Sales & Marketing

Luxury firms go digital to enrichen sales and challenge tech giants

4 min read

10 September 2015

A new kind of shopping generation is bringing about a wholesale change in how luxury businesses attempt to drive sales, led by interactive digital platforms, social media and video.

UK luxury groups are on the hunt for new digital brains to keep ecommerce sales surging.

Companies such as LVMH, which recently hired Apple senior executive Ian Rogers as its new chief digital officer, said it is increasingly looking at technology giants as it invests in new ecommerce talent.

A new report by global trend forecaster WGSN said nine out of ten luxury firms, such as LVMH, Cadogan Estate, Burberry and Gieves and Hawkes, had cited digital talent as a big investment area as they continue to develop “sophisticated, imaginative ecommerce offerings”.

“Luxury companies are seeking to build in-house capabilities. It seems the previous moves of luxury leaders such as former Burberry CEO Angela Ahrendts to Apple and the technology sector is not a one way street,” WGSN said.

The report found that 57 per cent of senior executives from luxury brands had recorded a significant surge in sales as a result of ecommerce investment.

Nine out of ten of luxury firms said it expects digital sales growth to accelerate over the next five years, with 69 per cent anticipating that online revenue will increase “greatly”.

Over three quarters of firms said alongside the sales benefit from digital and ecommerce expansion, brands and reputations had been enhanced through “technological diversification”.

Just over half of respondents, 53 per cent, said they had noticed an improvement in customer loyalty.

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Carla Buzasi, global chief content officer at WGSN, said: “The digital revolution has changed retail beyond all recognition, offering new opportunities for brands and businesses. In the luxury sector, after a somewhat slow start, there are many brands now succeeding in creating a compelling luxury experience online to complement the shopping experience in store, and in some cases replace it all together. 

“The most forward-thinking luxury brands have learnt to use graphics, video and social media to bring out the very best of their products.”

Cadogan Estate, the London property empire that owns prime retail space in Kensington and Chelsea, added that “digital forces” are transforming the attitudes of affluent shoppers, with consumers expecting a seamless online and off-line experience.

Hugh Seaborn, chief executive of Cadogan, said: “In the past few years, digital forces have swept through the retail industry, transforming consumer’s behaviour and their approach to shopping. 

“However, especially with the rise of social media, the most satisfying purchase remains one that comes with wonderful memories. Within an environment of great connectivity, vitality, world-class culture and heritage, shopping will never cease to be a desirable experience.”

Asked how customers were using digital services, 81 per cent of luxury goods executives said shoppers are researching online prior to purchasing goods in stores. Additionally, 78 per cent reported that consumers are buying on the internet. The same proportion, 78 per cent, believe shoppers are using websites or social media to find out about new product ranges. And 63 per cent said customers are most likely to use digital to find out about upcoming launches.

Video also emerged as a crucial tool in creating online luxury experiences, with 48 per cent of senior executives using tools such as Snapchat and Periscope to bring catwalk shows to a broader audience.