PARIS — There is no single route to doing digital for luxury brands: this was one of the key takeaways from the first day of conferences at the recent Vogue Fashion Festival.
Sponsored by Swarovski and held at the Hotel Potocki, home to the Paris Chamber of Commerce and Industry, the two-day program of conferences and workshops on Nov. 24-25 focused on the transformation of the luxury eco-system, with speakers including Kering’s chairman and chief executive officer François-Henri Pinault and Chanel’s president of fashion Bruno Pavlovsky.
Unsurprisingly, digital was at the heart of the dialog.
“Digital has added a complementary dimension and we are working to amplify our extraordinary story,” said Pavlovsky. “The risk is doing digital for digital’s sake, and unfortunately we see that often,” he reminded the audience. “But without the runway show, without our brand ambassadors, without the collections, there would not be much to say on digital.”
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Nevertheless, “Digital tools are at the heart of how we work today, we use them every day to communicate, to work, but digital cannot replace the brand fundamentals. It can be an amplifier, it can allow us to go faster, but it cannot replace them.”
Chanel continues to maintain its stance of not selling its core categories online, although it is working on developing what Pavlovsky described as e-services.
“For our fashion collections and accessories, we prefer to invite our followers to come and visit one of our boutiques. Our followers on social media are not necessarily our consumers of tomorrow. […] Luxury is characterized by a certain level of exclusivity. If ever we go down that road, it will be because we consider it offers our customers added value,” he said.
Despite its stance, “Chanel has never had as many young, connected consumers as it has today,” he said. While many of Chanel’s young consumers are digital natives, they continue to appreciate coming into the store to discover products, as well as benefit from the exclusivity factor that results from its stance, according to the executive. “They like to come into our stores for the service, the ceremony of the sale,” he said.
For Pinault, “e-commerce is a complementary service we must offer our customers […] But digital is more important to us as a field of expression for the brand.”
On targeting the Millennial consumer, Pinault countered the notion that a luxury positioning — and pricing — necessarily excludes younger consumers.
“The weight of under-35s [buying our products] has progressed massively in the past three to five years,” he said. For brands like Balenciaga, Saint Laurent and Gucci, younger consumers can account for as much as 60 percent of sales, he suggested.
“Brands that do not invest in these segments can miss out,” he continued, explaining that creativity and an emotional connection with the brand are crucial to appealing to the Millennial consumer. “The brand narrative is essential, we must create the narrative and the desire, and take creative risks. The success we have with these three brands today is thanks to this stance.”
Over the next two to three years, Pinault said, the company will enhance the digital experience for its luxury brands.
“Today, the real question for a luxury brand is how to recreate a luxury experience online. The answers we are working on at Kering are the creation of new services that did not exist before,” he remarked.
“We are exploring for different brands in the group how artificial intelligence will transform our industry in areas, with tests in the works with partners like Google and Facebook,” he added. “Artificial intelligence will fundamentally change many luxury professions.”
Nicolas Hieronimus, deputy chief executive officer of L’Oréal, addressed how the relationship between brands and consumers has been fundamentally changed by digital.
The cosmetics giant has been particularly successful with its strategy of acquiring “digital native” brands like Urban Decay and NYX, ramping them up and transposing certain aspects of their strategy on the other brands in its portfolio.
Creating targeted content, social listening and personalized products, as well as transforming the store into a place of experience and a form of media, are all part of this strategy, he said.
“Two-thirds of offline purchases are influenced by what is happening online,” said Hieronimus. “In the past, we were in a top-down relationship with consumers. Today, it is a dialog, consumers are expressing themselves. You can no longer, just because you are a major group, put a [mediocre] product on the market.”
Of the 125 million beauty videos available online, he said, 84 percent do not originate from the brands themselves. “For brands, it’s a real challenge to participate in this dialog,” he noted.
Introducing a session on e-commerce and department stores, Vogue Paris journalist Theodora Aspart said online now represents 16 percent of global apparel sales. According to Sandrine Deveaux, managing director for Farfetch Store of the Future, in the luxury business, that figure stands at 5 percent, and is expected to rise to 25 percent by 2025. “Bricks-and-mortar retail remain essential, it’s not a case of either or, it’s about how the two converge,” she said.
Luxury’s share “will not go above 20-25 percent,” agreed Nicolas Houzé, ceo of Galeries Lafayette and BHV Marais at Groupe Galeries Lafayette, which recently snapped up a majority stake in catalog and e-tail business La Redoute in a move to bolster its digital transformation, making it France’s largest apparel retailer in the process.
The retailer is working on developing digital solutions to allow it to propose a broader offer more akin to that of its Haussmann flagship in its smaller stores throughout provincial France, he said.
Potential solutions include allowing consumers to reserve as many items as they like online to try them on in store, only paying for what they actually choose to buy. Omnichannel will also play a major role in Galeries Lafayette’s new store on the Champs-Elysées, due to open next year and pitched as a “department store model for the 21st century.”