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Luxury Brands Can't Ignore Digital for Building Meaningful Relationships

May 4, 2016

Javier Calvar
Albatross Global Solutions

Albatross Global Solutions is a market research firm that forecasts trends in the luxury market worldwide. It also advises luxury brands on how to monitor the experiences they create at various touchpoints in the customer journey, how to deliver “memorable and inspiring experiences” to specific audiences and how to increase sales. eMarketer’s Karin von Abrams spoke to Javier Calvar, COO at Albatross, about the luxury market worldwide and how it’s adapting to the changing behavior of today’s consumers.

eMarketer: What are the biggest challenges for luxury brands looking to develop a presence online?

Javier Calvar: Luxury brands are facing today what their nonluxury counterparts faced a decade ago. They know there’s an online world and many understand the need to be part of that world, but they don’t know in which shape or form. There are three main things luxury brands wrestle with in relation to their online strategies.

One, the online world is very diverse—there’s the corporate website, social media and ecommerce. How can a luxury brand choose the most appropriate form for each touchpoint in the context of the role they play in the customer journey? Some touchpoints are educational—for example, a corporate website; others are about reassurance, such as social media forums. All are about engagement.

“Luxury brands are facing today what their nonluxury counterparts faced a decade ago.”

The second main thing is to ensure that all those touchpoints work well together and deliver a branded experience that is consistent throughout the customer journey, which includes, of course, brick-and-mortar boutiques.

Last but not least, it’s difficult to replicate online the type of luxury experiences delivered at boutiques, where different stimuli can be used. This is also a challenge for luxury brands.

eMarketer: How do the major markets for luxury goods in Western Europe differ from one another?

Calvar: Since they are all mature luxury markets, they share a lot more commonalities than differences. For consumers, what we call “inner reward” is the main driver of luxury consumption across markets such as the UK and France. Inner reward consumers like to enjoy the finest things in life and luxury brands are part of their lifestyles.

They buy luxury as they might buy art—they appreciate the craftsmanship and quality of luxury pieces and buy them to reward themselves, not for public recognition. In some markets such as Germany, there is still an element of what we call “social acceptance,” whereby consumers buy luxury brands to keep up with others.

From a retail point of view, mono-branded boutiques are still the preferred channel to purchase luxury goods across most Western European markets. Ecommerce is growing fast, but of course from a much lower base and as a complement to brick-and-mortar stores, as consumers by and large still like to feel the luxury experience that comes from a visit to a boutique.

eMarketer: Which luxury brands have done the best job of presenting their brand and products online?

Calvar: Compared to their nonluxury counterparts (i.e., fast-moving consumer goods), luxury brands are relative newcomers to the digital space. That said, there are examples of excellent work done online to deliver an integrated online-offline branded experience. Burberry and Montblanc are, in my opinion, good examples.

“Online content must complement the in-store experience and the product range must complement what is sold through stores.”

eMarketer: Is it important for luxury brands to offer exclusive content, services or discounts to online consumers, or can they encourage engagement and loyalty in other ways?

Calvar: Luxury consumers are looking for meaningful relationships with luxury brands, and digital platforms must help build such relationships. Online content must complement the in-store experience and the product range must complement what is sold through stores. We must be careful not to use online to sell at discounted prices. Special items/collections and limited editions are great for luxury ecommerce. Discounts are not.

eMarketer: How important is it for luxury brands to sell online? Does this vary by product category?

Calvar: Consumers around the world, and in Asia in particular, spend a significant amount of time online, gathering information, exchanging views with their peers, comparing and contrasting, and, of course, buying. It’s very important for luxury brands to be where their target consumers are.

Of course there are differences by categories, but no brand today can afford to not have an online and ecommerce presence, even in categories where ecommerce might seem counter-intuitive, like automotive. Maserati, the Italian luxury car marque, sold 100 of its newly launched SUV model in China through Tmall in just 18 seconds!

Some brands have done a great job integrating ecommerce and brick-and-mortar businesses into a single P&L. Burberry is a good example. As ecommerce platforms evolve and deliver a more engaging luxury experience, consumers will start treating such platforms as much more complementary to brick-and-mortar boutiques than they do today, blurring the divide between offline and online—what we refer to as “noline.”

eMarketer: What do you think are the most exciting developments in the luxury industry with respect to digital?

Calvar: At Albatross we do believe consumers increasingly think “noline.” Luxury brands must be prepared to engage with consumers in a meaningful, consistent manner across multiple touchpoints, treating each as part of an integrated customer journey.

“Maserati, the Italian luxury car marque, sold 100 of its newly launched SUV model in China through Tmall in just 18 seconds!”

Consider the example of Tiffany’s Ring Finder app (first launched in August/ September 2015). Unlike many brand attempts at creating their own mobile app, this is not simply a glorified ecommerce platform or a copy of the brand’s website. It uses the unique features of a mobile device to engage and educate the consumer.

It introduces various styles and materials and allows consumers to narrow searches according to their preference, but it also eases the shopping experience by using the touchscreen to allow users to find their ring size using any ring they already have. Thus, the customer can use the app to learn about the styles available, figure out what sort of ring they want, share and discuss options with friends, and contact a sales adviser to make a personal in-store appointment.

Another excellent case study is Mulberry’s “Qi Xi” campaign. Qi Xi is the Chinese equivalent of Valentine’s Day. In 2015, Mulberry offered their WeChat followers worldwide the opportunity to write a special message to a loved one in advance. The message was delivered in an e-card along with a coupon that could be redeemed for a personalized leather bracelet in participating stores—not only in China but in London, Paris, New York and Toronto.

This initiative is a perfect example not only of omnichannel engagement but also of emotional engagement, for it induced a meaningful, relevant conversation with its target consumers. It simultaneously connected its social media presence to its in-store experience and played an important part in thousands of couples’ celebrations of love. One can hardly imagine a better way for a brand to be remembered.

As befits most luxury brands, these efforts still aim to drive foot traffic to the store. However, both of them acknowledge and facilitate conversations, between the brand and the consumer and between consumers about the brand, through mobile digital technology. The experience through the phone, whether on a social networking app or proprietary brand app, is integrated with the store experience. They are part of the same dialogue, the same engagement process. This is what omnichannel really means, in a world where the luxury consumer journey is no longer linear but has evolved into a cycle.

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