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Luxury Brands and Social Media

Luxury brands were slow to adapt to the internet but as Coleby Nicholson reports, most now realise the importance of social media to customer relationship and branding.
Cartier
Cartier
Tiffany&Co
Tiffany&Co
Louis Vuitton
Louis Vuitton

It wasn’t all that long ago that luxury brands pooh-poohed the idea of selling goods online. While many of the world’s leading international luxury brands had impressive websites, very few had e-commerce facilities, preferring to use the internet as a marketing and promotional tool rather than a selling tool.

The main reason why high-end brands have been slow to embrace online retailing is the belief that it will destroy the aura of exclusivity. The brands chose to drive traffic to physical stores as a way of maintaining the aspirational feel and exclusivity for customers.

According to the Economist, a survey conducted by Forrester Research in 2008 showed only one third of the 178 luxury firms around the world sold their products on the internet.

“Luxury firms like to dazzle customers with plush stores and sleek ads, so that they think only about beauty and not at all about price. The web, by contrast, shines a clear light on price. ‘That’s the last thing I want people to think about,’ wails an executive from the watch industry,” the 2010 report stated.

At around the same time, Reuters’ reported luxury goods suppliers “are finally warming to the internet, lured by surging sales and a wider audience for their brands.

Executives and analysts suggest attitudes are starting to change as shoppers show a willingness to buy even the most expensive products from the convenience of their homes.”

Perhaps, as recognition that times are changing, some luxury brands have gone a step further. In 2010, Richemont, the Swiss luxury-goods giant and owner of Cartier, Montblanc and Chloe, acquired UK-based online fashion retailer Net-a-Porter in a deal valuing it at the time at £350m.

Just two years later, some luxury brands are now leaders in the use of social media, having discovered that sites like Facebook are an excellent way to build loyalty and create a buzz about their brands.

Bulgari chief executive Francesco Trapani recently told Reuters, “The internet is becoming more important, not so much to sell (products), but as a communication tool.”

High-end brands as diverse as Tiffany & Co., Burberry, Jimmy Choo, Louis Vuitton Moët Hennessy (LVMH), and Moët & Chandon champagne are all now using social media as a crucial source of information for affluent customers looking for product details and reviews, as well as ways to better engage with customers.

The Wall Street Journal even made mention of LVMH’s use and management of Facebook as a marketing medium when reporting on the group’s annual profits recently.

Thomas Romieu, group digital director for LVMH, says that it makes sense for brands to want to be on Facebook because of “the strong engagement of people on the internet”, adding that it isn’t enough to simply knock up a Facebook page and leave it at that: “Brands have to increase the value of the relationship with their customers through this medium.”

In January, Burberry Group announced a 15 per cent rise in sales for the last three months of 2012, up from £390 million in 2011 to £453 million, a result boosted by the company’s implementation of a digital media strategy.

Burberry CEO Angela Ahrendts told Luxury magazine in March, “Our investment in flagship markets and digital technology has enabled our global teams to continue to drive customer engagement, enhance retail disciplines and improve operation effectiveness, further strengthening brand momentum.”

At the time of publication, Burberry had nearly 13 million Facebook fans, close to one million Twitter followers and a YouTube channel with 34,000 subscribers.

The times have changed – initially hesitant to explore the online marketing space, luxury brands have put aside any fear of losing the ‘exclusive’ tag and embraced the marketing opportunities and free services available online.

A recent blog by Position 2, a search engine and social media marketing company, says it best: “Despite arriving a little late to the social media party, prestige brands have more than made-up for the lost time.

What gives these ’select few’ the edge over other brands is the one-on-one relationship they share with their consumers and it is this close relationship that establishes the trust between luxury brands and their customers and allows them to succeed in areas where other [non-luxury] brands have failed.”

The blog refers to a PM Digital Research’s analysis on the luxury retail market that shows social media as accounting for nearly 10 per cent of traffic to the luxury category. Although this may not seem like much when compared to the traffic sites receive via search engines and shopping sites, the figure is on its way up.

With a large percentage of high-income shoppers using online media to buy products, it has become the norm for luxury brands to have a Facebook or Twitter presence and, while initially concerned about the possibility of tarnishing their exclusivity, they have come to realise there is a happy medium.

According to Position 2, “Having to choose between holding onto their ‘exclusive status’ and venturing into the unfettered world of social media marketing, luxury brands today are trying to find the middle ground – having a social media presence, but not completely letting go.”

Some of the ways that Position 2 recommends how luxury goods businesses can make social media strategy a rich source of information and improve online content include:

Social media content
While marketers of luxury brands religiously follow the ‘Four Ps’ of marketing – Product, Place, Price and Promotion – there is one crucial ‘C’ sometimes relegated to the background: Content. One of the first rules that luxury brands need to keep in mind is that they cannot follow a one-size-fits-all approach.

Retaining exclusivity
Contrary to the myth digital marketing lowers the perceived exclusivity of luxury brands, the opposite is true. Customised web content and direct communication channels can help to bring affluent consumers closer to their favourite brands.

Power of storytelling
Interestingly, the most successful brands aren’t using social media to discuss product. Instead, they are focusing on lifestyle and brand experience.

Camouflaging unique lifestyle content in the guise of a story makes for a great read while also encouraging visitors to share content with others, thereby increasing traffic and visibility. The Chanel No.5 Night Train (Train de Nuit) video was a huge hit and generated considerable buzz online because of its impressive storytelling.

Sharing brand history
It is the rich history and legacy of prestige brands that sets them apart from their competitors. Luxury brands are using this history to show affluent audiences how their brand is special, and influencing purchasing decisions in the process.

Creating buzz
Contests are a great way to promote new products, and no one knows this better than car manufacturer Lexus. The company’s strategy to create online buzz and increase visibility during the launch of its hybrid model in 2010 saw Lexus encouraging Facebook fans to post statements about why they should win a one-year lease on the new model.

It was a perfect initiative, generating exponential online buzz and impacting positively on the Lexus brand.

Building followers
Gucci currently boasts seven million Facebook fans and 350,000 Twitter followers, excellent numbers for a luxury brand. Gucci’s strategy to build followers and fans was subtle, but impressive: the brand’s ‘12-days of Christmas’ promotion suggested 12 products that consumers could add to their shopping carts over the holiday season. That’s all. Gucci also gives its Facebook fans access to complimentary Gucci magazines via iTunes.

But what about sales?
It’s clear that luxury brands have changed their perception of social media but it’s also clear that the digital marketing landscape is constantly changing, and that the next big thing is always right around the corner – take Pinterest for example, relatively unknown only six months ago.

Facebook may well be the most-visited website in the world but, so far, it has failed to become the direct retailing channel many predicted. Countless attempts by app developers to entice fans to purchase from company Facebook pages have all failed and,right now, Facebook is still not a place for commerce.

In March, Bloomberg reported the closure of a list of Facebook stores: “Last April [2011], Gamestop Corp. opened a store on Facebook to generate sales among the 3.5 million-plus customers who’d declared themselves ‘fans’ of the video game retailer.

Six months later, the store was quietly shuttered. Gamestop has company. Over the past year, Gap, JC Penney and Nordstrom have all opened and closed storefronts on Facebook social networking site,” the report noted.

The story went on to explain that, although Facebook might have nearly 900 million members, the California-based social network “doesn’t drive commerce and casts doubt on its value for retailers.”

Sucharita Mulpuru, an analyst at Forrester Research has noted, “There was a lot of anticipation that Facebook would turn into a new destination, a store, a place where people would shop. But it was like trying to sell stuff to people while they’re hanging out with their friends at the bar.”

To this point, the so-called F-commerce experiments have all failed, and the message right now is that social media remains solely about engaging with customers, communicating brand messages and promotions, and boosting brand awareness and loyalty – it’s not about direct selling.

In a way, this means nothing has really changed. Good businesses have always done all the above, and it’s only the medium of communication that is now different. Social media has made it easier and cheaper to reach a far wider audience and, when done well, it’s far more effective than traditional promotional channels.

If luxury brands have embraced the digital age, then surely the time has come for small to medium jewellery businesses to embrace it also. Yes, it might not be about making a sale right now but the “right now” sentiment from three years ago was for luxury brands to thumb their noses at the internet. Times change, and online they change quickly.

Considering the vast number of people working on the problem, the question is no longer will the online world be able transform those social media fans into direct shoppers but whether retailers will be prepared when that transition finally does happen?
 

Chanel No. 5
Chanel No. 5

It wasn’t all that long ago that luxury brands pooh-poohed the idea of selling goods online. While many of the world’s leading international luxury brands had impressive websites, very few had e-commerce facilities, preferring to use the internet as a marketing and promotional tool rather than a selling tool.

The main reason why high-end brands have been slow to embrace online retailing is the belief that it will destroy the aura of exclusivity. The brands chose to drive traffic to physical stores as a way of maintaining the aspirational feel and exclusivity for customers.

According to the Economist, a survey conducted by Forrester Research in 2008 showed only one third of the 178 luxury firms around the world sold their products on the internet.

“Luxury firms like to dazzle customers with plush stores and sleek ads, so that they think only about beauty and not at all about price. The web, by contrast, shines a clear light on price. ‘That’s the last thing I want people to think about,’ wails an executive from the watch industry,” the 2010 report stated.

At around the same time, Reuters’ reported luxury goods suppliers “are finally warming to the internet, lured by surging sales and a wider audience for their brands.

Executives and analysts suggest attitudes are starting to change as shoppers show a willingness to buy even the most expensive products from the convenience of their homes.”

Perhaps, as recognition that times are changing, some luxury brands have gone a step further. In 2010, Richemont, the Swiss luxury-goods giant and owner of Cartier, Montblanc and Chloe, acquired UK-based online fashion retailer Net-a-Porter in a deal valuing it at the time at £350m.

Just two years later, some luxury brands are now leaders in the use of social media, having discovered that sites like Facebook are an excellent way to build loyalty and create a buzz about their brands.

Bulgari chief executive Francesco Trapani recently told Reuters, “The internet is becoming more important, not so much to sell (products), but as a communication tool.”

High-end brands as diverse as Tiffany & Co., Burberry, Jimmy Choo, Louis Vuitton Moët Hennessy (LVMH), and Moët & Chandon champagne are all now using social media as a crucial source of information for affluent customers looking for product details and reviews, as well as ways to better engage with customers.

The Wall Street Journal even made mention of LVMH’s use and management of Facebook as a marketing medium when reporting on the group’s annual profits recently.

Thomas Romieu, group digital director for LVMH, says that it makes sense for brands to want to be on Facebook because of “the strong engagement of people on the internet”, adding that it isn’t enough to simply knock up a Facebook page and leave it at that: “Brands have to increase the value of the relationship with their customers through this medium.”

In January, Burberry Group announced a 15 per cent rise in sales for the last three months of 2012, up from £390 million in 2011 to £453 million, a result boosted by the company’s implementation of a digital media strategy.
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ABOUT THE AUTHOR
Coleby Nicholson • Managing Editor

Managing Editor • Jeweller Magazine


Coleby Nicholson is publisher and managing editor of Jeweller magazine. He has covered the jewellery industry for more than a decade and specialises in business-to-business aspects of the industry.

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