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Luxury still too good for a digital strategy

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Chanel is one of the key culprits when it comes to lack of digital innovation

A recent McKinsey report declared that, for businesses, “The age of experimentation with digital is over“. That may be for most B2B and B2C private sector companies, but not for the luxury goods industry. Bemoaning the woeful development and investment in strategic initiatives for luxury brands online is something this blog has done once or twice before. There are understandable reasons why the industry has been reticent to commit to online retail, based on customer insight (the assumption that HNWIs don’t like to shop for something without being able to see and touch it for themselves) and conflicting priorities (physical store expansion into China and more experiential events has been the name of the game in recent years). But with a China slowdown mooted, particularly in the area of luxury gifting, and no real concrete research to show that HNWIs aren’t just as digitally savvy as their less liquid counterparts, there becomes less and less justification for what are, across the industry, woeful examples of digital strategy and innovation.

It can’t be easy for profitable businesses like LVMH, with an eye on quarterly earnings, to make drastic investments in the online space. Luxury’s brand equity often comes from provenance and tradition; a company’s roots are in its founding stores, the connotations of Milan, Florence, Paris, etc. They also worry about their neighbours; a flash-sale site or, worse, one full of counterfeit knock-offs, is always just a click away. From a logistical point of view, there is also the issue of back-end infrastructure to contend with. For several years, PPR (now Kering) ran much of its e-commerce business through Yoox, as we’ve talked about before. It would be wrong to single out those in luxury. L2 Thinktank recently tweeted with much excitement about Bacardi’s “cocktail discovery site” that worked seamlessly across web, mobile and tablet. Well, forgive us if we don’t leap for joy in an ecstasy of delirium, but this is 2014, that should be the minimum deliverable. Still, luxury is a sector in blatant need of redirection.

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eConsultancy eviscerated many luxury brands’ online presences in a recent article

Burberry is lauded by many as an outlier in this world of luxury goods, a company that has truly embraced digital. For all the talk of such innovation though, the website itself is utterly dominated by a rote e-commerce site, as are its social networks such as Google+. It is the physical stores where technological innovation has been injected. And this is supposedly the company pushing the rest of its peers forward. It comes as little surprise then that eConsultancy published a superb piece at the end of April excoriating the sector, leaving no brand unscathed. Headlines included, “painfully slow load times“, “awful UX” and “not making much effort“. But the worst and most perplexing atrocity had to be the above screengrab on the purposeful hiding away of an e-commerce platform, one that was presumably quite expensive to source and implement in the first place. We can’t overestimate the necessity of having a clear user journey through to purchase, just as it would be difficult to overestimate the amount of luxury good companies that are guilty of this sin for which Dolce & Gabbana have been singled out for here.

On this note, Gucci’s recently relaunched mobile site – replacing among other things a tablet site that had been left to wither since 2010 – was welcome news to us, as it seemed to be also (logically) to those wishing to actually part with their money on Gucci wares. L2 in May reported the news, saying that the new site now accounts for 27% of all traffic, a 150% YoY increase. Sounds good, except that means traffic through the mobile site in 2013 was a miniscule 0.18%, right? Terrible.

There are signs of hope. Gucci’s move to invest in a new mobile site, though monumentally belated, is a welcome one. As more brands cotton on to the importance of online, the Financial Times recently reported on the moves many are making to secure ‘.luxury’ suffixes, in the wake of IPv6, if only to avoid the complications of cybersquatting. And Michael Kors, which seems only to be going from strength to strength every quarter, has praised its own social media presence for “driving international sales”. We’ve almost entirely focused on fashion brands here, but other companies within the luxury sector are getting the message loud and clear. Take the auction house Christie’s, a legacy company if ever there was one, having been founded in 1766. Not only have they dedicated time and energy to investing in major online auctions, they have also recently created a new sector vertical of ‘luxury’ within the house itself. New thinking might well take new talent, it will also take C-suite buy-in, as well an acceptance that digital commerce is an integral part of business now, no matter how exclusive your product is.

Selling Luxury in 2013 – Does brand education lead to monetisation?

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At Cannes Lions tomorrow, Burberry’s Chief Creative Officer Christopher Bailey will ask “What if ads didn’t have to look or feel like ads?”. In a guest post, Chloé Hajnal-Corob writes about how luxury goods companies are seeking new and diverging paths in order to engage with their customers. Chloé spent time working at a fashion startup earlier in the year, assisting with the launch of a fashion hub for Vine videos, among other things. She is currently placed at Editd, a fashion data insight company.

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This spring, the House of Dior descended upon Harrods in London, one of the world’s premier department stores, for their “So Dior” exhibition and café. Last month, for one week only, Hermès had their “Festival des Métiers”, at London’s Saatchi Gallery. These two events represent a recent trend for providing luxury experiences, and though they are markedly different in some ways, they share a common goal: to drive revenues via brand education.

The “So Dior” exhibition, café and pop-up boutique took over a large designated area of Harrods alongside their usual concessions. Their presence was felt throughout, and Harrods have described the takeover as “a luxury-charged adventure combining French Savoir Faire and British charm”, the premise of which is to showcase the brand’s relationship with the store, and Christian Dior’s personal affiliation with the capital. Zeitgeist and I paid a visit, after seeing the social media hype from opening night. The event did not disappoint. On arrival, we were offered a private tour of the exhibition. What followed was a complete education into the history, heritage and identity of the brand and designers (Christian Dior, as well as Yves Saint Laurent, John Galliano and now, Raf Simons). The assiduousness and attention to detail demonstrated in the event were striking, and the quality of the experience was exceptional. It stands in particular favour given it was a free event, especially when compared with similar exhibitions such as the recent Valentino show at Somerset House, for which entrance was £12.50. We wondered if Dior and Harrods would set a precedent for luxury experiences where no fee is charged. Enter Hermès’s Festival des Metiers, which has been touring the world in a travelling circus of craftsmen, demonstrating their skills, and charging nothing for the privilege of seeing them. This harks back to how customers at high-end boutiques are treated, but without obvious intent to purchase. We are rewarded for our passion for the brand, not simply our contribution to sales.

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Dior’s exhibition excelled at presenting a linear history grounded in contextual relevancy

What is the ROI for these free events then, when the cost of execution is so high? Both exhibitions come after a lengthy stream of brand “experiences” (as noted in a previous Zeitgeist article) that represent the latest luxury market strategy for driving revenue and footfall to retail spaces, in attempt to allay fears of a mass exodus of shoppers from the street to the website. However, Dior’s CEO, Christian Toledano reportedly told vogue.co.uk at the launch party of the event: “This isn’t a marketing tool… It’s a transmission of Couture”. But these are not mutually exclusive concepts; rather they are means to the same end, and arguably an education into the brand is simply the chosen method of marketing. Indeed, Hermès openly acknowledges the lucrative repercussions these luxury experiences have. An article in the FT cites that the event, in each city, draws around 30,000 visitors, which in turn increases footfall to brick and mortar stores. A twenty percent increase, to be precise, in the week following the festival in Seattle, Washington. In a far more low-key event than Dior, these are impressive figures, particularly given that no attempt at sales was made on the exhibition site. A bespoke, or even generic, selection of products on sale at the event would likely have been very popular.

Both events encouraged significant online chatter, though neither seems to have been particularly driven by the host brands. Dior at Harrods was littered with high impact branded totems, ripe for the social media picking, and as usual, Twitter, Facebook and Instagram were filled with images and comments from the event, and now Vine, twitter’s 6-second video app, provided the ideal way to document the experiential nature of the event. It is interesting that Dior made no attempt at harnessing or leveraging the veritable mass of attention the event garnered. On investigation, I found only a limited amount of content around the event on Dior’s twitter feed and Facebook timeline. There was no official hashtag for the event and no evidence (that I could find) of any engagement with consumers who were talking about it. Hermès, though a far more low-key affair, “discreet to the point of invisible branding”, were no less well-represented in the social media space, but were almost equally poor at engineering and engaging with their online audience. The hashtag #festivaldesmetiers seems to have been widely adopted but it is completely unclear whether this was brand-driven, and Facebook interaction was limited to a single status update announcing the event. For brands that exert meticulous control over themselves in the physical space (something that was made patent in the exhibitions), it is strange that they are not attempting to implement this in the digital space, where barriers are borderless and the opportunity for damage is massive. This is a bold (perhaps naïve) move in the current climate, albeit that both events seem to have been highly successful.

It is somewhat ironic that Dior’s exhibition was held at Harrods – an obviously commercial venue, where special Dior products were available to buy – choosing to assert their mission as education rather than marketing. By contrast, Hermès chose an established art space to host their Festival des Metiers, albeit one that is often known for its consumer links, and have clearly acknowledged the potential of education as a means of marketing. Neither space is less appropriate then the other, but both are indicative of the kind of events hosted. Harrods, with its lavish window displays, reputation for luxury and labyrinthine layout, was apt for Dior’s fantastical and grandiose display, not to mention that it was intended to draw on the relationship between brand and department store. The Saatchi gallery’s minimal open space provided a neat backdrop for hosting “a rendez-vous with the Hermès craftspeople”, and apparently, sought to appeal to a younger demographic than perhaps the Hermès customer would ordinarily be. It is appropriate too, to present what can only be described as a fine art and craft, in an artistic space. It’s a notion that rival (and owner of Dior), LVMH, clearly thought worth cashing in on, since they have subsequently launched a similar initiative: the Journées Particulières, which this year will see it open 40 of its ateliers to the public for a weekend.

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Hermès attracted large crowds with its silk screen printing demonstrations

Both Dior and Hermès certainly made good attempts at getting people to engage physically (as well as virtually). The “So Dior” exhibition, and of course the café, were multi-sensorial. Beyond visual aesthetics, short films with headphones were provided, touch-sensitive technology was exploited and food inspired by Dior’s cookbook made for a wholly engrossing experience. Perfume was a key focus of the exhibition, explored from many different angles; not content with simply handing out the usual sticks of paper to smell, Dior and Harrods provided a telephone box (grey and white, in-keeping with brand décor, naturally) emitting one of Dior’s signature scents. Hermès was less immersive but more intimate; the possibility of viewing and interacting with those who create the product (and by extension the legacy), and even partaking in the sewing of scarves or ties, successfully created a feeling of exclusivity and privilege that the event no doubt strove for.

Toledano stated of the “So Dior” exhibition, “We need to explain why and how we do what we do. I want people to understand the passion, the innovation and our commitment to excellence.” In a similar vein, Guillaume de Seynes, great grandson of Emile Hermès explained: “We want to demonstrate that for us, craftsmanship is something that happens everyday.” Both brands sought to educate the consumer about themselves – Dior by making comment on the ideas and inspiration that produce the end product, and Hermès by demonstrating their commitment to the heritage of the brand by maintaining the quality of garments through skill of craftsmanship. Were they successful in their mission? Certainly; both provided real insight and inspiration. In doing so, Dior and Harrods, and Hermès’s Festival des Metiers, created an opportunity to become part of a legacy, and with this, the aspiration to turn something memorable into something wearable.

BA – Striking the right note for consumers

Having recently revamped their first class cabin with much hoopla and with an always-scintillating Rachel Weisz, British Airways might have felt quite chuffed with themselves. A lot of people, however, were left quite upset in the run up to Easter as they were left holiday-less due to the strikes by BA staff. Part of Zeitgeist was abroad, though “luckily” they were travelling with EasyJet. BA stood to lose some even more ground to it’s low-cost rivals, and when the strike was announced earlier in the year, carrier BMI did not miss a beat in its print ads. National Express also sought to capitalise on the affair. To add salt to the wound, a software developer at BA recently tried to organise a series of suicide bombings to take place during the strike.

It became clear early on though that public sympathy was, for the most part, with British Airways. This could be because the airline have had to endure strikes before, or because the flagbearer is seen as one of the last vestiges of a bygone era of empire and erudite financial control; something to be proud of. BA seized on this and decided to engage in a bit of ex-ante damage control. It should be noted that the company are somewhat digital-savvy, as evidenced by their Metrotwin which began with things to do and see in London and NYC in 2008, and which at the end of last year added Mumbai too. However they have in the past failed to correctly judge the mood of the masses, such as when they replaced the Union Jack on their fleet’s tailfins with ‘world art’.

Brand Republic reported on March 2nd that BA had asked Agency.com “to create a social-media strategy aimed at providing customers with the latest information on services should the industrial action go ahead”. They also launched a paid search campaign on Google and Yahoo! to keep travellers updated. On March 15th they launched a viral campaign featuring a YouTube video of BA’s CEO Willie Walsh, criticising the strike and “reassuring customers that flights will continue”. Separately, Lord Adonis, the transport minister “waded into the row… telling the BBC he ‘absolutely’ deplored the strike”.

On March 19th, BA launched a print campaign “to emphasise its efforts to minimise disruption to customers during the forthcoming strike”. In it, Walsh states the airline will “keep [its] flag flying”. Walsh continued to appear in a series of videos as the strike got underway, reassuring travellers that the atmosphere at Terminal 5 was “very positive” and that “very good numbers” of cabin crew were coming to work, as well as answering media criticism. A survey of 1000 people revealed on March 23rd, “the majority of those who had seen BA’s campaign have either retained or improved their perception of the brand.” On March 31st, the day after the strike ended, BA ran a print ad campaign in most of the nationals thanking “thousands of customers” for their support.

Though not flawless, the exercise was unquestionably a successful one, and stands as an example for future brands in times of crisis: don’t ignore the issue, address the consumer quickly and directly, do everything you can to get through it. Stiff upper lip and all that.

Luxury is Dead, Long Live Luxury

March 19, 2010 1 comment

A sad day for Zeitgeist today as car manufacturer Daimler announced the beginning of the end for the luxury brand Maybach (courtesy of the excellent Luxuo blog). The Maybach is an incredibly expensive, incredibly indulgent, ridiculously large and ridiculously powerful car. It’s exclusivity is second to none, to the extent that actually too few of them are being sold. Despite risqué attempts at brand activation with cutting edge artists like David LaChapelle and despite manufacturing only a hundred cars for some lines, the dream is over. How does luxury struggle onwards as the world crawls out of the recession?

The pleasure of Zeitgeist’s company was requested for ‘Artisan’ afternoon tea at Christian Dior on London’s Sloane Street this week. Luxury was front and centre. More than playing on the bling nature of the brand name, the idea was to present the fantastic workmanship that went on behind closed doors.

At the event, with the help of an Italian translator, Zeitgeist was able to speak to one of the aforementioned artisans, who was responsible for making handbags. The Florentine, wearing an immaculate white labcoat with the Dior logo above the breast pocket, said he had no quota for how many bags to produce per day or week, that Dior demanded absolute perfection instead in every bag, no matter the time taken. Though each person will have his or her own speciality, they will work across both the Dior and the Dior Homme brand. Elsewhere in the store, people worked meticulously on Dior jewellery and watches with incredible patience. The work pace of those in the jewellery and timepiece department was similarly dedicated to quality over quantity. From a branding perspective, not only does this ensure a higher rate of product satisfaction, at the same time it also helps to enforce scarcity.

While all this was occurring, waiters roamed the boutique with tripled tiered treats, ranging from caramel pastries and petites tartes aux framboises to mini cupcakes with swirls of icing. The whole affair felt very similar to that of the recent Miss Dior Cherie campaign, directed by Sofia Coppola, who coincidentally directed a very similar scene in Marie Antoinette. Dior definitely had its thinking cap when it came to integrating retail environment and through-the-line campaigns. The event next goes to Tokyo.

Elsewhere in the fashion sector, Louis Vuitton streamed its Paris Fashion Week collection over Facebook (again), and Burberry’s collection in London was broadcast in 3D. And what of luxury in general, how will it manage in a world of frozen credit? Zeitgeist recently listened in on a Datamonitor webinar called “Recovery from Recession”, (definite articles clearly not being a trend for this year according to Datamonitor). Consumption has slowed holistically because people no longer have the money, or access to borrowed money, that would allow them to make those purchases they otherwise would have done. This economic realignment – some might call it sanity – will hopefully be a relatively short-term affair. There is a worry for luxury brands however that these more frugal tendencies will become deeply ingrained in the buying habits of their potential or erstwhile consumers.

As such, there has been a trend by some brands to open up further to the masses. This has its advantages in that it can persuade people to trade up, especially concerning “everyday luxury items and treats” which are “a treat, rather than a representation of lifestyle”. “It is important that the long term image of the product is not hindered through aggressive discounting policies.” For Datamonitor, Grey Goose is a fine example of this, as it sells below retail price in the duty-free sector to great success. The fact that it is not discounted at a supermarket – where a shopper might see it every week rather than on infrequent trips to the airport – means the brand retains its premium image despite price cutting in some choice locations. Value added services, in this case a cocktail guide, also help. For those that are able to keep up their pre-recession spending uninterrupted, the trend is toward more arcane brands, such as Loro Piana. Shops like Escada, cognisant of consumer fears over reckless spending, have provided unbranded paper bags of late.

With the rather large hiccup of the recession seemingly over, luxury brands can certainly breathe a very small sigh of relief. Just how much people will want to spend on arguably frivolous products in the years to come, and, importantly, how discreet they will wish to be about it, will be a very important factor.

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