LVMH Japan’s Digital Team to Drive DX for Omnichannel
The onset of the pandemic sparked an acceleration in LVMH’s global digital strategy, and omnichannelization is poised to be the second stage. We asked Yuki Endo, Head of Digital at LVMH Japan, how the strategy will be localized for each brand in Japan, and her role in promoting DX for the 38 brands under the LVMH umbrella.
LVMH Japan Digital’s role with each brand
The role of LVMH Japan Digital, to which Endo belongs, is to support maisons (brands) in LVMH Group in the localization and implementation of their individual digital strategy. This is done in line with the LVMH Group’s overall strategy built by their global head division to fit the Japanese market.
“My role is to think about how to use digital technology to respond to the Group’s strategy of becoming omnichannel while maintaining the corporate philosophy of LVMH. For example, I’m always thinking about how to promote e-commerce, how to connect online and offline businesses, how to circulate customers on both sides, and in turn, how to provide customers with a seamless experience as a luxury house,” Endo said.
After Endo joined LVMH Japan Digital in 2019, an IT Digital team was established in 2021 to provide solutions and technical support in the French headquarters. Currently, there are two teams, one in Japan and one in France, supporting the digital strategy of the LVMH Group’s brands in Japan. Endo acts as a bridge between Japan and France, overseeing a wide range of areas, including e-commerce, CRM, digital marketing, clienteling, and all digital contact points with customers in marketing and sales.
The second stage of the digital strategy is to promote omnichannelization
Endo feels that the pandemic has brought about a digital transformation that has already been promoted in the LVMH Group for some time. In addition, the company is receptive to an agile approach to various projects.
Endo says, “There is a lot of momentum to try small things, such as being able to make a reservation to visit a store or make an inquiry directly from the official LINE account thread, in order to achieve the goal of allowing customers to enjoy shopping without feeling inconvenienced”.
The LVMH Group has been working on digital initiatives since as early as the mid-1990s.
The company’s basic policy on digital until the 2010s was lukewarm: “You don’t have to be an early adopter, but you don’t have to be a laggard either,” but since the mid-2010s, it has accelerated its digital shift in response to millennials becoming a major luxury customer segment and the rapidly growing Chinese market. In 2015, the company strengthened its digital ecosystem by hiring former Apple music executive Ian Rogers as CDO, and in 2017, it launched services such as 24S, which allows customers to buy all brands online.
In December 2020, Ian Rogers stepped down as CDO and became an advisor, and Michael David was appointed as Chief Omnichannel Officer in January 2021. Under him, the company has shifted its strategy to the more seamless integration of in-store sales and digital platforms. In Japan as well, the company pushes for seamless online and offline operations to maximize profits through the customer experience.
The key to promoting DX is communication that identifies the needs
What Endo spends the most time on is “communication” to understand the intentions of each maison, and to coordinate with the division in France. This is because LVMH Japan does not have each maison under its umbrella, but rather has a parallel relationship with each company. Endo communicates with the Group head in France and works closely with each company in Japan to support their DX activities, and one of her important tasks is to make sure that the Group head understands what the maisons in Japan want to achieve.
There are two main reasons behind this: the Japanese market is unique compared to the global market. The first is the existence of Japan’s popular communication app such as LINE, which is an indispensable contact point with customers in Japan. “I explain to the head in France why masons in Japan need to use LINE, how they can utilize LINE in their omnichannel activities,” said Endo.
Another factor is the unique purchasing behavior. “In Japan, sales of small leather goods such as wallets are outstanding compared to other countries. If we don’t explain that Japan is in this situation first, it is difficult to tell what digital measures should be taken in Japan,” Endo pointed out.
In Europe and the U.S., luxury brands are not positioned as something that everyone can buy due to class consciousness. In Japan, on the other hand, it is not uncommon for high school students to own a Louis Vuitton or Dior accessories as an entry-level item. Later on, when they change their wallet, they often choose a high brand and when they enter college and University they buy non-leather tote bags, and later in their careers, they move on to more expensive leather bags and fashion items such as ready to wear and shoes.
Endo also points out that Japanese customers have a complex and lengthy process before they purchase in a store. From the time they become aware of a product to the time they buy it, they check the website several times and visit the store to see the actual product before buying it. Therefore, planning a sale event or promotion on the Internet is unlikely to result in an immediate increase in conversion like in other countries.
Considering this kind of purchasing behavior, it is not enough to capture customers by only placing advertisements in luxury media and limited exposure to visuals and products. In addition to advertising, Japan’s unique marketing strategies will be necessary, such as how to expose small leather goods in general media, and how to reach the appropriate target segment by making good use of network distribution in digital advertising.
In the U.S. and Europe, celebrities are often used as influencers, but Endo said that the characteristics of mega-influencers and how they are used globally are not completely applicable in Japan. “It is important to focus on familiarity and credibility (of influencers and ambassadors), and use micro-influencers as the key strategy in Japan. We need to make sure that the Group heads in France understand this,” said Endo.
Communicating the uniqueness of the Japanese market to the global community will enable the implementation of a digital strategy appropriate for Japan.
One of Endo’s main focuses for 2021 was to help people understand the usefulness of LINE. “The only other communication app outside of Japan that is similar to LINE is WeChat in China, but WeChat and LINE are not used in the same way,” Endo said. To understand this, Endo has been conducting user surveys since the end of 2020, creating a blueprint of how to position LINE in the customer journey and how it can be effectively connected to online marketing activities.
“Without deviating from LVMH’s global digital strategy and the strategies of each maison, I respected the worldview of each maison and explained to them how to utilize the LINE tool with IT Digital team,” said Endo.
In the spring of 2020, her team was involved in the development of ZOZOVILLA, a luxurious item zone within ZOZOTOWN — one of the most popular Japanese e-commerce platforms — to develop a marketing communication pilot based on an AI demand forecasting model using ZOZOTOWN’s big data. Collaborating with the maisons under LVMH, she is committed to enhancing the maisons presence in Japan.
LVMH Japan is also leading information exchange meetings and seminars to bring together digital professionals from different maisons in the LVMH Group. Endo believes it is very important for the digital managers of each maison to get together to exchange ideas and share information and insights. This physical network creates a sense of working hard together, which becomes a driving force for DX.
Issues in the Japanese market and the ideal shape of luxury brands
Endo is concerned about the resistance to change in the Japanese luxury market, where there is a strong tendency to maintain the status quo, in the hope that things will go back to the way they were before so that everything will be fine.
“With the pandemic, customers have already become accustomed to a hybrid of the online and offline. So, even if the infection situation calms down, it will not be ‘back to pre-pandemic’. Based on the premise of hybrid consumption, what will the luxury business do in the future? As an industry that specializes in the wealthy, we need to prepare various options and think about how to create the new sales opportunities,” Endo said.
With Japan’s declining birthrate and aging population, it is obvious that the number of customers itself will decrease in the future. Endo’s sense of urgency is driven by the need to look ahead and plan how to be a maison that will continue to be loved five to ten years from now.
She added, “It is essential for management to understand that technology is a tool and that they must make the necessary investment, not only on the infrastructure but also on organizations and human resources, decisions should be made based on a clear understanding of what they see beyond the tool and what they expect to achieve by using the tool”.
Establishing omnichannel in Japan
The digital team led by Endo has set a goal to establish an omnichannel in Japan in 2022 based on the measures taken so far and to eliminate the barriers between brands’ sales channels in the future. This is because customers want the same customer experience no matter where they buy, including online, from the same brand.
Endo believes that this can be achieved by teaming up with staff with expertise in solution planning, online business, omnichannel, and UX, a Japanese version of omnichannelization can be realized, and which she hopes will lead to a seamless purchasing experience for customers as soon as possible.
A position like Endo’s that supports and accompanies the development of digital strategies based on each brand’s strategy will be one of the most important positions in DX and BX in the future. They are the “hubs” for bridging the gaps within the company, breaking down the stove-piped structures that occur in the value chain, and sharing the vision of what the future should be.
Text: Ching Li Tor
Original text (Japanese): Yukari Akiyama
