DIGITAL

Is The Role of Digital Becoming Obsolete Within Luxury Companies?

by

Limei Hoang

|

This is the featured image caption
Credit: This is the featured image credit

The recent changes at the top level management at LVMH may signal a wider move within the luxury industry to move away from “digital transformation” and a shift towards a “total immersion” in their business.

Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.

PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.

In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”

The Fondation Cartier pour l’Art Contemparain building in Paris

The recent changes at the top level management at LVMH may signal a wider move within the luxury industry to move away from “digital transformation” and a shift towards a “total immersion” in their business.

When Ian Rogers announced at the end of last year that he was leaving his role as chief digital officer at LVMH, it signalled a significant shift that the world’s biggest luxury group was moving onto its next phase of transformation, one that would rely heavily on creating a seamless omnichannel experience for its customers.

His departure was accompanied by the news that LVMH would create a chief omnichannel officer role, promoting Louis Vuitton executive Michael David – who oversaw online retail at the brand – to the position. While not much has yet been revealed about the chief omnichannel officer’s remit, it has been reported that LVMH’s future priorities are expected to include accelerating its brands’ migration to share technology platforms, leveraging data and artificial intelligence and focusing on “the fast-moving ecosystem in China.”

While it comes as no surprise that luxury companies have needed to undergo a “digital transformation”, the global COVID-19 pandemic has accelerated the urgency for brands to move forward from simply understanding what they need to do to actually implementing those changes throughout their business.

According to the latest study by consultancy Bain and Altagamma on the luxury market, the core personal luxury goods market fell by 23 percent to 217 billion euro, its sharpest fall ever, while the overall luxury market – which includes luxury goods and experiences- also fell at a similar pace and is now estimated at around 1 trillion euro.

As a result, online shopping for luxury goods has soared, doubling its market share from 12 percent in 2019 to 23 percent in 2020, indicating the profound shift in consumer behaviour and the urgent need for brands to meet customers’ expectations in a more seamless manner across all of their channels.

Disrupted Age

Considerations like product availability, increased online customer support, click and collect and contactless payments have become key to succeeding in these times, as brands contend with store closures, ongoing lockdowns and travel disruptions the world over. Meaning, it has never been more important to reassess one’s strategy for this new disrupted age, where global consumption patterns have changed as a result of new consumer behaviour that has emerged from the global COVID-19 pandemic.

“Out of crises, typically comes innovation,” said Karen Harvey, chief executive officer of KHC – a consulting and advisory services firm for luxury fashion businesses – and founder and CEO of Fashion Tech Forum and INDX. “The digital transformation story for our industry begins with a real need on our side to understand digital in general,” explained Harvey. “What is digital? Are we looking at it from a platform back-end standpoint? From a marketing standpoint? From a social standpoint?”

“When we launched Fashion Tech Forum in 2014, there was a huge disconnect between how the leadership in the technology sector viewed the fashion and retail sectors and how the leadership on the fashion and retail side understood and viewed the future of how technology would come to play in their business,” said Harvey.

“Ian Rogers was a great example of bringing somebody into a world-class portfolio of companies like LVMH to bring a bridge between where the companies were to where they have come today – in mindset, in understanding of the power of digital and in really getting some good understanding of platform transformation,” she added.

Under Rogers leadership, LVMH implemented numerous changes including the launch of its multi-brand fashion e-commerce site 24S, the creation of accelerator programme and the introduction of new technologies like augmented reality and artificial intelligence. E-commerce now accounts for 10 percent of LVMH’s total revenue since Rogers’ appointment, according to a report by BoF. Rogers also significantly improved online sales of its brands like Louis Vuitton and Christian Dior, as well as the data analysis and marketing operations across the group’s brands, helping the luxury conglomerate to more easily access digital functions in a new era of digital luxury.

But as the competition in the e-commerce space heats up, LVMH will undoubtedly be preparing for a new chapter of its digital journey particularly after Richemont’s announcement in November that it was forming a global strategic partnership with Farfetch and Alibaba to provide luxury brands with enhanced access to the Chinese market and to accelerate the digitisation of the global luxury industry.

“I believe they are going to be looking at it from a much more individual way,” said Robert Burke, CEO of Robert Burke Associates. “And looking at how to market, how to service their customer from an omnichannel stance. The reality is that many of the brands, as well as LVMH and Kering, are pulling back on their e-tail whether than be online or in-store and looking at the control of their individual brands more than ever.”

“Each brand needs to be treated in its own unique way,” he added. “I believe that that bigger is always not better for multi-brand online, and this consumer will be attracted to more curated customised specialised sites. It is kind of split, it’s not a one shoe fits all which we might have thought about five, six or seven years ago when you look at online.”

Ian Rogers, the former Chief Digital Officer at LVMH.Credit: Photo: Courtesy

More Options, More Approaches

The added complexities of tailoring your digital strategy can bring many other issues for luxury brands. Logistics, talent, cost, assets and tools are just some of the things that companies need to consider when trying to ensure that digital is fully immersed into their whole business.

“The definition of digital has not fundamentally changed,” said Alain Zimmermann, managing partner at DLG (Digital Luxury Group). “What has changed is the relevance and the essential role of digital, particularly the relationship between the customer and the brand and vice versa. The context of Covid has further highlighted the strategic challenges of digitalisation, which is being discussed more and more at the highest level of organisations.”

“For the vast majority of brands, digital transformation is the number one priority just to stay in the race,” he added. “This transformation implies agility and a strong adaptability to the new normal in an omnichannel approach, with rapidly changing client attitudes and expectations.”

“Today, digital has to be approached and lived in a fully integrated manner,” continued Zimmermann. “Some brands have on that journey for quite a while now, which is a huge advantage these days to compensate for the limitations of offline, but it has also helped them accelerate for the near future as the right foundations, culture, mindset, skills and processes are already in place.”

What is clear is that the digital acceleration will create more opportunities to luxury companies to rethink the playbook on how to approach their marketing strategies, however brands must ensure they keep their core values and positioning intact.

“It is difficult to predict the future with any certainty in these times,” noted Zimmermann, who previously held the role of CEO of Baume et Mercier and has worked for brands like Cartier, IWC and L’Oréal. “Agility at all levels is essential. It’s crucial for brands to show a willingness to these new approaches, in order to help achieve luxury companies’ main goal: to attract, satisfy and retain customers through a unique and high quality experience. Digital can greatly contribute to this.”

“Digital offers a multitude of options and new opportunities, especially on social media," he added. "It can be tempting to be present on many channels but for a lot of luxury brands, not all options are relevant for them as they may risk losing exclusivity and consistency.”

Join Luxury Society to have more articles like this delivered directly to your inbox

Seamless Execution

What will become more important as luxury companies move into the next stage of immersing digital into their businesses, in ensuring that whatever strategies that brands do put into place are seamlessly executed, not just online but also within their physical retail spaces. Customer relationship management will become key as well as direct to consumer.

“You need that seamless execution between your own physical spaces and the e-commerce, you need to own that journey,” said Harvey. “Customer relationship management strategies become incredibly important so in an omni-world where you are trying to develop relationships with your wholesale partners, your multi-brand retail partners, whether its companies like Selfridges or Matchesfashion. Then you realise that these leaders that understand doing business direct to consumer are crucial.”

“There will be more of a seamless experience on customer service side,” noted Burke. “Appealing to net-worth customers is going to be extremely important and how you go about appeal to them and surfacing them is critical. And I think that will be the future of luxury.”

“There has never been this much change,” Burke continued. “We bring everything back to the pandemic, and the pandemic expediting the customers looking at shopping today. There is a risk that the customer can be overwhelmed and this is just my feeling, but there is so much out there and there is so much happening, that there may be a real opportunity, for the specialist store retailers whether it be a Matchesfashion, or a Webster or a MyTheresa to hone their extremely focused assortment and excellent customer service, and I’m sure that the brands are looking at it the same sort of way.”

“If anything, as we know, fashion goes in cycles and so sometimes, if the luxury consumer feels that things are too accessible, it becomes less appealing to them,” said Burke. “And it has to play into online. And therefore, maybe a conglomerate like LVMH or Kering would be more specialised by brand when they drill down on their online and have omnichannel as opposed to treating it all the same.”

The Louis Vuitton Etoile store in RomeCredit: Photo: Courtesy

Stronger Data Culture

Data will become even more crucial to understanding how companies can deep dive into better customer relationship management, and how to ensure they are meeting their consumers in the omnichannel journey.

“Structures and organisations are starting to change,” said Zimmermann. “This evolution will certainly further accelerate in the future with shorter paths to decision making, fewer silos, new roles and more access to information, all essential components to help orchestrate and succeed in launching new products with even shorter times to market. Often, these organisational changes are accompanied by the internal creation of new areas of expertise such as data experts whose role in a digital ecosystem is more than strategic.”

“I find it fascinating to what extent the right use of digital tools allows personalised marketing, to an almost surgical degree,” he added. “At a very granular level, you can adapt your message to a specific audience through a dedicated channel for a limited time and in a selected geography. This almost personalised approach can help brands to meet the expectations of sophisticated audiences used to one-to-one treatment and therefore increase their level of engagement with luxury brands.”

Future Proofing

With data helping companies to form better insights, luxury brands should not be afraid to experiment and test new ways of working to better future-proof themselves for the overall digital transformation taking place within the industry.

“Many leaders right now have had a chance to use this, really really, trying period, that pushed limits of everything to really understand the pillars of what will drive their business going forward,” said Harvey. “Intimacy with the consumer is top of mind in our industry. Sustainability, all of those really important brand values and brand pillars, you will see a reshaping of these brand values and pillars. And they understand that is very key to future proofing. And then, their digital capabilities, whether you are marketing or selling, I mean, it’s everything going forward.”

“The best leaders are not unaware of what they need to do, it’s how fast they can do it,” Harvey continued. “You see some winners and you see some people that are less good. You see Lululemon crushing it. But the investment they made over many years on digital definitely paid off for them. They were ahead already.”

“The hiring, the immediate pace that is required to bring that knowledge, the technology build is critical,” she added. “And in the meantime, it takes time. But you have to be able to bring people that know how to brief and create these platforms going forward and I think that there are some clear winners in that regard and then there are others that have to catch up.”

Cover Image: Fendi's Spring/Summer 2021 campaign. Shot by Nick Knight.

Limei Hoang
Limei Hoang

Senior Editor, Luxury Society

Limei Hoang is a senior editor at Luxury Society, based in Geneva. She was formerly an associate editor at the Business of Fashion in London. Previously, Limei spent six years at Reuters as a journalist, and she has also written for the BBC, The Independent, and New Statesman.

DIGITAL

Is The Role of Digital Becoming Obsolete Within Luxury Companies?

by

Limei Hoang

|

This is the featured image caption
Credit : This is the featured image credit

The recent changes at the top level management at LVMH may signal a wider move within the luxury industry to move away from “digital transformation” and a shift towards a “total immersion” in their business.

Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.

PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.

In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”

The Fondation Cartier pour l’Art Contemparain building in Paris

The recent changes at the top level management at LVMH may signal a wider move within the luxury industry to move away from “digital transformation” and a shift towards a “total immersion” in their business.

When Ian Rogers announced at the end of last year that he was leaving his role as chief digital officer at LVMH, it signalled a significant shift that the world’s biggest luxury group was moving onto its next phase of transformation, one that would rely heavily on creating a seamless omnichannel experience for its customers.

His departure was accompanied by the news that LVMH would create a chief omnichannel officer role, promoting Louis Vuitton executive Michael David – who oversaw online retail at the brand – to the position. While not much has yet been revealed about the chief omnichannel officer’s remit, it has been reported that LVMH’s future priorities are expected to include accelerating its brands’ migration to share technology platforms, leveraging data and artificial intelligence and focusing on “the fast-moving ecosystem in China.”

While it comes as no surprise that luxury companies have needed to undergo a “digital transformation”, the global COVID-19 pandemic has accelerated the urgency for brands to move forward from simply understanding what they need to do to actually implementing those changes throughout their business.

According to the latest study by consultancy Bain and Altagamma on the luxury market, the core personal luxury goods market fell by 23 percent to 217 billion euro, its sharpest fall ever, while the overall luxury market – which includes luxury goods and experiences- also fell at a similar pace and is now estimated at around 1 trillion euro.

As a result, online shopping for luxury goods has soared, doubling its market share from 12 percent in 2019 to 23 percent in 2020, indicating the profound shift in consumer behaviour and the urgent need for brands to meet customers’ expectations in a more seamless manner across all of their channels.

Disrupted Age

Considerations like product availability, increased online customer support, click and collect and contactless payments have become key to succeeding in these times, as brands contend with store closures, ongoing lockdowns and travel disruptions the world over. Meaning, it has never been more important to reassess one’s strategy for this new disrupted age, where global consumption patterns have changed as a result of new consumer behaviour that has emerged from the global COVID-19 pandemic.

“Out of crises, typically comes innovation,” said Karen Harvey, chief executive officer of KHC – a consulting and advisory services firm for luxury fashion businesses – and founder and CEO of Fashion Tech Forum and INDX. “The digital transformation story for our industry begins with a real need on our side to understand digital in general,” explained Harvey. “What is digital? Are we looking at it from a platform back-end standpoint? From a marketing standpoint? From a social standpoint?”

“When we launched Fashion Tech Forum in 2014, there was a huge disconnect between how the leadership in the technology sector viewed the fashion and retail sectors and how the leadership on the fashion and retail side understood and viewed the future of how technology would come to play in their business,” said Harvey.

“Ian Rogers was a great example of bringing somebody into a world-class portfolio of companies like LVMH to bring a bridge between where the companies were to where they have come today – in mindset, in understanding of the power of digital and in really getting some good understanding of platform transformation,” she added.

Under Rogers leadership, LVMH implemented numerous changes including the launch of its multi-brand fashion e-commerce site 24S, the creation of accelerator programme and the introduction of new technologies like augmented reality and artificial intelligence. E-commerce now accounts for 10 percent of LVMH’s total revenue since Rogers’ appointment, according to a report by BoF. Rogers also significantly improved online sales of its brands like Louis Vuitton and Christian Dior, as well as the data analysis and marketing operations across the group’s brands, helping the luxury conglomerate to more easily access digital functions in a new era of digital luxury.

But as the competition in the e-commerce space heats up, LVMH will undoubtedly be preparing for a new chapter of its digital journey particularly after Richemont’s announcement in November that it was forming a global strategic partnership with Farfetch and Alibaba to provide luxury brands with enhanced access to the Chinese market and to accelerate the digitisation of the global luxury industry.

“I believe they are going to be looking at it from a much more individual way,” said Robert Burke, CEO of Robert Burke Associates. “And looking at how to market, how to service their customer from an omnichannel stance. The reality is that many of the brands, as well as LVMH and Kering, are pulling back on their e-tail whether than be online or in-store and looking at the control of their individual brands more than ever.”

“Each brand needs to be treated in its own unique way,” he added. “I believe that that bigger is always not better for multi-brand online, and this consumer will be attracted to more curated customised specialised sites. It is kind of split, it’s not a one shoe fits all which we might have thought about five, six or seven years ago when you look at online.”

Ian Rogers, the former Chief Digital Officer at LVMH.Credit: Photo: Courtesy

More Options, More Approaches

The added complexities of tailoring your digital strategy can bring many other issues for luxury brands. Logistics, talent, cost, assets and tools are just some of the things that companies need to consider when trying to ensure that digital is fully immersed into their whole business.

“The definition of digital has not fundamentally changed,” said Alain Zimmermann, managing partner at DLG (Digital Luxury Group). “What has changed is the relevance and the essential role of digital, particularly the relationship between the customer and the brand and vice versa. The context of Covid has further highlighted the strategic challenges of digitalisation, which is being discussed more and more at the highest level of organisations.”

“For the vast majority of brands, digital transformation is the number one priority just to stay in the race,” he added. “This transformation implies agility and a strong adaptability to the new normal in an omnichannel approach, with rapidly changing client attitudes and expectations.”

“Today, digital has to be approached and lived in a fully integrated manner,” continued Zimmermann. “Some brands have on that journey for quite a while now, which is a huge advantage these days to compensate for the limitations of offline, but it has also helped them accelerate for the near future as the right foundations, culture, mindset, skills and processes are already in place.”

What is clear is that the digital acceleration will create more opportunities to luxury companies to rethink the playbook on how to approach their marketing strategies, however brands must ensure they keep their core values and positioning intact.

“It is difficult to predict the future with any certainty in these times,” noted Zimmermann, who previously held the role of CEO of Baume et Mercier and has worked for brands like Cartier, IWC and L’Oréal. “Agility at all levels is essential. It’s crucial for brands to show a willingness to these new approaches, in order to help achieve luxury companies’ main goal: to attract, satisfy and retain customers through a unique and high quality experience. Digital can greatly contribute to this.”

“Digital offers a multitude of options and new opportunities, especially on social media," he added. "It can be tempting to be present on many channels but for a lot of luxury brands, not all options are relevant for them as they may risk losing exclusivity and consistency.”

Join Luxury Society to have more articles like this delivered directly to your inbox

Seamless Execution

What will become more important as luxury companies move into the next stage of immersing digital into their businesses, in ensuring that whatever strategies that brands do put into place are seamlessly executed, not just online but also within their physical retail spaces. Customer relationship management will become key as well as direct to consumer.

“You need that seamless execution between your own physical spaces and the e-commerce, you need to own that journey,” said Harvey. “Customer relationship management strategies become incredibly important so in an omni-world where you are trying to develop relationships with your wholesale partners, your multi-brand retail partners, whether its companies like Selfridges or Matchesfashion. Then you realise that these leaders that understand doing business direct to consumer are crucial.”

“There will be more of a seamless experience on customer service side,” noted Burke. “Appealing to net-worth customers is going to be extremely important and how you go about appeal to them and surfacing them is critical. And I think that will be the future of luxury.”

“There has never been this much change,” Burke continued. “We bring everything back to the pandemic, and the pandemic expediting the customers looking at shopping today. There is a risk that the customer can be overwhelmed and this is just my feeling, but there is so much out there and there is so much happening, that there may be a real opportunity, for the specialist store retailers whether it be a Matchesfashion, or a Webster or a MyTheresa to hone their extremely focused assortment and excellent customer service, and I’m sure that the brands are looking at it the same sort of way.”

“If anything, as we know, fashion goes in cycles and so sometimes, if the luxury consumer feels that things are too accessible, it becomes less appealing to them,” said Burke. “And it has to play into online. And therefore, maybe a conglomerate like LVMH or Kering would be more specialised by brand when they drill down on their online and have omnichannel as opposed to treating it all the same.”

The Louis Vuitton Etoile store in RomeCredit: Photo: Courtesy

Stronger Data Culture

Data will become even more crucial to understanding how companies can deep dive into better customer relationship management, and how to ensure they are meeting their consumers in the omnichannel journey.

“Structures and organisations are starting to change,” said Zimmermann. “This evolution will certainly further accelerate in the future with shorter paths to decision making, fewer silos, new roles and more access to information, all essential components to help orchestrate and succeed in launching new products with even shorter times to market. Often, these organisational changes are accompanied by the internal creation of new areas of expertise such as data experts whose role in a digital ecosystem is more than strategic.”

“I find it fascinating to what extent the right use of digital tools allows personalised marketing, to an almost surgical degree,” he added. “At a very granular level, you can adapt your message to a specific audience through a dedicated channel for a limited time and in a selected geography. This almost personalised approach can help brands to meet the expectations of sophisticated audiences used to one-to-one treatment and therefore increase their level of engagement with luxury brands.”

Future Proofing

With data helping companies to form better insights, luxury brands should not be afraid to experiment and test new ways of working to better future-proof themselves for the overall digital transformation taking place within the industry.

“Many leaders right now have had a chance to use this, really really, trying period, that pushed limits of everything to really understand the pillars of what will drive their business going forward,” said Harvey. “Intimacy with the consumer is top of mind in our industry. Sustainability, all of those really important brand values and brand pillars, you will see a reshaping of these brand values and pillars. And they understand that is very key to future proofing. And then, their digital capabilities, whether you are marketing or selling, I mean, it’s everything going forward.”

“The best leaders are not unaware of what they need to do, it’s how fast they can do it,” Harvey continued. “You see some winners and you see some people that are less good. You see Lululemon crushing it. But the investment they made over many years on digital definitely paid off for them. They were ahead already.”

“The hiring, the immediate pace that is required to bring that knowledge, the technology build is critical,” she added. “And in the meantime, it takes time. But you have to be able to bring people that know how to brief and create these platforms going forward and I think that there are some clear winners in that regard and then there are others that have to catch up.”

Cover Image: Fendi's Spring/Summer 2021 campaign. Shot by Nick Knight.

Limei Hoang
Limei Hoang

Senior Editor, Luxury Society

Limei Hoang is a senior editor at Luxury Society, based in Geneva. She was formerly an associate editor at the Business of Fashion in London. Previously, Limei spent six years at Reuters as a journalist, and she has also written for the BBC, The Independent, and New Statesman.

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