Digital Transformation Success Cases in Luxury Retail

Over the last fifteen to twenty years the fashion retail landscape has been through large-scale changes as a direct result of the rise of technology.

It’s no secret that the luxury brands have been at the slower in embracing the digital transformation. However, the era when the most exclusive players had the luxury to consider online retail to be only fitted for selling low to mid-range goods, has come to an end.

Important Shifts in Luxury Retail

Going digital has brought along many notable changes in society in general. One of the main tendencies is that the role of the consumer has shifted from one of passive observance to enabled dominance. Empowered by the use of digital technologies, the consumers want to interact, belong and influence the brands they buy.

Research by McKinsey projects that by 2025 an estimated 20% of personal luxury sales will take place online. However, as we said before: it is not only about online sells, but rather the impact digital presence has over the image of the brand. Digital is already having a great impact on how luxury shoppers choose brands and goods.

According to the same report, nearly 80% of luxury sales are “digitally influenced”. That means that the majority of consumers use digital channels before, during or after making their purchase and that all those different digital touchpoints on their luxury-shopping journeys have an impact over the general experience.

Digital Opportunities in Luxury Retail

The assumption that luxury shoppers will always prefer a tactile shopping experience with personalized customer service (to get all their money’s worth), has now been challenged. While the growing importance of digital luxury is induced mostly by a generational shift, this isn’t just about millennials: nearly all luxury shoppers have enthusiastically embraced the digital lifestyle.

There are many aspects of customer experience that luxury brands can refine using digital means. In practice, there are three core areas on which brands should be focusing to leverage the benefits of digital: brand engagement, customer insights, and footprint.

Brand Engagement

New technologies offer great opportunities to reach customers more frequently and effectively, which apart from driving awareness helps to nurture the emotional benefits associated with luxury products. Alongside the big campaign creatives, brands have a lot to gain from creating additional assets that are much quicker and less expensive to produce. A meditated brand engagement strategy will feed customer desires and helps to strengthen both brand and its relationship with its audience.

Customer insights

An individual approach has always been an essential part of the luxury experience. Now, with help of digital, brands can gain an even better understanding of their customers through tracking their online signals. Thanks to an effective data strategy that collects and analyses customer information, brands will be able to build a detailed picture of their customers’ online persona while feeding business strategy. The collected data can be used to create a trend analysis, build customer clusters or come up with a hyper-tailored experience for customers in the form of specific content.

Digital Footprint

Relationships with agencies, technology partners and media suppliers allow luxury brands to take full advantage of digital services. These carefully built relationships will also help the brand to access skills and resources that can bring the feeling of luxury into the online arena. Investing in partners who truly understand the brand’s tone of voice contributes to the better communication of the overall brand vision. Strategic partnerships that complement in-house competencies can be of great assistance in creating novel and exciting customer experiences.

All these three strategies, if implemented correctly, can significantly grow a brand without causing any damage. In a world of increasing complexity and volatility, the companies need to increase their vigilance. The brand itself and its reputation have become the most important commodities to protect, as it can take many years to build a successful brand, but only a short time to destroy it.

Digital Transformation in Luxury Retail

Digital transformation makes it easier to implement organizational change, manage reputational risks and close the gaps between customers’ expectations and the service and experience they receive. For a fashion brand in particular, this means re-imagining how shopping in a digital world should play out. A key enabler for success will be to ensure a consistent omnichannel consumer experience that embodies physical, virtual and emotional aspects, from communication to conversion and beyond.

When speaking about digital transformation, it is important to understand that digital is no longer only a sales or a communication channel. It has become a key element of the value equation that brands need to master. It is currently spanning a range of disciplines, including retail, supply chain, brand management, and customer engagement.

Advanced analytics has become our new reality and CEOs should make sure their teams are using it properly to bring back authenticity and intimacy in the customer relationship.

Success Cases

In 2019, most luxury brands have embraced digital in some way or another. While most of the big players might not be plugged-in pros yet, they have successfully adopted digital as a marketing channel and use it selectively as a sales platform. In what follows we are going to examine a few of the most outstanding examples.

1. Gucci

The Italian brand and its revamped digital strategy are often cited as a blockbuster success story. A report published by Gartner L2 Digital IQ Index ranks Gucci the number one luxury brand with the highest digital IQ score.

Gucci was the first to invest in top-tier site functionality and build on a strong shopping experience through integrated content, robust search and navigation, and aesthetically pleasing product pages. To drive customer satisfaction, the Italian retailer has built a Facebook-integrated chatbot and it also launched scannable adverts. For its spring 2018 campaign, Gucci developed in-store augmented reality (AR) and virtual reality (VR) installations, which allowed consumers to become a part of the campaign. They also stand out for their collaborations with famous internet artists to create memes to sell wrist watches and their Instagram campaign where insta-famous visual artists express their interpretations of Gucci’s patterns and iconic motifs.

This prudent digital strategy has resulted in roaring success. Since 2017, Gucci remains the most visible brand across e-tailers, scoring higher that multi-brand retail sites such as Farfetch and Net-a-Porter. Gucci is also the most searched fashion brand in the world on Google in 2017 and 2018, and its hashtag mentions across digital platforms outsize all other luxury brands. As a result, their sales are growing considerably (the brand experienced a record 48.3% increase in sales in the first quarter of fiscal 2017) and about 50% of Gucci’s sales come from millennials.

2. Louis Vuitton

Louis Vuitton, acclaimed as the world’s most valuable luxury brand (in fact, the only luxury brand in the top 30) has modernized its brand identity, blending heritage with modern desires via social media.

An example of this is Louis Vuitton’s app, which immerses users into the ‘World of Louis Vuitton’, a digital library acting as an additional buying and marketing platform. The app also hosts a Chatbot feature, still a relatively new tool to the world of digital marketing.

Louis Vuitton’s ventures into digital are bound to continue, as LVMH, the French conglomerate that is the owner of Louis Vuitton, recently announced an accelerator program for international start-ups. The focus is on chatbot customer service, visual recognition-based predictive technology, biometric wristwear and robotic technology that creates clothing customized for individual consumers’ bodies.

Louis Vuitton has also accessed new audiences through their collaboration with New York cult streetwear brand Supreme that drove an increase in brand searches across a more diverse audience, helped connect with the most coveted Millennial luxury shoppers and opened up a new market.

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