WANT TO INNOVATE LIKE THE WORLD'S MOST LUXURIOUS BRANDS?
Learn How LVMH and Tiffany Are Going Digital…And How You Can Too
The majority of the world’s most exclusive, luxury brands have a heritage going back generations. Chanel turned 108 this year, Gucci will celebrate its 100th anniversary in the next few years and the Versace brand is older than the country of Croatia.
But…the luxury landscape is changing.
In the last five years, the growth of luxury branded goods sold online has outpaced the total global market for e-commerce. By 2025, the sale of luxury goods online will more than triple to 74 billion euros. That’s nearly a fifth of the total luxury market.
Don’t be fooled. This isn’t all about Millennials spending more.
New generations are actually boycotting traditional spending habits. Marriage isn’t fashionable. Yet Tiffany & Co is suddenly selling more engagement rings. How can this be?
Here are just some of the fundamental shifts impacting the shape of spending on luxury goods around the world:
Wealthier customers are spending more of their money online with little regard to the size of the price tag
Minority customers want and can afford luxury goods…but will only purchase brands that resonate with them
Consumers are getting bored with information overload. They demand products and services that cut through the crowd
Customers want brands to grow with them and to evolve the conversation to keep their attention. Evoke a new sensation
So luxury brands have been forced to change the way they communicate with customers. They are throwing themselves into the world of digital and innovating the conversation.
Let’s look at two different strategies that top brands are adopting: The home of Louis Vuitton (LVMH) has built a startup accelerator to tap into the world’s most eager and innovative entrepreneurs; while Tiffany & Co. expand their ‘winner takes all’ strategy from search to social.
LVMH Accelerator Strategy:
LVMH is home to 70 brands spanning six sectors — including legacy brands such as Louis Vuitton, Dior, Hublot, Veuve Clicquot, Givenchy and Fendi.
In Spring 2018, LVMH launched an accelerator called La Maison des Startups — akin to the famous Techstars and Y Combinator that we’ve seen disrupting the tech scene around the world — to work with 50 international startups each year as their route to push the bar on digital innovation in the luxury goods sector.
One of the startups that was accepted into LVMH’s first cohort is Cappasity (https://cappasity.com) — an interactive 3D product imaging solution for online retail and ecommerce. Cappasity offers an easy and scalable platform for creation, embedding and analysis of 3D and AR/VR content.
LVMH’s strategy to tap into digital innovations via a startup accelerator is an increasingly popular model for corporates around the world. This type of strategy facilitates access to the most eager and innovative entrepreneurial talent, requires low capital investment and low partnership risk.
“By providing a unique environment where entrepreneurs can access resources, invent and create synergies with the many well-established initiatives across the Group, LVMH is further strengthening its already robust digital ecosystem.” “Innovation is an integral part of the history of our Maisons, which are often centuries old. This is why we know, perhaps better than others, how to find ways of working with startups that benefit us all.”
- Bernard Arnault, Chairman and CEO, LVMH
The Tiffany & Co Millennial Strategy:
Tiffany’s growth strategy has long been to dominate search engines as the ‘go to’ for jewelry. Compared with their competitors, Tiffany & Co is the most visible on search engines across every major region.
As Tiffany & Co shift into Millennial targeting and innovate their digital presence, they are nnuchoosing to adopt a similar ‘winner takes all’ approach to social media and repurposing their dominance in search engine optimisation for their new target audience.
This summer, Tiffany & Co stepped outside of their traditional forget-me-not blue box, and hosted a concert on the roof of their flagship store with Millennial rapper A$AP Ferg. Streamed on Spotify and Facebook, they revamped their social media presence to launch their first line from new creative director Reed Krakoff. The brand relaunched with photography that includes models with tattoos, celebrities that present a bolder and more cutting edge style, graffiti art and high impact videography.
The brand also joined the bandwagon — started by celebrities — of deleting all the Instagram posts on its page before April 28 and resumed posting with black-and-white images. These bold moves in the digital world that were unheard of a few years ago prove that they are on top of not only jewellery trends, but also celebrity, tech and fashion, to their high net wealth customers.
Illustrating the importance of an omni-channel experience across all of the brand’s digital and in-store retail, Reed Krakoff updated the brand’s New York City flagship store to represent not only the “aesthetic of the extraordinary”…but also “the everyday”. In this move, Tiffany & Co is evolving their entire presence to illustrate the modern, artistic and innovative world of design as part of their bigger strategy to update and expand the company’s image in the digital age.
So how do I digitally transform my own luxury brand and innovate my conversation with customers?
1. Build a website and social media presence. Expand your brand’s narrative
An engaging, regularly populated social media account with a stunning, edgy and engaging website is a fantastic opportunity for your company to expand customer conversation through text, photography and videography. Hire a team of photographers, web designers and a PR guru to help you design and build your digital presence with the right photography and voice from the start. If you’re a startup or on a budget, focus on just one social media outlet at a time.
2. Make bold moves. Embrace Millennial and minority customers
Take a leaf out of Tiffany & Co.’s book when it comes to identifying the target audience for your next marketing campaign. You would be surprised at how responsive other age and minority groups are to Millennial-targeted photography and videography.
Everyone wants to share stunning, edgy digital content across their network. So create it for them!
3. Remember to match digital customer service. Turn offline customers into online influencers
When implemented correctly and creatively, a stunning and engaging digital media strategy can turn a one-off offline customer into a repeat purchaser or digital influencer for your brand. However, this only works if your brand is able to match the customer service expectations that your customers have collected in-store…into the digital world. Develop a digital customer service strategy that promotes online conversation and customer service that flows from online to in-store and back again.
4. Engage with other businesses. Create your own accelerator strategy
You may not have the financial resources or public relations capabilities to launch your own version of LVMH’s accelerator program, but you can still create a funnel for innovation and collaboration.
Startup Accelerators: Research which startup accelerators specialize in your industry and contact them for networking and partnership opportunities. Win access to their current and previous cohorts.
Coworking Spaces: Embed yourself in coworking spaces. They are a melting pot of startups and high growth SMEs with the idea to foster collaboration and be social within a cross-business, cross-industry working space.
Social Networks: Join and participate in online social networks aligned to your industry, adjacent industries and potential disruptors.
Or let it be known on your own website, social media and in stores that you are looking to discover the next big innovators in your field.
Going Digital and Innovating Your Narrative
The network effect of going digital, innovating and embracing social media can be the game changer that you have reluctantly been looking for. It can be daunting, but one-by-one execution of a well thought out and executed digital strategy has the potential to not only increase value per customer but also to open up newer, bolder and more innovative growth opportunities for your business.
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