“A majority of luxury brands still rely heavily on traditional channels,” said Dan Carter, vice president and senior creative director at Jack Morton Worldwide. “Digital and social media don’t live in the forefront of their mind. The recent slowdown of sales in the region, particularly in China, may even result in a smaller budget on digital marketing.”
While a few digital-savvy luxury brands, such as Burberry and Estée Lauder, have been boosting their investment in digital marketing, the rest are still playing catch-up to the multichannel game - e-commerce to mobile apps and social media.
Christian Louboutin, a high-end French footwear label, recently tapped into Chinese social network Sina Weibo and video-sharing sites Youku and Tudou to expand its digital presence.
Luxury isn’t for everyone, but social media is, which means labels in the category face a unique dilemma. Social media requires frequent content but if a brand is too accessible, then by definition its exclusivity could diminish.
“Localising a digital strategy for Asian markets requires much more than translation skills, as the digital landscape is fragmented in the region,” said Pablo Mauron, general manager China at Digital Luxury Group. “Asia has such a big population that brands can easily be fooled by numbers. The right mix between quantitative and qualitative key performance indicators is required.”
Etienne Chia, digital director at Jack Morton Worldwide, agrees that luxury brands should seek a sweet spot between producing quality content and over feeding an audience.
“The solution to that is to share passion with consumers, rather than talking too much about products, being too sales-driven,” he said.
The danger of not having a dedicated social media platform is that fans have the ability to create their own online communities where brands have no control, making it even harder to maintain an elite image. To stay in the driver’s seat, luxury purveyors need to establish a social media presence as well as e-commerce sites.
Apart from efforts to control public image, most of luxury brands lack dedicated online shopping sites in Asia. Issues including logistics, payment platforms, security and price control all play into the dynamic.
“Luxury brands are now more open about e-commerce in Asia, since it is a reality for some of them and a concrete plan for the others,” said Mauron. “The next challenge will be to build the trust between a brand-operated platform and the consumers, as well as to find ways to drive sales without promotions or discounts if that is not in the DNA of the brand.”
Some luxury brands choose to partner with third-party e-commerce sites.
Lanvin recently partnered with ShangPin, a members-only online shopping mall, to enter the e-commerce arena in China. The French atelier can have its own flagship space in the upmarket digital venue. The site also hosts online premium stores for Prada and Burberry and works with a number of prestigious names, including Chanel, Valentino, Fendi and Bottega Veneta.
The tactic could be a safe bet, compared to launching self-driven e-commerce sites, but it puts a major constraint on brands. Outsourcing the channel means companies cannot provide personalised customer services, which are a key element of the luxury experience and part of the foundation of appeal for the segment’s consumers.
Furthermore, digital venues, especially social media, have become a key platform for brands to deliver superlative customer experiences and gain consumer insight.
Anna Gamvros, a partner at Baker & McKenzie, pointed out that many luxury brands face the challenge of replicating the brand experience of a physical store in an online environment. The difficulty is why the segment’s engagement through digital channels, including social media, is slower and more cautious than for other retail sectors.
Nevertheless, there is increasing demand for luxury experiences, online and offline, as Asian consumers become more sophisticated and knowledgeable.
“Instead of above-the-line ads, brands should create rich experience and cultures, which can be owned by brands,” said Chia. “They also need to make sure the investment is on people who understand the brand culture and DNA.”
However, the high level of activity on social media platforms makes it tougher than ever for brands to stand out from competitors. Developing a good social media strategy and deploying the right tactics is only the base.
“Media investment and synergies with other strategic channels (online or offline) is also required,” said Mauron. “Also, a digital team working for a luxury brand, no matter if it is in-house or with an agency, should have the same knowledge and understanding of the brand that the sales staff have.”
Gamvros also stressed that when brand communication on social media steps up to the next level, pushing out more marketing messages and engaging with reviewers, it is important for companies to have transparency, especially concerning celebrity endorsements or paid reviews.
More people reside in the globe’s digital realm and anyone and everyone can influence opinion in the space. The potential pitfalls may be greater for luxury brands but so too are possible rewards. Done right digital engagement can make customer relationships more personal while simultaneously growing sales volume.