FT Business of Luxury Summit – 5 Key Takeaways
Author: Benoit Soucaret
November 27, 2020
Benoit Soucaret, LiveArea EMEA Group Creative Director, joined luxury brands and retailers at FT Live’s Business of Luxury Summit, adding to the conversation with the industry’s leading decision-makers and influencers from the likes of Kering, Prada, Burberry, Balmain, Jimmy Choo, Dior and Cartier. Here, Benoit discusses some of the key takeaways from the summit.
Luxury Recalibrates to Digital
The pandemic has accelerated the shift to digital in luxury at pace. With the absence of international travel, particularly from China, and attitudes to shopping evolving rapidly, luxury is facing a new normal, one where retail networks have to be redesigned, collections need to be presented in new ways and customer engagement must be reconsidered.
Digital was a running theme through many of the conversations – brands talking about the enforced acceleration to digital this year in particular, and how it’s no longer a means to merely connect with the younger generations, but a question of survival.
Burberry CEO Marco Gobbetti explored how digital has infiltrated brick-and-mortar luxury, and how there should no longer be boundaries between digital and the physical stores, highlighting with the success of Burberry’s social retail store. Whether it’s retail tie-ups in China, live stream shopping, AR try-on tools or introducing direct messaging between stores and clients, Burberry is the digital trailblazer in luxury.
Kering’s Chief Client & Digital Officer Grégory Boutté was sure to point out how being a global business played a significant role in adapting and recovering from the disruption of this year. In particular, growth in APAC (18%), China (80%) and the US (44%) showed how investment in online and offline operations in these markets has been hugely significant.
We know that China now accounts for an increasing volume of global luxury spending, and is a unique and crucial market. Bain expects Chinese local spend to account for up to 28% of global luxury consumption by 2025, buoyed by the country’s growing number of younger, high-net worth individuals. The key seems to be brands investing in local technology, retail and logistics partnerships and targeting the younger consumer groups. This year’s Singles Day in China saw a host of luxury firms including Prada, Cartier, Montblanc, Piaget, Balenciaga, Vacheron Constantin, and Chloé taking part for the first time, joining around 200 luxury brands – more than double last year’s figure.
Create New Customer Journeys
Before the pandemic, the traditional, linear customer journey had already been blown to bits. The experience a customer receives has changed and luxury brands need to ensure they evaluate and solve any new pain points or friction that occurs. Luxury groups have to attract many more customers to their digital platforms and really create a new customer journey. Brands need to think of ways to create efficiency and identify new revenue streams through the analysis and re-imagining of their services, customer touch points, technology, and business processes.
There’s a definite acknowledgement that luxury brands need to do more to offer real value to clients through a holistic approach, particularly with such an accelerated shift to online. Brands are refocusing efforts and shifting media spend to online channels with a focus on customer activation. This consistent, high-quality communication with the consumer is vital in creating a sense of community around the brand, attract new customers and identify new revenue streams.
Innovate Like a Start-Up
Brand loyalty isn’t what it used to be. Today, customers are constantly introduced to new and better services from previously unheard-of companies. As a result, they’re much more willing to switch to a new product if it offers a smarter or simpler solution to their needs. For heritage brands, this is a real challenge. The very thing that made them great in the past – their relentless focus on running and managing their core business – often prevents them from focusing as strongly on inventing the future of their business. This puts them at risk of a new company developing a new product that disrupts the market and challenges their market position. The simple truth is that today, all brands – even long-standing luxury companies – need to act, invent, and move like a start-up to stay ahead.
For example, the role of payments and channels used in retail have been redefined. 53% of global shoppers have bought products via social media, with 71% willing to use buy-now-pay-later payment platforms. This is the fastest growing payment method with Gen-Z driving the large majority. Although many luxury brands are reluctant to explore this avenue, as this consumer group is fast becoming the industry’s most sought-after audience. If brands aren’t meeting their basic expectations in facilitating convenient purchases on these popular channels or payment methods, there’s a real risk of falling behind.
Sustainability Under the Lens
Globally there is a desire for industries to be ‘sustainable’, and luxury is no different. Luxury brands have been approaching the subject somewhat through a marketing lens, which creates a safe place for businesses to play within and trial responsible products and partnerships. However, this doesn’t hold them fully accountable throughout their end-to-end operations, which is where meaningful change needs to take place.
Alex Weller, European Marketing Director at Patagonia shone a spotlight on this. Despite sustainable claims by countless major fashion and luxury brands, he exposed how the total quantity of organic used in fashion production is still only around 1-2%, which has barely changed in the last 30 years.
We need to move away from this vague, meaningless term and using ‘sustainability’ as a commercial tool. Now is the time to shift industries to live within planetary bounds. Daniella Vega, Group Director of Sustainability at Selfridges Group emphasised the importance of ‘Materials, Models, Mindset’ that is seen through their products.
Maxine Bedat, Founder of New Standard Institute, shared how 2021 needs to see realignment across the board – mills over materials – claiming 76% of the carbon footprint within a garment’s lifecycle is due to the material choice, but what is happening during production. Brands could steer away from finding the elusive ‘magic material’, and focus on the mills to ensure they are energy efficient, running on renewable energy.
That would be real, achievable progression and must be a key driver for responsible brands. It’s time for brands to refocus, questioning the models of consumption, changing the way we shop and the way we do business.
Author: Benoit Soucaret
Benoit is the Creative Director, Experience Design at LiveArea – EMEA, passionate about the intersection of brand, business, design and technology. Driven by market and consumer insights, and be able to align them with product strategy, essential business needs, and delivering exceptional quality digitally designed experiences is at the core of Benoit’s design ethos. With almost 15 years’ experience in digital media communications, Benoit has worked with many of the world’s largest brands, helping them transform their digital presence. Prior to joining LiveArea, Benoit served as Design Director at his own agency – Whatalovelyday – and created rich branded content and commerce websites, product configurators, in-store kiosks, and digital campaigns. In addition to a B.S. in Visual Communications, Benoit attended the ESADE Business School, and holds a Masters in Business Administration.