It’s no secret that some industries have embraced digital transformation faster than others. Luxury brands have typically been at the slower end of the scale. Ecommerce democratizes access to products and information. However, for brands like Tiffany & Co., Chanel and Gucci, exclusivity is a good thing.
Luxury brands trade on their names. The name “Louis Vuitton” evokes a certain craftsmanship, but more than that, those brown handbags are a status symbol. And in the brand’s eyes, purchasing one should be all about the experience, complete with white glove service that is hard to replicate online.
The problem for these brands is that wealthier consumers are doing more of their shopping online. According to last year’s Adobe Digital Price Index, the states with the biggest online shoppers—D.C., New Jersey, Massachusetts, Connecticut and Maryland—are among the states with the highest per capita incomes. Over the past five years, luxury brands have outpaced the global market in ecommerce growth, which is only going to accelerate. McKinsey & Company projects that ecommerce will make up 19% of the market by 2025, up from 8% in 2016.
Luxury brands have no choice but to embrace digital transformation. And here’s how five of them are doing it.
LVMH—the French conglomerate that includes brands such as Louis Vuitton, Dior, Dom Pérignon and Sephora—recently announced an accelerator program for international start-ups. Participating companies’ areas of focus include chatbot customer service, visual recognition-based predictive technology, biometric wristwear and robotic technology that creates clothing customized for individual consumers’ bodies.
The start-ups will attend workshops about the unique challenges facing luxury retail. That gives them guidance in their innovations, while LVMH benefits from their technological solutions.
Imagination is a big part of luxury brands’ mystique. With Gucci’s spring campaign, consumers don’t have to picture themselves living a lavish lifestyle; they can actually do it. (Kind of.) Virtual and augmented reality are the centerpiece of Gucci Hallucination, which is based on the work of Spanish artist Ignasi Monreal.
It includes in-store AR and VR installations that allow consumers to be a part of the campaign. There are also scannable ads for the shoppers at home.
One company in LVMH’s start-up accelerator developed an artificial intelligence solution that consumers can use to detect counterfeit products with their smartphones. Of course, “digital transformation” also includes simpler strategies. According to a recent study from PMX Agency, social media is one of the top sources of website traffic for luxury brands. And none of them do social better than Chanel, which boasts more Instagram followers than any other luxury brand.
Chanel’s Instagram maintains the brand’s aspirational image, with every photo looking like a magazine ad. But Chanel’s social media presence is just as much about function as it is about fashion. Following what the followers want, Chanel has since launched two additional accounts. One revolves around beauty products; the other is all about user-generated content, creating a sense of community.
Social media is the number two driver of website traffic, according to PMX Agency. Number one is Google, of course. Studying jewelry brand keywords for a summer, L2 Inc found that Tiffany & Co. “shines at keyword visibility.”
Compared with its competitors, Tiffany & Co. is the most visible on SERPs across every region L2 analyzed. When you Google “Tiffany,” the brand dominates the entire first page, with the exception of two links to Tiffany Glass galleries and the ’80s pop star’s Wikipedia page. Tiffany & Co. dominates Google’s Local 3-Pack. Regarding visual search, 48 of the first 50 images relate to the brand. Even if you search for “Tiffani,” you have to scroll through Tiffany & Co. ads to find out what Tiffani “Kelly Kapowski” Theissan is up to these days. (She’s one of the stars of a new Netflix show called Alexa and Katie, by the way.)
Neiman Marcus, where the aforementioned brands and many others live under one roof, received the 2017 IRT Retailer Innovation Award in Customer Engagement. Why? The department store has been hyper-focused on creating omnichannel shopping experiences, including a website that remembers customers’ sizes based on previous searches and personalized direct mail and email letting shoppers know that items they’ve been eyeing have arrived in their local store.
There’s also the “Memory Mirror” that allows consumers to take 360-degree videos of themselves trying on clothes; the videos live in-app to be perused later. And what may be the coolest one of all is “Snap. Find. Shop.” If you see an item you like, take a picture. Neiman Marcus’ app uses image recognition to serve up comparable products.
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