Luxury Brands Are Moving Into Online Stealth Mode. But How Can They Measure Success?


Limei Hoang | March 25, 2021

Bottega Veneta Salon 01 系列广告Credit: Bottega Veneta

Bottega Veneta’s move to “go dark” on social media might signify a wider shift in the luxury market between brands choosing to be more inclusive or more exclusive with their customers. But with no engagements to measure, which priorities should brands focus on?

At the beginning of this year, Italian fashion house Bottega Veneta signed off its social media accounts not with a bang, but with silence. The move, which was followed by the removal of its content on its Weibo account, was praised by many and marked a decided shift in the wider luxury market between brands that choose to be more inclusive in mindset, and those that are taking a more exclusive approach with their customers.

But at a time when engagement and community growth on social media are seemingly some of the metrics on which brands measure their success in the digital age, does this type of strategic move actually work and how can brands who choose this path ensure they can still retain a foothold in the online and social space without having to participate on its platforms?

The first thing brands need to consider is what kind of luxury brand they are and where they are positioned. Gucci for instance, for whom millennials and Gen-Z make up a large proportion of its audience, has more of an inclusive approach towards its communications.

From hosting online film festivals, creating shadow boards to better leverage insight from younger consumers and launching a series of games entitled “Gucci Arcade”, the Italian fashion house has undergone a major overhaul in recent years under its CEO Marco Bizzari and designer Alessandro Michele, resulting in a doubling of its revenues and a trebling of its profits between 2015 to 2019. Its success has meant that Gucci now accounts for 60 percent of revenues and 80 percent of profits at Kering, and a large part can be attributed to its willingness to experiment with new ways of communicating and engaging consumers.

Different Approach

Yet from the same parent company, a different approach can be seen with Bottega Veneta. Its positioning in the luxury market is presented as a little more upscale and exclusive, particularly after appointing its creative director Daniel Lee in 2018, whose designs have catapulted the brand to a superstar status – particularly on social media – helped specifically by a squishy clutch bag named the Pouch (the fastest selling bag in the brand’s history), which has featured on the accounts of fashion editors, insiders and influencers generating a kind of social media hype brands can only dream about.

“It’s a different kind of luxury brand,” said Thomas Chauvet, Head of Luxury Goods Equity Research at Citi. “It’s about elegance and sophistication. Bottega Veneta is a not a house of fashion, it’s a house of style. They are not unique, but it’s different from many of the brands out there. Both Kering management and Daniel Lee know that well.”

“Since its repositioning, Bottega Veneta has really been a leader in putting out luxury product that is highly desirable to the fashion consumer,” said Robert Burke, CEO of Robert Burke Associates, noting the popularity and success of its shoes and bags. “And because of that, I think that they are smart in reassessing Instagram, Facebook and Twitter because there is such a thing as overexposure and we are starting to realise that more is not always better.”

“The allure is the brand’s exclusivity, which is always the case within fashion, whether its Hermès, or Chanel, whether its Vuitton or Dior, being exclusive is what allows you to have longevity,” added Burke.

Differences of brand values aside, it is hard to ignore the fact that online is growing and that social is an easy path to promote oneself on to a digital audience. According to a recent study by Bain and Altagamma, online is expected to become the leading channel for luxury purchases by 2025, with younger generations expected to drive 180 percent of growth in the market from 2019-2025.

“It’s true that it’s a bit surprising,” said Chauvet of Bottega Veneta’s decision. “The reach of social media is immediate. But the question for them, perhaps compared to Gucci, is how much of that social reach actually translates into the recruitment of target audience and in actual sales?”

Indeed, despite all of Gucci’s recent marketing and promotional activities, sales at the brand fell by 10.3 percent in the fourth quarter of 2020, on a comparable basis, a steeper drop than the 4 percent analysts had expected. In contrast, sales at Bottega Veneta grew by 5 percent in the same period.

Bottega Veneta's Slime Green Tote BagCredit: Photo: Courtesy.

“It’s really two different businesses and two different approaches,” noted Emanuele Pedrotti, Partner and Apparel, Fashion & Luxury Mediterranean leader at McKinsey. “You have the type of consumer who is more selective, lives in a more intimate environment. They want to wear something that is just for them. It’s not like mass personalisation, it’s really for them.”

“You have another type of luxury that instead is more about belonging to a group that shares your same ideas … but it’s really two different types of consumers, in two different worlds,” he added. “One is probably a more introverted researcher and the other is a more extroverted communicator. Both groups exist and they both need to get an answer to their needs.”

But when a brand decides to remove itself from social media, what can be used to measure success?

The first thing to note is just because a brand is not present on social media, does not mean it has excluded itself from the online and digital conversation. While Bottega Veneta may not have an active presence through its own accounts, it can still rely on others to amplify its messages, said Mario Ortelli, Managing Partner of Ortelli&Co, a strategy and M&A advisory company specialised in the luxury goods industry.

“Bottega Veneta has increased its reliance of brand ambassadors on social media, which, from their accounts can show the products of Bottega Veneta and speak about the brand with their own language,” he noted. Indeed, the Instagram account newbottega, described as a digital journal dedicated to the work of Daniel Lee, boasts 501 thousand followers at the time of publication. Not bad for an account that began at the start of this year.

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However, social media withstanding, analysts believe that brands still adhere to the end result – sales. And they agree that thinking about how to generate further sales speaks to more volumes to a company’s bottom line than how many number of likes on social media.

Quality of Customers

“One of the most important, and objective, metrics is same-store sales, to measure a brand’s success,” said Chauvet. "Bottega Veneta has the potential to improve the quality of its retail footprint. There will be store closures, relocations and enlargements to convey a different brand and store experience, which should drive better sales productivity and higher profitability over time.”

Customer retention, conversion, unit per transaction are also other things that brands can place more emphasis on to help boost same store sales.

“We are seeing it even in how the brands are focused on their customer service and really retaining the customer so it’s super important right now,” said Burke. “It used to be two years ago, people would say, well how many likes, how many followers and that was considered the most important information and valuable. And what happened, in really the pandemic escalated this, is that just foot traffic and just eyeballs does not translate into business.”

And thirdly, customer service and loyalty still counts for a lot in the world of luxury, particularly when brands can now tap into the data from their customer relationship management databases to ensure they are personalising each customer’s experience and tailoring their preferences to them.

“The pandemic showed that it’s not about the quantity of customers, it’s about the quality of customers and the brands have gone through a fundamental mindset change, really in the last year,” added Burke. “The focus on making the shopping experience even better for the best customers, and even more importantly cultivating new customers, as well as the average spend, is incredibly important and the repeat customer is incredibly important today.”

“The ultimate luxury is being recognised,” said Pedrotti. "We all look for recognition. You want not just to merely recognise the brand, but the brand to recognise you. What we see in this space becoming super relevant, is the level of personalisation of experience you can propose to your customers,” he added. “Brands can personalise the experience through a combination of advanced customer relationship management, physical in-store interactions and life on the web.”

Whatever the case, something that many in the luxury industry seem to agree on, is that the move by Bottega Veneta meant that, even in an overcrowded market where consumers are bombarded with messaging and communications, silence can be golden particularly when focusing on the right target audience for your brand.

“When you are silent, the few times that you do decide to speak, there will be someone to listen,” said Ortelli. “The move of Bottega Veneta was pretty smart, because everyone is talking about it, and it has created a lot of curiosity.”

“More than screaming your message, listening to your consumer is the command of the moment,” said Pedrotti. “And silence helps you to listen.”

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