Luxury personalisation evolves as consumers turn to e-commerce
High-end online stores, experiences and personalised customer interactions… To adapt to the pandemic and closure of their stores, luxury players have had no choice but to rush their digitalisation.
Since 2013, e-commerce sales for luxury houses have shown an increase of only 13 per cent. For many industry professionals, digital was not compatible with the idea of high-end customers and exclusivity.
But the fact is that luxury brands’ online sales increased by 8% in the second half of 2020, boosted by the lockdown and closure of stores in major cities worldwide. This trend demonstrates the digital leap the sector has made since January 2020. A necessary step for an industry that has been slow to organise its digital shift.
An individualised online offer
The boom in online sales made it necessary to react quickly. While some brands were still reticent to digitise their activities before the pandemic, many houses, like Cartier, Hermès, Van Cleef and Bulgari, opened an e-commerce facility. But with Covid-19 they were forced to accelerate, with one primary concern: maintaining the personalisation of their offer.
Data is the essential tool to meet the demands of a customer base used to receiving personalised service. Thanks to data collection, LVMH group companies have been able to send customised emails to their most loyal customers. Home pages also evolve according to the consumer’s profile. Technology now allows customers to expect ultra-personalised experiences and demand that the natural world and the online world be seamlessly connected.
An app to try jewellery on!
With the shutdown of physical stores, it was also essential to recreate online experiences.
Like Gucci and Louis Vuitton, some brands set up a digital boutique in a few weeks where customers can chat live with their advisor. Others, including Chaumet and Bulgari, have created apps with filters to simulate trying on high-end jewellery pieces. Hermès and Cartier both launched an appointment platform that allows their most exclusive customers to have a sales assistant come directly to their home to show them the latest products in their house.
The visual experience brands offer to customers is crucial, whose group relies on virtual reality and video to deliver how products are made and understand their quality. Some brands have developed in-house platforms to meet this new challenge when others, like Dior, have chosen to collaborate with startups. The iconic fashion house signed a partnership with American startup Obsess to offer clients a 3D and 360-degree site where they can discover the new collection, zoom in on items and purchase via the online store. Some brands have used augmented reality to recreate an inspirational experience. This is the ultimate remote shopping!
The online sales sites specialised in luxury have never been in such good shape. And they are competing with ingenuity to take the pole position in a sector that also attracts tech giants like Amazon, Instagram and TikTok.
A structural change in the luxury customer experience
These technologies seem to be in it for the long haul whether or not containment periods are multiplying. E-commerce is on its way to becoming a permanent feature of the luxury sector, and the brands that have launched will not be able to go back.
The phenomenon can now be amplified by the launch in September of Amazon’s Luxury stores. It’s only a short step from there to making an opportunity for the changes imposed by the numerous lockdowns. Digital won’t be replacing stores, that much is obvious, but it will increase the power of brands with more services and accessibility. More than ever, luxury houses must offer both physical and online services to keep up with the evolution and needs of the consumer. Just as critical, social networks, whether for inspiration or purchase, are a way to reach a new customer base — an opportunity for luxury brands who are desperately trying to chase Gen Z customers.
From standardisation to customisation
Multi-brand retailers of luxury fashion now represent 78% of online purchases. Yet flagship stores are still largely dominant in the physical environment. These figures partly reflect the dominance of online specialists (such as Farfetch, Net-A-Porter, Mytheresa) compared to the relative lack of investment in online channels by major Fashion houses. This illustrates these brands’ strategy, which has focused on expanding their physical store networks into new markets and territories over the past decade.
During this period of physical expansion, the focus was on consistency and standardization of the customer experience. This led to creating a series of similar stores that delivered an upscale but still very standardized customer experience.
But the expectations of new consumers in terms of customer experience have considerably evolved. A 2018 Deloitte survey of luxury fashion consumers shows that:
- more shopping channels: 39% demand home delivery
- more rewards for loyalty: 44% expect gift rewards
- more personalization: 45% demand personalized products and services.
Digital channels are creating a need for high-quality personalized content at scale. Some luxury brands have started to open a dialogue with consumers and involve them in the marketing strategy process.
This dialogue with the consumer is a real opportunity for companies to justify higher pricing and create a deeper connection based on the experiences and feelings that luxury products mean for their buyers.
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About this article
This article has been written by a student on the Grenoble Ecole de Management’s Advanced Masters in Digital Strategy Management. As part of a content creation assignment, students are given the task of writing articles based on their digital interests and disseminate the articles online. Articles are marked but we make minimal changes to the content. Thanks for reading! James Barisic, Programme Director, MS DSM.
