PARIS – Shoppable videos, UGC search and licensing and tools to leverage big data in real-time: Those were among the digital innovations touted at a conference here Tuesday as crucial fuel to power the sluggish luxury sector.
About 60 brand executives, digital experts and luxury analysts spoke at Luxury Forward, a summit at the Palais Iena here organized by Fashion Capital Partners and the online communications agency Fred & Farid.
Brand executives talked about the difficulty of maintaining a coherent message across a multitude of online and offline channels, while technology firms vaunted an array of potential solutions for the sector.
Luca Solca, managing director for luxury at Exane-BNP Paribas, noted the luxury sector has entered a period of profound structural change in which annual growth of 2 percent is the norm—versus an average of 6 percent over the past decade.
China has accounted for two-thirds of that growth, with luxury retailers able to surf the wave of rapid growth in the world’s most populous country by increasing the number points of sale and positioning their products to push prices ever higher.
But as growth in China shifts to the middle class, pricing power is weakening, Solca said. And with the Internet and smartphones making the global prices more transparent than ever before, retailers will not be able to keep inflating prices in this market. The Chinese government is also pushing retailers to bring prices down to global norms in an effort to stop capital flight: High prices at home are driving Chinese shoppers to make their major purchases abroad.
In a panel discussion, Carven chief executive officer Sophie de Rougemont echoed this need to normalize prices—not just between regions but also across physical retailers and online—now that shoppers have the ability to instantly comparison shop on their phones.
Retailers that invest in a physical space risk becoming showrooms for other sellers. “Clients come to the store to check that the shoes are the right size, then go home and buy them for 10 percent cheaper online,” de Rougemont said. “All of a brand’s stakeholders need to put themselves in agreement and sell at the same price.”
In a panel on online transformation, digital officers for Sephora, L’Oréal, Louis Vuitton and Christie’s talked about the challenge of interacting with clients across diverse online channels—a key push for hooking millennial consumers.
“The number of different points of contact with the consumer has multiplied,” said L’Oréal digital chief Axel Adida, “It’s important to keep the message consistent across all channels.”
“Every brand has their ‘Kyle Jenner moment’” said Louis Vuitton’s Agnès Vissoud—recounting how the brand had had to decide quickly whether to engage with an explosion of online interest in the house after the social media star of the Kardashian clan had worn a Vuitton scarf around her hair in a promotional video for her lip gloss brand. In this case, the luxury house decided it was better to keep their distance.
Representatives for Silicon Valley giants including LinkedIn, Google, and Facebook touted new digital initiatives that could offer solutions for the sector.
Two-thirds of luxury purchases are made to celebrate a life milestone, according to LinkedIn’s luxury account manager Tatiana Dupond. LinkedIn knows when customers have a new job or promotion, and are in a position to help luxury firms propose the right celebratory purchase at the right moment.
“Consumers will no longer accept seeing content that isn’t personalized and adapted to their needs,” said Morin Oluwole, who manages French luxury clients for Facebook and Instagram. With Facebook, for example, “you can communicate with current and potential clients in the space where they already spend their time,” Oluwole said.
Google’s Mailene Swildens talked about the power of shoppable video for luxury, and showed off clips from interactive tours her team had created for both Bulgari and the hotel chain Jumeirah. Google had sent film crews to shoot HD video that was then laid over Google Street View technology to offer users an immersive storytelling experience.
“Shoppable video content is the innovation that seems the closest, the most accessible to me,” said Nancy Lorenzo, chief merchant for online luxury reseller The RealReal. “I’m really attracted to this as a technology that can keep the romance of luxury alive but can marry with commerce directly.”
In a keynote speech at the conference, French digital affairs minister Axelle Lemaire said the luxury sector had long been “in denial” about the online revolution. “Just like we have had clean tech and biotech, we need a fashion tech,” Lemaire said.
Smaller tech firms represented at the conference included the wearable technology start-up Cute Circuite—best known for the light-up Galaxy dress that Katy Perry wore to the Met gala in 2010—and Chute, a start-up that identifies and negotiates intellectual property rights for user-generated content (UGC).
UGC is a powerful tool for reaching millennials, according to Aileen Faudree, Chute’s vice president for customer development, noting young clients react more strongly to seeing products in the context of a certain lifestyle and aesthetic.
“For luxury brands the quantity of UGC is not the problem, the quality is,” she said. “Is the authentic brand story being told?”
Chute offers to help brands tap into “earned media” by identifying, licensing, and promoting the right social media posts.
For Exane-BNP’s Solca, the focus on technology responds to a more profound shift in the luxury sector.
“Luxury brands can sell a lot of iconic items when they have a lot of new consumers, because they just don’t have those things yet,” said Solca, referring to the newly well-heeled shoppers of emerging China. “But once you lose that flow, innovation becomes much more important.”
Luxury brands will need to focus on exploiting growth pockets like luxury travel goods and the online space—as well as tightening up their finances to become more efficient, he suggested.
The luxury sector should also revamp its offer to local consumers, according to Boston Consulting Group’s Olivier Abtan. Many shoppers in luxury brands’ home markets feel they’ve been been priced out of the sector as retailers focused on courting wealthier tourists.
“No one can say which of these innovations is really going to be the next big thing, and what works for each brand will be different.” said The RealReal’s Lorenzo. “I’m just really glad to see the luxury sector getting together to talk about these issues with technology and innovation. Two years ago that wasn’t the case.”