For an industry built on data, there's a certain irony in the tentative adoption of all things digital by luxury fashion brands - after all, the pursuit of digital excellence doesn't involve a descent down the proverbial rabbit hole.
Recent industry headlines cast a foreboding shadow on luxury fashion growth, signalling an ominous "digital iceberg" or "dark side of digital." And a wave of articles bemoans the challenges of digital disruption (after all, fashion isn't known for embracing change, au contraire) currently faced by fashion veterans and insiders.
Luxury is stagnant, and likely will be for the foreseeable future, yet in that underbelly lies a silver lining: digital transformation.
According to a new study by Bain & Co, the estimated $273 million projected 2016 spending on luxury apparel and accessories will remain flattened by the burden of currency exchange, terrorist threats and the U.S. presidential elections.
There is a bright side: luxury ecommerce. In fact, the inflection point is now in luxury ecommerce, according to Bain & Co, with 7% penetration in 2016. Overall luxury sector online sales compound annual growth is forecast at 4% by 2020.
It would befit luxury in a recession to aggressively embrace digital as an antidote, and many brands are seeking digital differentiation. Yet, while digital - particularly, e-commerce, mobile e-tail, digital branding, customer retention and acquisition - presents a potential corrective to the stagnant global luxury fashion market, there remains a pervasive gloom looming in industry news of late.
Step aside and recalibrate for a moment. Imagine the luxury ecommerce market as "the world's third largest luxury market, after China and the United States."
This impressive hypothesis was made in a mid-2015 McKinsey luxury ecommerce study, which also predicted that by 2020 luxury's share of online sales would double from 6% to 12%.
Forecasting exponential sales growth in luxury sector ecommerce, the study further predicted that by 2025 the ecommerce share would grow to 18%, with a value of about $77 billion annually.
Translation: One-quarter of personal luxury goods market transactions could potentially be conducted on ecommerce platforms within the next decade - largely luxury fashion transactions.
From the unifying mantra of the fashion digerati, the crescendo of an increasingly vocal majority can be heard. Accept the fact that the buying habits and patterns of luxury fashion customers have radically changed, thanks to digital. Follow and interact with these customers where they are, gingerly, while practicing the same customer care excellence online as afforded in-store.
Despite the doubt, social media interaction and luxury customer coddling can be achieved in digital. Social media has already set the stage for luxury brand positioning and ecommerce. Authenticity (another coveted tenet of luxury fashion) has at least two sides - a sense of uniqueness and exclusivity, as well as non-counterfeit, to be sure.
For example, Louis Vuitton took top place among luxury brands (#19 overall) in this year's Forbes 100 Most Valuable Brands report. Unsurprisingly, Louis Vuitton also ranked high in the 2016 NetBase Brand Passion Report: Luxury Brands, an annual social media analysis created by the enterprise social media intelligence platform.
Several other pure-play brands have also embraced digital transformation, though there is little uniformity in luxury fashion. Digital pacesetter Burberry has evolved to offer an insta-gratification ecommerce model for its collections, without the six-month wait. Blockbuster turnaround brand Gucci is also assessing digital priorities.
Couture house Dior, which hired its first woman creative director, Maria Grazia Chiuri, has begun cultivating a new generation of women with an Instagram play featuring female role models. And, Chanel - which displaced Louis Vuitton in the NetBase Luxury Brands Report - strategically conceives its shows and marketing from a top-of-mind digital everything policy, produces immersive digital experiences designed to attract younger audiences, as well, interested in more substantive storytelling.
While most luxury fashion brand digital inroads are experimental and eschew a single model, their common tone is experiential, a fundamental tenet of in-store luxury culture.
Luxury fashion has much to learn from veteran luxury ecommerce platforms, which have vetted the experiential model, creating a plush seamless experience between editorial and online purchasing, notably, Net-a-Porter. Leading luxury etailers Farfetch, Luisa via Roma, MyTheresa and Net-a-Porter are ahead of pure band plays in luxury digital fashion ecommerce. And, each platform enjoys high net sentiment and passion intensity, not to mention customer reach, attentive customer service and robust transactional capability.
Localspeak analyzed the four platforms using NetBase. Net-a-Porter, the granddaddy - or, grandma, if you consider that it was founded by Nathalie Massenet - of luxury fashion ecommerce still leads the pack with over 50% share of mentions. However, much of the heated passion intensity surrounding the platform was generated by negative social discourse over the past year by circumstances surrounding its acquisition by Yoox.
Given their global ecommerce models, we analyzed these luxury ecommerce pioneers to include all languages in this NetBase generated topic comparison chart for the past year.
Still, minding a luxury brand's digital touch points cohesively involves a delicate balancing act, one that implies the risk of "killing the romance," as ultra-high net worth legacy jeweler Fabergé cautions. The temptation to engage with customers excessively on today's multitude of digital touch points carries with it the risk of overkill and overlooks potential perils. Fabergé practices what it preaches, cognizant that winning a new customer involves nine times the effort as retaining an existing customer.
Accessible luxury brands (for the aspirational luxurian), which have paved the way in fashion ecommerce, must also remain vigilant to shifts in consumer profile. As detected in a 2016 NetBase Social Media Best Practices Guide, a factor in Kate Spade's sluggish sales performance may be attributed to social media negligence in detecting a disconnect between its brand persona and target customer.
As technology and social media analytics platform have matured, luxury fashion is in an auspicious position to adopt, and adapt to, a new era of sophisticated etailing, globally.
To capitalize on the anticipated luxury ecommerce boom, brands will have to overcome any lingering reticence to etailing - including resistance to change, but especially belief in the anachronistic credo that equates luxury with exclusivity, and most importantly, accelerate their investment in digital.
The time has come to either get on board the bullet train or hazard a titanic competitive risk. Embrace data-driven marketing and strategy, where digital is the sine qua non, or suffer the laggard. There's no turning back.