Ahead of our event, ‘The Future of Luxury’, with Google on 21st March, we caught up with Deborah Stead, CEO of Deborah Stead Associates (previously CMO of Clive Christian) to get her thoughts on the luxury sector:
With online sales currently accounting for 8% of the 254 billion euro global luxury market according to Euro monitor, with online sales forecast to triple in the next seven years. It is predicted that one fifth of all luxury sales will take place online.
Of course all luxury shoppers have embraced digital lifestyles, not just millennials, with a staggering 80% of luxury sales being “digitally influenced”.
However that native millennial digital mind-set, has influenced the way many generations are now open to and engage in that digital landscape.
Deloitte researched the millennial luxury purchasing behaviour in their report “Bling It On” and reiterated several key behavioural traits that are more pronounced to this generation:
1) Desire and interest in luxury experiences – this is a trend that has been widely discussed and can simply be interpreted as consumers (not just millennials) looking for positive experiences at every brand touch point: to be made to feel special; with immersive story telling, emotional engagement and to feel enriched by the overall brand experience
2) Social media the largest single source of luxury brand discovery (and probably overall brand discovery) 20.5% of respondents quoted social media as the key influence of purchase, versus more traditional advertising, reinforcing “digital influence” as the key for this group
3) Purchase decisions are less about impressing family and friends but more focused on how it makes them look and feel, with the perceived quality of the brand (quoted 46% of respondents) being the most important factor
4) Most inclined to purchase luxury goods for a special occasion (20.5%) or as a personal treat (18.5%) with an inevitability from the millennial as there will be a limit to their accrued wealth and spending power due to age, however luxury seen as a “special purchase” is a key motivation for millennial
It is reported by McKinsey that todays average luxury shopper engages with brands through up to fifteen touch points (currently split 50:50 on-line off-line) customers engaging with and following an ever more fragmented and complex customer journey.
This evolving customer journey challenges all brands to continually better understand where, when and how to engage customers.
With all luxury brands challenged with how best to thrive, in this changing landscape, to focus budgets and resources, to ensure they are able to deliver a coherent and seamless brand image; consistent messaging (especially when such a high percentage of digital content is customer generated); consistent customer experience globally, across this multitude of touch points and yet still deliver return on investment.
Brand Omni-channel blending has become ever more important, optimising customer excitement, engagement and ultimately transactions, through the blending of customer experiences, engagement initiatives and developing points of differentiation across the channels and touch points.
Whilst bricks and mortar retailing is evolving fast with much testing and trialling by brands, retailers and service providers are in a desperate search for survival, from the declining customer footfall and turnover, threatening the over spaced and uninspiring retailers. The concepts we are seeing include:
Convenience building – such as “shop and go” checkout free retail outlets from the likes of Amazon and Zara; evolving click & collect pick up points; rental pick up points such as Rent the Runway at Westfield
Destination discovery – with the integration of more personal services such as personalised beauty services & styling; personal fitness and personal shopping
Hospitality integration – with greater meeting, socialising, entertaining areas being integrated into retail spaces
Experience experimentation – with product discovery such as master classes being operated by many luxury brands offering discovery, immersion and education in a convivial gathering example Sephora and Apple
Luxury eco-system development (brand alliances) – Some of the most successful pure play online retailers such as Yoox Net A Porter have provided an exceptional marketplace of luxury brands, expertly curated. Leading the realisation that brand alliances can have great benefit, offline & online.
Enabling the brands the opportunity of physical human interaction; exposure to new customers; development of captivating online content such as fashion shows, seasonal, sporting or specialist events. Examples include Wedgewood partnering with RHS (Royal Horticultural Society in creating the Wedgewood Afternoon Tea Conservatory)
Customer-to-customer – embracing, encouraging and celebrating genuine customer generated content across brand and sector appropriate platforms. Developing, inspiring, cultivating brand advocates, ambassadors, enthusiasts, critics and aficionados.
The differentiated mind-set of the millennial generation provides us the opportunity to reinvent how we interact with our customers at each and every touch point making sure the brand experience is consistently genuine, emotionally engaging, immersive, creative with great authenticity, transparency and integrity, hopefully delivering a luxury brand sector with greater differentiation, personality and passion.
*Most recently holding the position of Chief Marketing Officer at Clive Christian and previously holding roles including Managing Director of The Body Shop at Home and Head of International Development for The Virgin Cosmetics Company, Deborah is an expert in blended-channel business development across bricks and mortar stores, E-commerce and experiential direct to consumer programmes. This commercial expertise includes developing turnaround and expansion strategies for consumer goods and service businesses and brands, with particular expertise in perfume, beauty, wellbeing, nutrition, fitness and fashion.