“If you buy a Chanel bag but didn’t Instagram it, did it actually happen?” Luxury going digital — SXSW Day 3

My Sunday SXSW highlight was a session creatively titled “Mo’ money, mo’ problems — luxury confronts digital”. A panel of executives from Havas Luxe and Giorgio Armani opened my eyes to the unique blockers to going digital that the luxury soft goods industry currently faces. At a time when every conversation heard across companies seems to be stressing a focus on digital, one might wonder why most luxury brands (with the exception of Burberry) have been slow to move.

Because of the rise of digital, the luxury industry is facing a very unique dilemma of having to solve for being inclusive and exclusive at the same time. How can a brand remain niche and sought after while still staying competitive with its peers and digitally connected with its consumers in the modern age? The panel discussed brands afraid of going down the “Michael Kors” route — their digital strategy seems to have diluted the brand by making it seem more approachable rather than luxurious. Michael Kors posts multiple times a day to Instagram followers, showcasing celebrity red-carpet looks juxtaposed with everyday women wearing the new season’s outfits. It’s tough to say whether it was Kors’ intent to use social for the motive of chasing after purchase volume rather than brand equity, but the results did not look good. While it is definitely not causational, it is interesting that Michael Kors’ stock price has been cut in half over the last 2 years, the same time it was aggressively growing its digital presence. With this very prominent case discussed across the industry, it is no wonder why marketers at luxury brands might hesitate before investing a lot in digital.

In addition, a big challenge with consumers today is that we are impatient — if an Uber takes more than 5 minutes to get to us, we cancel and select reason “I expected a shorter wait”. The see-now, buy-now consumer mindset is a huge dilemma affecting luxury fashion shows in particular. Dresses from New York Fashion Week are not going to be available for months after they are spotlighted on the catwalk, for example. The supply chain process simply isn’t made to have outfits operationalized to be on racks so quickly, since one distinguishing feature of most luxury goods is that they are handmade. It is not clear whether this operations chain even needs a solution — making high fashion too ubiquitous would defeat the exclusivity. It is a very careful balance.

Despite the opposing forces of inclusivity and exclusivity that must be met, the SXSW panelists gave very insightful recommendations and next steps for luxury brands to approach digital marketing strategies successfully -

  1. How can luxury brands personalize the customer experience using digital? CRM software is a great starting point. It equips brands with a strategy to communicate in a niche way by segmenting and grouping customers with sophisticated predictive analytics. This enables different customer groups (such as more frequent or loyal purchasers) to get the appreciation and special treatment that can delight.
  2. What channels are most effective in social? YouTube and Instagram are very key tools for the luxury retailer. YouTube is an important channel because a lot of the advertising needs to be about storytelling, so longer, elaborate ad campaigns and behind-the-scenes footage can be shared and discussed on the popular channel. As for Instagram, it was very eye-opening to hear that Instagram has actually become a powerful pacemaker for the luxury fashion industry — fashion shows now need to think about how things will look on Instagram when they plan the walks and shoot footage, because it is such a popular destination for fashion and lifestyle inspiration. Meanwhile, a new (and much discussed at SXSW) modern marketing channel like Snapchat might not yet work well because of the ephemerality of each story. The casual nature of Snapchat needs more consideration and observation — most brands leverage it to create more personal relationships with the user, but luxury goods may need to be a careful exception.
  3. How can luxury brands effectively reach and engage specifically with millennials? Only 6% of millennials think ads are a credible sources and 95% actually look to peers for decision-making. Millennials are a very educated and connected generation. However, they are also a more vocal generation because of being accustomed to conversing with friends, strangers, and brands on the internet. Luxury brands can structure the social communication by leveraging influencers and celebrities to create user generated content.

While going digital is harder for luxury brands than others, it is still a critical priority to start moving towards. Each brand needs a clear digital vision, and there is no escaping it. However, as with any industry, it is important that each brand thinks very strategically about how to communicate to users through each digital channel. Users go to Facebook vs. Twitter vs. Instagram for different reasons and expectations, so the digital and omnichannel strategy should reflect that. It is important not to go digital for the sake of it, as that could actually lead to a more negative user experience.

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