The luxury industry is going through a paradigm shift. While luxury was once perceived as “conspicuous consumption” the fundamental changes in consumer’s values have made the luxury industry shift to “mindful consumption”. Today’s consumer has an increased awareness of social and environmental issues, and therefore brands who embrace and care about these matters can achieve a deeper connection with their consumers.
Before we get ready for TREND’s next discussion, this piece discusses how to optimise the customer experience by making it engaging, innovative and personalised. In order to achieve this, brands must establish a convenient, seamless omnichannel experience throughout the customer’s journey.
Here are the five marketing trends that luxury digital innovators are embracing:
1 . Technology at the core of the business
“The goal is to turn data into information, and information into insight”. As Carly Fiorina, Former CEO of Hewlett-Packard quotes, data gives power to businesses to take the right paths to get closer to consumers.
In luxury, data translates into personalisation. Jeremy Langmead, Brand and Content Director at Mr Porter stated at an Agora debate that “personalisation is key so that consumers feel that you are talking directly to them, not to the galaxy”. Mr Porter uses data such as shopping habits, history and what the consumer has or hasn’t liked to serve all channels with a personal touch. This feature has become essential for luxury brands. However, whilst data is essential for tailoring a customer’s experience, Langmead warns against becoming too reliant on it. Sometimes you have to break out of a dataset – ‘how do you get someone who likes navy suits to buy a red jumper?’ You still need to bring in surprise and individuality.
Brands like Tommy Hilfiger are also using AI as a launchpad for their creative process. This technology allows the firm to research real-time fashion trends and ongoing customer perception about the firm’s product and image. In this case, AI analyses previous data on which collections have been more successful to give designers insight on which trends would work best.
2 . Influencers becoming brands.
The rise of influencers in the luxury industry is evolving. It is well-known that authentic personality persuades more, and brand loyalty is achieved through creating a community of followers.
And who are the best at creating loyal communities?
Influencers, of course.
In past few years, we have seen a wave of influencers finally taking advantage of their followers and launching brands that are completely aligned with their personality. Chiara Ferragni with her own luxury fashion brand, Jeanne Damas with the launch of Rouge or Elle Macpherson with the launch of her beauty brand WelleCo, are three different examples of influencers capitalising on the power of their followers.
The more personalised and customised the brand’s marketing message is, the more engaged and loyal the customer will be. Building that sense of community with your target audience can help you achieve higher levels of loyalty, and ultimately improve conversion rates.
3 . The art of social
According to this statistic from Havas LuxHub that shows the leading sources of new luxury brand discovery among consumers worldwide, an obvious 42% of respondents aged 18 – 26 years-old admitted to learning about new luxury brands mainly through social media. As the younger generations grow, this percentage is getting higher and higher.
As mentioned above, creating a community is essential to achieve brand loyalty and these communities are often created through social media. For luxury consumers, social media is a key tool to find like-minded people and brands with a powerful identity.
Years have gone by since luxury brands were reluctant to play in this field. Now consumers expect more and more instant gratification. They expect the experience of a personal touch in any interaction with a luxury brand, from having a personal assistant in-store to personalised communication on social media.
4 . Appealing through emotion
As stated in the new report by Positive Luxury “The world is ruled by Emotions, 2018 Predictions Report”, purpose-driven businesses are more likely to attract talent and consumers.
“A brand’s ability to spark an emotional connection with consumers, especially around the social and environmental factors that are increasingly important to them, will be imperative to successful growth. This is especially true for brands looking to engage younger consumers, the future of the luxury marketplace and workforce.”
Playing on customer’s emotions is not new in business; we have seen it in many forms of advertising before. The difference today relies on the ability for consumers to track real communication and identify truth in the brands they follow. These emotions are now based on actionable facts like engagement with local communities, implementing a sustainable supply chain or sharing the brands’ real story, rather than simply creating an emotive advertisement.
5 . Blockchain at its best
The potential of blockchain to bring transparency to the luxury industry can be an absolute game-changer in this sector.
“In an industry such as the diamond trade, where a single stone can go from mine, to aggregation, to market, to lapidary, to market again, to manufacturing, to wholesale, to retail and finally to the customer, full transparency is difficult to achieve.” – The Future Laboratory
The blockchain can help the luxury industry achieve that transparency by forcing stakeholders to be ethical at all points of the supply chain, from sourcing, to production, to the final delivery. With consumers being much more informed and conscious about the source of luxury products, this technology allows them to ultimately verify the origin of that specific luxury product. London-based company Everledger is already using IBM blockchain technology to track a diamond at each stage of the supply chain.
If we apply these technological developments to the rest of the luxury industry, fashion, travel and hospitality businesses will head towards a more authentic, trusted and sustainable future that will better align with the consumer’s needs.
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