The shift to digital is happening. Online shopping is already becoming the norm and everyone from high net worth individuals (HNWI) to Insta-savvy millennials is expecting a seamless, 360-degree experience when it comes to buying luxury items.
However, a study conducted by McKinsey & Company found that luxury brands only account for a mere 6% of all e-commerce revenue – a figure that is set to triple in as little as a decade. But with reputations built on exclusivity, status and heritage, isn’t it understandable that luxury retailers are resistant to jump on the online bandwagon? Well, it is soon to become a sink or swim situation; here, we give three reasons why luxury brands have to take the digital plunge …
Consumers are online
With over 90% of HNWI active on social media, luxury shoppers are increasingly spending more time online. Digital is no longer just an extension of a millennial’s shopping habits, but rather it is integrated. This is to the extent that, according to research by Annalect, 82% of shoppers continue to consult their smartphones while in-store. Ultimately, digital is where the decisions are being made.
The rise of digital marketing
While brands such as Ralph Lauren, Bergdorf Goodman and Burberry have been praised for their online presence (15% of Burberry’s online sales are derived from their click and collect service), there are still companies that continue to churn a notable marketing budget into offline initiatives. With print in decline, the future is undeniably content marketing, and luxury brands must instead explore everything from YouTube channels, to social media and the power of the 21st century blogger to enhance their revenues.
Luxury consumers don’t just want a product; they want to buy into a lifestyle. By tapping into digital, luxury brands are able to share a story and express their heritage in a way never thought possible. Fortunately, the communicative nature of social media, alongside HD videos, sharp graphics and cutting edge user experience allows shoppers into a brand’s ‘world’, in turn building bonds and long-lasting consumer loyalty.
So what are you waiting for?
According to research by ContactLab, consumers that purchase from luxury brands both online and in-store spend around 50% more a year than customers who only buy in-store. Furthermore, digital is expected to drive around 40% of the growth of the luxury market by 2020.