How Millennials and Gen Zers are Forcing Luxury Brands into E-commerce

    For millennials and Gen Zers, whatever channels they choose, brands need to be able to tell their stories consistently and precisely across all channels.
    Kering’s approach of using A.I. to identify insights from their consumer data is a step in the right direction. Photo:
      Published   in Hard Luxury

    If a company chooses a wait-and-see approach instead of leading the charge into new technology, then they have already lost. Many brands still don’t understand this.

    For instance, it’s nearly impossible to buy any luxury car online. And the typical reason CEOs and sales directors of luxury car companies give me is that consumers don’t want to buy a luxury car on the internet. However, Tesla already shows that many consumers have no problem paying 150,000 USD or more for a Model X online.

    Why shouldn’t they? Luxury is an emotional purchase, so why not allow a consumer to choose when or where they want to buy it? The fact that most car brands do not offer the option of buying online doesn’t mean consumers would never do it. The consumer needs to be the focus of all brand thinking. If they want to buy in a store, the brand needs a brick-and-mortar presence, but if they want to buy online, maybe on a different occasion, the brand should be available online, too.

    However, e-commerce execution isn’t something that’s separate from core brand positioning. Independent of the channel, the experience that a luxury brand creates must reflect the core positioning of the brand. This is why selling luxury via third-party platforms like Net-a-Porter can be problematic if the third-party store is not expressing the positioning of the brand precisely enough, and if it doesn’t create the experience that a proprietary store or site offers.

    In a recent press event that was summarized in Vogue Business on June 10, the chief client and digital officer of Kering, Grégory Boutté, highlighted that Kering is going to fundamentally rethink their online approach. Instead of relying on those third-party sites where there is little control over the content, Kering’s brands — which includes Gucci, Bottega Veneta, and Yves Saint Laurent — will refocus on their own e-commerce sites to create a more seamless brand of storytelling. That is to say that the luxury group will correspondingly treat their e-commerce sites as their stores: carefully managed with content that is controlled by brand teams.

    Additionally, he stated that Kering is using A.I. and machine learning to make sense of their generated data — something that will offer more streamlined customer experiences, including in their brick-and-mortar stores, which are still responsible for more than 90% of their sales. What can other luxury brands learn from this?

    The brand is everything#

    Most companies still underestimate the necessity of getting their brand story straight. What do I mean? Many brands really just trademark. There is a name, a blurry positioning which often just reflects the entire category, a design and product philosophy, and a general price positioning.

    Typical positioning statements I hear when I do brand audits are “We sell the best fashion products,” “Our quality is second to none,” “We sell a dream, an experience,” “We are the most trusted brand,” “We have a longstanding history,” or “No one matches our creativity”. This is not enough!

    It’s not just insufficient —it’s dangerous. That’s because a blurry brand will not resonate with Millennial or Gen-Z consumers, each of whom has a shorter attention span and less patience. They expect to understand their reason to buy the product right away. The message needs to be specific and relevant to them. Precision is necessary — brands need to have a clear purpose which cannot be defined from the brand’s perspective but needs to be determined from a consumer perspective. In other words: “What’s in for the consumer? What do I get from this specific brand?” Rationally and emotionally, the positioning needs to be rigorously sharp and straightforward, understandable in five seconds, and always consumer-centric.

    Why is it dangerous to be blurry? Because your brand won’t resonate, you will waste your marketing investment, and you will quickly become obsolete as the competition heats up and other brands resonate better with the Millennial target. Prada, for example, had to pay a high price recently in China, when Chinese Millennials were not buying their bags anymore because they struggled to understand what their brand stands for. On top of that, correcting a blurry brand will take additional investment and time on top of the time and money the brand has already spent.

    All channels are equally important#

    Brands need to be wherever the consumer is, and whatever channels consumers choose, brands need to be able to tell their brand stories consistently and precisely across all channels. It’s the same logic as controlling the sales environment in brick-and-mortar. Setting the highest standards needs to apply online, too. Third-party sites are possible but should only be considered if the brand story can be told correctly and with the same precision as on a proprietary website.

    Data is the connective tissue#

    Kering’s approach of using A.I. to identify insights from their consumer data is a step in the right direction. I am shocked at how few companies today use the potential of A.I. and machine learning.

    Data is an enabler. It’s like a connective tissue between all the company’s activities. Any brand should be able to 1. measure the ROI of a marketing campaign to track a specific sale when the consumer was exposed to a brand message to evaluate their effectiveness, and 2. to measure consumer consent on an ongoing basis. An automated A.I. tool should scan every online conversation for trending topics and anomalies to identify critical issues in real time. Anything less than that is not acceptable in today’s world of digital natives. Any brand that operates without these powerful data analytic tools in China, which has the most digital luxury market in the world, risks committing brand suicide if something unexpected happens. Dolce Gabbana’s infamous canceled Shanghai fashion show is an excellent example. By the time the brand understood the PR disaster they’d created, it was too late.

    Advanced data analytics also helps brands create a seamless journey between online and offline experiences and between offline experiences at different locations. Why should a consumer be treated differently in the Shanghai store of say, Louis Vuitton, just because she’s visiting from Beijing where she usually shops? Or on vacation in the New York store, for that matter?

    Live or die#

    In my point of view, these strategies and tools are not optional today. They are the key to survival and the only way to lead the change that millennials and Gen Zers are ushering in. All efforts need to start with a precise brand positioning followed by executing that positioning excellently across all channels and leveraging data to create consumer-centric luxury experiences. There is no plan B in reaching these younger consumers.

    Daniel Langer is CEO of the luxury, lifestyle, and consumer brand strategy firm Équité. He consults some of the leading luxury brands in the world, is the author of several luxury management books, serves as a regular keynote speaker, and holds management seminars in Europe, the USA, and Asia. Follow @drlanger

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