You probably heard or even used Augmented reality (AR) recently. The application of digital imagery to a real world environment came to the public’s attention first through Snapchat filters, and latterly through the gaming app Pokemon Go. Whether its adding digital backgrounds to your selfies, or hunting ‘Pokemon’ in the real world, both, in their own way, are fun and gimmicky.
Now, disruptive technology is being rolled out by major luxury retailers and fashion labels such as Swarowski, Prada, and Burberry. For some brands, this enables you to digitally try on clothing, while for others, you can customize your own home digitally through your smartphone camera.
While these retailers still deal with tangible goods, they are being forced to adapt their products by enhancing and providing digital experiences. For the brand managers of the future, adapting luxury brands to the interests of the buyers of the future is crucial, and it is quite clear that ‘digital’ will play a large role in this.
Adapting to the new generation of buyers is crucial for retailers. For millennials and generations Y and Z, this is firmly centered in a world of technology. Part of this is adapting the ‘DNA’ of a brand in a way that appeals to young consumers. Swarovski’s VR app, for example, shows goggle-wearing consumers around a luxury home fitted tastefully with Swarovski products.
Millennials are increasingly detached from the in-store mode of shopping, and much more attached to the online way. In the US, 47% said they would prefer to buy online, compared to 43% in store. Moreover, Goldman Sachs estimates that virtual and augmented reality technology will be worth $80 billion by 2025, as it becomes more of an integrated part of retail.
The digital revolution can be a huge opportunity for luxury brands that wish or need to increase their popularity, which is different from increasing their accessibility.
This is why small luxury brands or new luxury brands targeting a younger generation of luxury consumers may be tempted to leverage more on the digital revolution than traditional and well-established luxury brands, which already benefit from strong awareness supported by big marketing budgets and strong off-line retail store channels.
For luxury brands, the process of embracing digital has been initially slow due to the perceived threats brought by digital channels such as the loss of control over brand communication, as well as tier differentiation. As luxury brands of today build their presence on digital, there are some key aspects which may not have been adequately addressed, such as how the proliferation of the internet has changed the habits of consumers, and that engaging consumers on social media is not just about delivering brand digital content, but also about having a conversation with them.
In order for luxury brands to embrace digital, it is important for luxury brands to put themselves in the position of an e-commerce native, where shopping online could be more relevant than shopping in a store.
Going a step further, the concept of the omni-retail channel is also an important way through which brands, not only those in the luxury industry, can integrate both their physical and online presence. Through the omni-retail channel, brands can use digital and social media to drive sales and traffic to their retail stores. Through such a system, consumers are empowered with more flexibility and convenience, and brands are able to better consolidate their online and offline initiatives.
Beyond e-commerce, digital influences every step of the luxury consumer decision journey, bringing an increasing number of touchpoints such as social media, bloggers and digital advertising in the Discovery phase, brand websites and user-generated content in the Evaluation phase, online stores and mobile applications in the Transaction phase, as well as the use of Customer Relationship Management (CRM) tools in the loyalty phase.
To continue to engage consumers, digital content for luxury brands needs to be both inspiring and relevant to customers, possibly curated for more authenticity, be increasingly experiential and needs to convey emotional values to connect with consumers on a higher level.
The Digital Revolution has indeed changed even the luxury industry considerably, and brands which are able to capitalize on this potential through a tailored approach focusing on the consumer experience will have much to gain from these channels.
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