, so characteristic of the luxury sector, then becomes the watchword. How to make it possible? Through adaptive web browsing or services to customize any product. Jewelery offers representative examples of some of these innovations. For example, there are many brands today offering jewelry engravings directly on the web. A service unthinkable for this sector a few years ago.

Digital innovations to replicate the in-store experience have become legion. With the My Personal Stylist application, Galeries Lafayette allows, for example, to connect a customer browsing its site with a professional stylist who can advise him throughout his purchase process.

Social networks and video games, favorite playgrounds of innovative brands

Despite a poor understanding of these new communication channels, social networks have quickly become a strategic lever in their own right. The presence of muses, another essential lever in the communication of a luxury brand, has greatly contributed to accelerating the installation of brands on these channels.

Social networks, adaptable as desired to the values ​​of each brand, are proving to be central to capturing a new, younger audience. Is it therefore a question of adopting a strategy for the general public on these networks? This is not the turn that the sector seems to be taking. Via an omnichannel strategy, the accounts of luxury houses on social networks respect an image and customer service that are just as exclusive as on official sites or physical points of sale.

For the most pioneering brands in the sector, another playground has recently opened up: video games. Indeed, the prospect of a virtual world without limits allows certain brands to offer avant-garde innovations. Balenciaga, for example, offered players of the Fortnite video game virtual fashion outfits and accessories. All the ingredients are there to generate interest and growing popularity among Generation Z.

In this perpetually changing digital ecosystem, what prospects then for luxury, making the avant-garde its watchword? There is an attraction of luxury brands for NFTs and the virtualization of fashion. The fight against counterfeiting in the luxury sector will most likely be intensified by relying more on digital technologies, in particular blockchain with the breakthrough of NFTs, with each object in the sector being assigned a digital certificate proving its authenticity. Already, some players are experimenting with innovations in this direction: Hublot, via its E-Warranty technology, is working to obtain certification only with a simple photo.