Now that digital technologies are revolutionising customer relationships in all sectors, from banking to mass retail to health, how is the luxury goods industry embracing tech innovation and how are brands using the new ICTs to enhance customer relationships?
If we want to investigate innovation in the customer experience, it is logical to look in the first place at what is happening online. In fact it took luxury brands, especially the larger firms, quite some time to set up e-commerce sites but today they all have one. Some companies – such as luxury apparel and accessories specialist Hermès – have struck the right chord by creating a setup which is entirely distinct from the brand’s official website. This French brand has created a ‘Maison des carrés’ (House of Scarves), an online e-commerce site selling its famous ‘headsquares’, paying great attention to aesthetically pleasing graphics. Meanwhile a number of young luxury brand designers – a notable example being the highly original French stylist Simon Porte Jacquemus. – are relying on websites and e-shops that are both unique and design-oriented to help them compete with the traditional firms. Being young allows them a certain freedom of expression, plus the option of greater risk-taking, compared with traditional brands, whose aim is to maintain an established reputation.
When it comes to bricks-and-mortar stores, the customer experience is highly dependent on the service the store offers its customer. Fabrice Starzinskas, head of the creative house Bright Studio, argues that ‟luxury brands have always distinguished themselves and continue to differentiate themselves through their in-store customer service.” So how should we assess the digital initiatives of stores working along the lines of the Burberry store in London’s Regent Street? First of all we should salute the approach of the UK brand in using online tools to support offline retailing. Burberry provides its sales assistants with access to each customer’s purchasing history and thus enables them to create an ultra-personal experience for the customer. Nevertheless, one might ask just how relevant are the numerous screens and digital displays placed around the digitised store. Is this arrangement really in tune with Burberry’s values? And does it serve to add value to the customer experience?
Use of digital technology ‘a cultural and generational shock’
At the moment, despite these – sometimes rather clumsy – initiatives, luxury brands still appear to be lagging behind when it comes to incorporating digital technology both in online retailing and at physical stores.
When your brand is Louis Vuitton or Van Cleef & Arpels, you have a century of history behind you, which is quite something. The reputations of these major houses, whether they specialise in ‘haute couture’, jewellery, or perfumes and cosmetics, are founded on their tradition and their know-how. Some actually go back as far as the 1830s, so it is understandable that embracing change will take time. Jacques Bungert, co-director of French fashion house Courrèges, points out that keeping control is often a key objective for these family firms.
Instagram, a personal shop window for Balmain creations and the public life of the firm’s artistic director, Olivier Rousteing
The notion of control is less of an issue for the generation of fashion houses which emerged after World War II, the luxury brand baby boomers that include French houses Balmain, Céline and US-based perfume and cosmetics group Estée Lauder. In addition to being less in thrall to their past, some, like Courrèges, are now being relaunched. At such firms there is no fear of digital. It may take some time to integrate digital technology, but they recognise that this approach can be a real new source of revenue. For the new powerhouses in the luxury goods industry, whether we are talking about young creators or the new artistic directors at the head of famous houses, digital has become one of the driving force of the brand.
A case in point is Olivier Rousteing, artistic director at Balmain, who sees integrating digital technology as a natural step to take. “I was born with Facebook and Twitter and Instagram and Skype. The fact is I love communicating with people. […] Instagram is for me a new way of sharing moments of my life [at Balmain] and also to give people an overview of my work,” he revealed in an interview with BusinessofFashion, adding: “Instagram is all about a population that is not only the front row of a fashion show. Today it is as important as the front row.”
Danish brand Soulland uses QR codes on the catwalk
Frenchman Jacquemus also uses Instagram a great deal to communicate with his customers, and he uses Tumblr as well. In fact you can find an overview of upcoming collections, sources of inspiration, creators, videos and fashion shows on a number of social networks these days. Danish firm Soulland was a pioneer in integrating digital technology into its brand universe, by displaying QR codes right next to its models. In the same way as museums post pictures of sculptures, the fashion models are posted upright and immobile just after the show. The audience can then scan a code on an information display panel and so find the item in the e-shop via the brand’s app.
However using digital technology is ‘a cultural and generational shock’, reckons Guillaume Salmon, head of Public Relations at French fashion retailer Colette. He expects to see ‟a surge in the next few months” – not before time, some would say, though others argue that the luxury goods industry does not need digital tools to prosper. These doubters do have a point, given that international tourism plus the rise of a middle class in emerging countries have been boosting the industry’s profits in recent years. Bain & Company estimates that the sector saw 5% growth in 2014 to reach a €223 billion market value worldwide. If this growth figure pales beside the 10% increase posted in 2010, the Bain & Company analysts describe this latest growth as ‟less strong but more long-lasting”. And topping the list for sales of luxury goods worldwide in 2012, according to Deloitte’s Global Power of Luxury Goods 2014 report, were LVMH – comprising inter alia Louis Vuitton, Fendi, Marc Jacobs and Céline, with sales totalling $21 billion; and the Richemont group, which boasts under its umbrella such brands as Cartier, Lancel, Chloé, Jaeger Lecoultre and Van Cleef & Arpels, with $12.3 billion worth of turnover.
Source: Deloitte, Global Power of Luxury Goods
So, while it is undeniable that the luxury goods sector is doing very well, it would be a mistake to underestimate the opportunities afforded by digital. This need not mean jeopardising the brands’ ‘desirability’ (the idea that something is sought-after by many but accessible to only a few), which they have done so much to maintain. Explains Fabrice Starzinskas: ‟Despite the very slow processes at the large houses, which are structurally incompatible with the Internet, brands do need to have a presence there.” And these firms certainly have the budgets required to get to grips with the ins and outs of digital technology. While ‘non-luxury’ marketing budgets are stagnating, the marketing spend in the luxury goods industry is soaring. ‟Marketing budgets in the perfume sector alone have risen by 16% in two years,” reported an article on French business website Capital.
Innovation transcending mere ‘customer service’
So how can digital tools help to boost luxury brands? Luxury brands are already well-known for their close attention to customer service. Nevertheless, the new technologies can help to transcend the basis notion of customer service, not least by optimising the way products are ordered and supplied.
Jewellery and watchmaking specialist Chaumet recently tried out a new Set on Demand approach, which enables the company to take account of the current stock situation and offer the customer a product tailored to his/her tastes and budget, in line with what is immediately available. All this information is forwarded digitally to the production workshops and the customer is then able to receive the finished article within a couple of weeks. The incorporation of digital technologies into luxury sector processes means that a customer can receive his/her order faster than ever before, thus improving this aspect of service quality.
While innovation is more or less embedded in the genetic makeup of high fashion house Courrèges, nowadays innovation has mainly to do with processes, underlines co-Chairman Jacques Bungert: “When it comes to digitisation, we’re just at the very beginning. It all starts with the coordination of information flows and the supply chain, which isn’t a particularly glamorous aspect.” Nevertheless, internal digitisation does ultimately help to streamline the customer experience.
LVMH group subsidiary Chaumet is experimenting with Delivery 2.0
Digital tools may not in themselves be able to guarantee ‘impeccable staff behaviour’, as every individual staff member needs to be well-trained, professional and service-minded in order to maintain impeccable personal standards, but the digital approach can still help sales staff to optimise the service provided by giving customers a clear picture of the stock currently available at the shop, and offering delivery services via such tools as Viber and Whatsapp. In fact many luxury goods purchasers are already quite familiar with digital tools, as Grégory Pouy, founder of the digital transformation consultancy LaMercatique points out: “What the traditional luxury brands sometimes fail to grasp is that luxury clients tend to be highly digitised. If you look at the survey results, you’ll see that there’s a definite correlation between digital habits and luxury consumers.”
In addition, digital can also take hold in a more subtle manner through digital artwork. This is the logical extension of the approach taken by the major fashion houses, as many creators maintain close links with the art world. Few people today remember Christian Dior’s links with film-making but he started out as a wardrobe expert in the movies. The brand revived this tradition last year by bringing out a short film directed by Eliot Bliss, in which Marion Cotillard played Lady Dior.
This artistic link is also to be found at Courrèges, mainly embodied by its iconic founder André Courrèges. This engineer and artist who displayed at the International Contemporary Art Fair (FIAC) has managed to inculcate a real artistic flair at the high fashion house. Explains Jacques Bungert: “Courrèges is intrinsically an artistic brand and it’s the job of any artist to use the tools appropriate to his/her time.”
The use of digital art by major brands may also take the form of digital artworks incorporated into their shops – both permanent retail points and temporary outlets – or on the fashion catwalk. For instance, Warsaw-based design collective panGenerator has created a digital necklace, formed using light patterns projected on to the wearer's throat via a smartphone, which adapt to the person’s movements. And it is not hard to imagine other potential variants of this Art 2.0 approach in the luxury goods world.
Neclumi, futuristic jewellery by Generator
Of course any such innovative artistic forays undertaken by a given luxury brand must convey meaning, in line with the logic and values that characterise the company. Digital art, like any other digital initiative, must chime perfectly with the brand’s DNA, otherwise it will serve no useful purpose. “At the end of the day, digital is basically just a new and out-of-the-ordinary communication channel. The medium is the message. The technology is available to brands in support of their brand content and goals. They need to go beyond the buzz phenomenon,” underlines Jacques Bungert. Sound advice for brands looking to embark on the digital adventure in the near future.