Lessons in New Luxury: Part 2
Creating and Sustaining Loyalty
The terms that have always defined luxury may seem at odds with those that resonate with today’s new customer who is not brand loyal and is always on the hunt for something new, now. How can luxury take this as an opportunity to find a balance between exclusivity and the demand for newness and personalization?
In Part 1 , we saw how the new shopper profile is driving luxury — traditionally more resistant to change — to take a good look in the mirror when it comes to how it is perceived in the minds of diverse audiences.
In Part 2, we uncover how, while initial discovery is one thing, engagement and maintaining loyalty requires a different skill set. Here are some examples of luxury brands that are hooking today’s capricious and distracted audiences through personalization and deeper connections.
Part 2: Creating and Sustaining Loyalty
Even if a brand succeeds at catching the eye of new customers, it would be misguided to assume that they will become regular customers. In fact, with so many options, possibilities, and distractions it’s more likely that they won’t. This is yet another reality that the retail industry must face, ushered in primarily by technical and digital advances.
Luxury’s higher price points have always been a mostly intentional barrier to entry for many shoppers, but these brands may need to reevaluate their approach to hanging on to clientele who won’t be loyal “just because”. Why would, or should, new customers come back and shop luxury brands again and again?
We believe there are three ways in which luxury brands can not only grab the attention of new customers, but also achieve loyalty: Appealing to an increased sense of individuality, taking “retailtainment” to the next level, and embracing bigger-picture causes that customers deem worthy.
Customers as Individuals through Personalization
Euphemistically, technology has sparked a lot of “reshuffling” across almost every industry, luxury fashion being no exception. While this disruption is often seen as a major cause for concern, retailers who make use of insights coming from new tech can make it work in their favor. They can learn more than ever about consumer behavior, preferences, and demographics which are invaluable for giving consumers the personalized experiences they demand.
As we mentioned in Part 1, French luxury conglomerate LVMH is positioning itself as a tech leader. New generations often associate innovation and service with digital companies like Google and Amazon, but LVMH has spearheaded a new, annual innovation gathering in Paris (VivaTech) as the European answer to CES in the US. We participated in VivaTech in the LVMH Luxury Lab, whose theme was “Crafting the Customer Experience of Tomorrow”.
This year’s award went to US startup 3DLook that specializes in body scanning tech for the retail industry that guarantees perfect body measurements based on just two photos taken from your own phone. 3DLook ensures that articles purchased will fit customers. Since customer body types come in all shapes and sizes, it makes perfect sense that fit should be hyper-personalized, which is exactly what 3DLook offers and was awarded for.
Another example of LVMH’s recent initiatives is the ‘Dior Insider’ tool, which uses chatbot AI to assist VIP customers through Facebook Messenger. This machine-learning tech creates an individual and seamless relationship with the brand, existing in a place where the shopper also has relationships with friends and family.
LVMH’s partnership with Farfetch allows the group to offer personalized products from the Fendi and Nicholas Kirkwood brands. This plays to consumer demands for customizable products — in fact, Deloitte research found that 98% of US and European millennials would, or would likely be, prepared to pay a premium for personalized goods.
The outcome of LVMH’s initiatives has been long-term customer loyalty and dramatic sales gains. At the start of 2019, the group reported record breaking sales in 2018, including a record net profit growth of 18%. They must be doing something right.
Fashion as an Art Form: Putting on the Ultimate Show
Look no further than the runway. It’s clear that creativity and performance are central to luxury. These elements, in combination with innovation, can give luxury consumers something they’ve never seen before — essential to attracting today’s consumers who are drawn to experiential shopping. We believe this is an area in which luxury can truly excel.
Take, for example, Italian luxury powerhouse, Gucci who is blurring the lines between performance art and luxury branding. Late last year, Gucci hosted an intimate dinner to celebrate the newest book authored by the brand’s official fine jewellery ambassador and British singer/songwriter, Florence Welch. Welch, donned head to toe in Gucci, read a selection of poetry from her book, Useless Magic (whose cover art was designed by the House’s Creative Director, Alessandro Michele), at the new Gucci Wooster Bookstore.
The brand has also taken inspiration from another “muse”, naming the Gucci Zumi bag after experimental musician and jewellery designer Zumi Rosow. Rosow walked the bag at Gucci’s SS19 runway in September and has since gone on international tour with it in tow. Those who attend Gucci-hosted cocktail events for the bag can also hear poetry readings by Alaska Lynch and receive a copy of his work.
Moncler’s Genius project, conceptualized by Chairman and Chief Executive, Remo Ruffini, is another example of luxury attracting new energy, people, and generations with newness. Conscious of the need to shake up the legacy brand due to tech disruption and new purchasing habits, Ruffini started the “House of Genius” made up of six (expanded to eight for 2019) visionary designers that create limited-edition collections.
Unlike traditional collections delivered every six months, Genius project items must be delivered to every shop in 60 countries at the same time, on the same day, every month.
Backing causes that resonate: Tech mimics nature
Another pressure applied by today’s discerning consumers the desire to connect with brands on a deeper level, often forcing them to take a stand on issues they support. Brands that succeed at this, take one step closer to gaining the loyalty of customers.
Of special importance in the luxury sector is the need to take a position on sustainability and animal rights issues. In fact, according to BCG-Altagamma, 60% of both Gen Z and millennial luxury shoppers are influenced by such factors when making purchases. Deloitte says addressing these issues is the key to winning new customer generations’ hearts, and may be of particular importance when building the loyalty of the critically important customer segment of HENRYs (high-earners-not-rich-yet).
One of the issues that generates the most controversy in luxury is the use of skins and furs. The heat on this topic will only increase in the years ahead and has sent the industry scrambling for alternatives. In the last year alone, hordes of brands have stopped the use of furs and skins altogether.
There are several examples of luxury brands who have turned to tech as the bridge to the hearts of new customers. Lab-grown silks and diamonds have been in development for years, and have finally hit their stride in usability and cost. Stella McCartney was a trailblazer, having sold a vegan assortment long before the term appeared on chain restaurant menus, and one of the first high-profile brands to partner with Bolt Threads, who’ve developed lab-grown spider silks.
Their latest development together is Mylo. It stems from mycelium, a biomaterial grown from an underground root structure. The brand released its popular Falabella bag in Mylo leather for an exhibition at London’s Victoria & Albert Museum, but is yet to put the fiber into general release.
Another example of tech replacing nature for materials is Omega who has taken the plunge with the release of its Biosteel Nato watch strap. The fiber, made by German company AMSilk, is made from fermented natural materials before being spun into silk-like threads. The end product is not only more sustainable than leather or polyester, but it’s durable too.
Earning and maintaining the loyalty of new customers is not simple task, but luxury brands who can adopt a new skill set will be rewarded by customers who shop with them again and again.
Appealing to individuality through personalization, giving customers an experience with the brand that they won’t forget, and standing up for bigger-picture issues are fundamental to keeping customers engaged and interested.
TL;DR: The lesson
Part of what makes luxury brands beautiful in the minds of consumers are its associations with heritage and tradition. But things are changing. Luxury must constantly be on the lookout for new ways it can win over the hearts and minds of customers and make their relationships long-lasting. It is more important than ever to foster profound connections by treating the new luxury customer as an individual and backing larger causes that resonate with them.
Have you come across any incredible luxury brands that are finding new ways to drive brand loyalty? Comment below and tell us what they are!
Stay tuned for Part 3, where we learn how technology is helping some luxury brands do what they do best: meet high expectations flawlessly and behind the scenes.
