How to Navigate Digital Luxury in 2020
In this C'EST DU LUXE article, we'll answer the following questions:
- What advantages do luxury brands have in this pandemic?
- What mindset will carry your brand through a crisis?
- How far are other luxury brands into their digital journeys?
- How should I approach my retail strategy?
- What is the future of retail and digital?
- As a luxury brand, what should I be experimenting with online?
- Who is supporting your leadership?
COVID Luxury Trends 2020
Luxury brands are masters of storytelling.
A luxury brand is timeless, and a crisis can serve as fuel to pursue and persist.
It's time to reimagine, reinvent, and redefine how you want to be known.
What is your legacy?
It's a matter of evolving the way we tell our stories.
Luxury brands are the masters of legacy, of timelessness.
And the only way to be timeless to survive.
It's times like these that challenge your legacy - and cement it.
More Baby Boomers are Online
The pandemic has shifted us in new directions.
Luxury e-commerce has increased with Millennials but also with Baby Boomers.
According to the Boston Consulting Group's 2019 report, Millennials are expected to drive 50% of the global luxury market.
In 2017, the projection then was that by 2025, Millennials would drive 40% of the market.
In two years, the projected market share of the luxury market grew by 10%.
There is so much still flux with the global pandemic and economic situation, but early case studies shed some light on its effect on the future of digital luxury.
Ideally, before the crisis, you had five years before you had to think about Millennials edging in as a majority luxury consumer group.
Quarantine has pushed the gas pedal on e-commerce - globally.
China's early e-commerce numbers showed an increase, besides the predictable group, but it may surprise you as to whom.
Baby Boomers are a leading luxury consumer group responsible for much of the industry's development over several decades.
The only segment that did not have an increase in e-commerce purchase was the under 30 crowd.
And in New York, a month into quarantine, some luxury businesses were hitting record e-commerce numbers, comparable to a Black Friday/Holiday season.
The pandemic will have lasting effects on global operations and local business models, causing brands to consider different approaches, sooner than expected.
It will strain and put online business models to the test, extending their capacities and forcing new and adaptive solutions.
As we live more of our lives online, brands of all kinds find themselves a home online, including luxury.
For some time, things have been shifting online.
It could be a search engine, video, reviews - digital is an essential part of the toolkit.
Luxury purchases online have increased through the crisis. By 2025, the online channel could represent up to 30 percent of the market (Bain Luxury Report 2020).
Compelling trends around the future of luxury were already causing many brands to reexamine their positions.
Much of the customer journey was starting to find its way online.
However, at the end of the customer journey, the act of making the purchase still tended to happen in-person pre-pandemic.
With digital-only and retail-only luxury brands existing at both ends of the spectrum, the future for many of us seems like an overlap of the two worlds in a dynamic way where they influence and complement each other.
Brands should start to think of their collective efforts as simply touchpoints of the same universe.
Don't underestimate the opportunity (digital luxury is just beginning)How far are other luxury brands into their digital journeys?
Digital can be very overwhelming, but there is solace that most of your competitors probably aren't very far into their digital journeys - large brands included.
In May 2020, Daredevil debuted its first e-commerce site this month with just a collection of small handbags is the first time they've ever done e-commerce.
Bogota launched virtual flagship stores on Alibaba for the first time.
What's the future of retail and digital?
Versace gives us an example of what it's like to have a digital advantage, one of the first global luxury fashion houses to explore digital.
Compared to many other brands, Versace had flexibility going into the crisis.
While Versace boutiques across the US and Europe remained closed, reopenings were happening in China and Hong Kong.
Versace leaned into digital, and e-commerce allowed them to reach markets were retail sales were just not possible.
Who is Supporting Your Leadership?
The crisis is a catalyst for many brands to develop and deploy a luxury universe online and place an omnichannel strategy at the center of their immediate business needs.
Whether it is serving on an executive team or advising those on one, you need supportive people who feel comfortable making decisions in a time of resilience and transformation.
Take care of the people you have in leadership positions and those supporting your leadership during this time.
Try new things (live streaming)
Video was already the fastest-growing media.
Social distancing has pushed streaming and video chats to everyday use.
With few branded content producers dominating the video space, its a novel place to open your imagination and make your mark.
Luxury real estate groups like the Interior Marketing Group have embraced Instagram Stories and IGTV, doing an incredible group of showing listings and given extensive interactive tours.
You record the tour once but now show to endless guests.
Here is where newcomer TikTok shines.
Almost every social media platform has a variation or several variations of video to use to your advantage.
Whether it's digital or physical, it's about being where you need to serve your customer.
The pandemic has opened up possibilities to reimagine digital and how different generations relate to it, looking at them as both separate and converging markets.
What opportunities can you create in this period of change?