Danai Pathomvanich
Oct 19, 2015
A recent Altagamma Foundation joint study with McKinsey showed that three out of four luxury purchases, even if they still take place in stores, are influenced by what consumers see, do and hear online.
Today, for many luxury product manufacturers, the question is no longer if and when they should embrace the digital opportunity but how they should go about doing it.
Booming online sales
The “Digital Inside: get wired for the ultimate luxury experience” study showed that in 2014, global luxury brand e-commerce sales reached Euro 14 billion, a whopping 50 per cent increase from 2013.
• Smart phone revolution
The study also showed that wealthy consumers have adapted fully to the smart-phone revolution at a much higher rate than the general population.
“Nearly all luxury buyers have at least one smart phone – globally the figure is 95 percent and in most mature countries, its 100 per cent.”
In addition, a large majority of luxury consumers (75 per cent) have multiple mobile devices, whereas only 33 per cent of Americans own more than one.
Smartphones, the study said are the first truly personal devices because we carry them everywhere.
They have driven the rapid development of new consumer behavior patterns, such as the “always on, anytime but only when I want” attitude.
Luxury consumer: digitally highly-social
More than 80 per cent of luxury shoppers used social media monthly, whether its Instagram, We-Chat, Facebook or Twitter.
“Two-thirds generate social media contact including photographs, videos, product reviews or re-postings of content created by others – at least once a month. Fifteen per cent do it daily.”
• Consumer power
These luxury consumers are also amassing huge amounts of power relative to the luxury brands.
“For each image that luxury brands post on their official Instagram accounts, an average of 10,000 more consumers have posted containing the brand’s hashtag.”
The study said this raises the inevitable question of who is creating the messages and information that define the brand’s identity – the brand itself or its customers.
• High consumer expectations
Highly digital, mobile and social luxury consumers consequently develop extremely high expectation for what they want in their shopping experiences.
“More so than most, luxury shoppers want a seamless, digitally enabled, multi-channel experience – one that unfortunately most luxury players are not ready to deliver.”
Luxury brands – traditionally very cautious
Traditionally, luxury brands have been very cautious about digital and e-commerce.
They often feared that they would lose control of the brand image and story-telling to the internet and the digital space. Tier distantiation toward the customers also challenges their traditional thinking.
E-commerce was seen as more of a threat because it created market channels that conflicted with traditional own stores and favored the development of counterfeit and grey markets.
These fears have created a gap between what shoppers are looking for and what brands are delivering.
Most brands, however are increasing becoming aware of the need to embrace digital and bridge this divide.
Five key touch-points
While luxury brands know they must be everywhere, the study indicates that five particular touch points that clearly impact at least two-thirds of final purchase decisions.
1. The city store
Even in a digital age, luxury customers are heavily influenced by what they see in physical stores – the most important point of contact.
2. Person to word of mouth
Luxury shoppers care about what their peers think.
3. Online search
Being visible online is just as important as having beautiful stores
4. Sales people
A great experience with sales impact can have last impacts, same as vice versa
5. Brand web-site
A customer’s experience with a brand’s own web-site determines a great deal of how the perceive the brand.
