Luxury Daily: State of Marketing 2018—The Inside View
On September 26, the Coresight Research team attended the Luxury Marketing Forum hosted by Luxury Daily, and our key takeaways from this event are:
- The new luxury consumer is an empowered and informed shopper who demands personal and social relevance from the brands they interact with.
- Retail and in-store experience has never been as important for engaging the new luxury consumer as it is today.
- For luxury, digital also matters and it matters a lot.
- Luxury brands need to redefine marketing by empowering consumers to tell personalized brand stories.
On September 26, the Coresight Research team attended the Luxury Marketing Forum which was hosted by Luxury Daily at the UBS Building in New York City. The conference was an all-day event in which participating speakers offered their insights into marketing strategies and other best practices in today’s world of luxury commerce. There was a special focus on the power that consumers now possess and how to market to this new demographic.
Speakers at the forum included Mickey Alam Khan, Editor-in-Chief of Luxury Daily; Robert Samuels,Chief Investment Officer of UBS Wealth Management; Martin Shanker, Founder and President of Shanker Inc.; Adelina Wong Ettelson,Global Head of Residences Marketing at Mandarin Oriental; Ken Nish, Chairman of JGA; Preeti Pincha, Senior Manager at Deloitte Consulting; Milton Pedraza, Founder and CEO of Luxury Institute; Morin Oluwole, Head of Luxury at Facebook and Instagram; Sana Carlton,Northeast Group SVP of Kantar Milward Brown; and David Becker, CEO of Attract China.
In this report, we share our top four takeaways from the event, which are on how:
- the new luxury consumer is self-informed and self-directed, and values personalized experiences;
- the retail and in-store experience of luxury commerce needs to evolve;
- the role of online and tech in the luxury sector is important for improving omnichannel consumer experience and distribution capabilities; and,
- redefining marketing and creating new strategies is critical for luxury-commerce companies.
These takeaways are discussed in detail below:
1) The New Luxury Consumer
Keynote speaker Samuels opened the event and touched on one of the important themes of the day, the changing luxury consumer. Today, the retail consumer has access to much more information than ever before and, therefore, has much more power.
Shanker stated that “self-informed customers are self-directed.” Technology and access to information has resulted in a shift in the power dynamics of the luxury market. With a steady flow of information about brands, fashion, influencers, et al, at their fingertips, the consumer has started outpacing the industry’s ability to keep up with her desires and expectations. High net-worth luxury shoppers are more informed than sales peoples and can “sniff out BS from a mile away,” according to Samuels.
Everyone agreed that millennials and GenZers are the epitome of this new changed consumer and are the luxury consumers of the future. According to Samuels, these consumers value personalized experiences that are authentic and exclusive along with brand interactions across multiple platforms and brand’s lifestyle values. Shanker noted that younger consumers demand experience rather than just a product and interacting directly with them—via Snapchat, Instagram and other tech platforms—is very important.
Also, younger consumers value sustainability, where and how a product is made, and how a company treats its employees. Social consciousness is a huge driver of the new luxury consumers’ purchasing decisions.
2) The Retail and In-Store Experience
All panelists stressed a growing need for brands to evolve their in-store experiences to match the demands of today’s evolved consumer. About 80% of retail luxury transactions are carried out in brick-and-mortar stores, and only brands that create in-store experiences will be able to: increase store traffic; increase conversions; expand their customer base; and enjoy, growth.
Most important for evolving in-store experience to satisfy the desires of the new luxury consumer is hiring talented and trained associates. Retailers need to invest in their front line employees to win. Shanker queried, “are sales associates obsolete?” He urged sales associates to emulate art dealers and create “an oasis of genuine service and an emotional connection with the client.”
Nischspoke of co-shopping environments and stores that have succeeded in creating an environment of storytelling and authentic engagement. He presented the example of Sundance, a store in Arizona that provides women with a female-oriented environment filled with sustainable and artisanal products that communicate the brand story. There are more examples of successful environments in Europe and South America that blend shopping, beauty, wellness, food and other lifestyle aspects to attract consumers, he said.
3) Role of Online and Tech for the Luxury Sector
McKinsey has predicted that online sales in the luxury sector are set to triple in the next few years. Today, e-commerce accounts for around 10% of total retail sales in the US; however, given its present double-digit growth, penetration will increase in the foreseeable future.
This growth in e-commerce holds huge potential for luxury also and brands need to improve their omnichannel consumer experience and distribution capabilities for tapping into this boom.
Brands that have started implementing new digital and tech strategies are already reaping the benefits. For example, Sephora, the France-based multinational chain of personal care and beauty stores,is a leading digital brand today and its sales are growing exponentially. Luxury brands have begun using Instagram swipe up, polls, and stories which allow them to interact with—and convey their messages more directly to—consumers.
Samuels suggested that luxury brands should look at consumer packaged goods companies for tech strategies—for example, Tide and Patron, which are using Amazon’s Alexa to provide consumers with tutorials and drive increased engagement. Rayban and NYX are using augmented reality to allow customers to try on glasses and lipstick shades through their smart phones and other devices. Net-a-Porter provides easy cross-shopping by including links to items that pair well with the item in the consumers basket.
Becker stressed the importance of luxury brands to become China-friendly with their digital solutions. He noted that87% of Chinese consumers use mobile payment and seamless paying options, and these shoppers—who account for 30% of global luxury purchases—expect brands to accept payments made using WeChat Pay and AliPay. The entry of luxury brands into Chinese markets, Becker said, can be facilitated by Jeenie, a live bilingual translation app that supports customer engagement efforts WeChat and Weibo platforms.
4) Redefining Marketing and New Strategies
Pedraza admitted that there are no standard recipes for success in the luxury market. For example, copying Gucci’s strategies that resulted in the company’s recent meteoric rise might not work for other brands. When Gucci CEO Marco Bizzarri chose Alessandro Michele as the brand’s creative director, this success was unforeseen; however, the use of constant feedback for making real-time rapid changes led to Gucci’s malleable strategy and the ability to quickly pivot to what worked. Pedraza advises brands to “operate with agility, experimentation and rapid adaption/feedback.”
Pedraza called for a redefinition of marketing.Today’s table stakes are: empower customers to share their story; focus on multi generational mindsets; expand omnichannel capabilities while doubling down on in store experiences;and, execute digitally and articulate social responsibility credentials.
Lessons can be learned from brands that are succeeding. According Carlton and BrandZ, Louis Vuitton’s (LV) brand equity rose 41% to $41 billion in 2018. It is the most valuable luxury brand based on its brand experience, use of data and technology, innovations and heritage. Staying relevant by partnering with artists such as Jeff Koons and maintaining exclusivity by releasing limited availability collections has resulted in LV retaining its top spot.
Chanel has a brand value of $10.4 billion (ranked fourth among global luxury brands),according to BrandZ, and Oluwole believes that, with 40.8 million followers, Chanel is the most influential luxury brand on social media with digital relevancy and inclusivity, without losing its classic elegant identity.
Khan summed up the day by urging luxury marketers to: stop focusing on demographics and start focusing on mindsets; employ one-to-one marketing without being disruptive or interruptive; and, evolve logistics and find new ways to target overly-informed consumers.