Digital: a new horizon for the luxury customer experience?
Luxury has always been synonymous with exclusivity and rarity. However, in a world where digital transformation is reshaping business practices, the luxury sector has long resisted the digital shift. Unlike other industries that quickly embraced the online world, luxury brands have been hesitant, prioritizing the unique and exclusive experience of their physical boutiques. Yet, digital is no longer just an option: by 2025, online luxury sales are projected to triple, accounting for 20% of global revenue, according to McKinsey & Company. With this shift, one crucial question emerges: can luxury and digital coexist without compromising the essence of the luxury experience? While these two worlds may seem at odds, the numbers suggest that integrating digital into the luxury customer journey could be the sector’s new frontier.
Does luxury really need to go digital?
Luxury requires a different digital strategy
While the majority of luxury brands have already embraced digital transformation, 40% still don't sell online, and those that do have yet to fully tap into their potential. On average, luxury brands are present in only 45% of key markets. This hesitation often stems from a fear of compromising the essence of luxury itself: exclusivity.
The internet, with its instant access to a vast range of products, seems at odds with what luxury represents—timeless quality and exclusivity. Unlike mass-market brands that thrive on large-scale availability, luxury houses worry that an online presence could make their products too commonplace. Rarity fuels desire and differentiates luxury from mainstream goods.
However, the real question for these brands is: where are their customers today?
Affluent consumers are online
It’s no surprise that affluent customers use the internet just like everyone else. However, where they differ is in how they use it—twice as much when it comes to research. They are also perfectly willing to purchase luxury products online. In the U.S., for example, 74% of wealthy customers had already made online luxury purchases by 2017.
Beyond purchases, luxury customers are highly active on social media. In fact, over half of them already follow luxury brands on these platforms.
But another question remains: which devices are they using to go online?
According to statistics, mobile is the preferred device. Affluent consumers follow the same trends as others, with 64.6% visiting luxury brand websites via mobile, and 50% researching premium products on the same channel. This makes mobile a highly attractive investment for luxury brands.
Study conducted by ContentSquare
In any case, luxury brand customers—or at least 37% of them—are convinced that luxury products and the internet will become inseparable in the future.
Deloitte Study
Moreover, they expect omnichannel interactions with brands, regardless of their age (75% of baby boomers and 86% of millennials).
Luxury brands must recognize the importance of a digital strategy that meets the expectations of their affluent clientele without losing their core values.
Challenges of digitalization for luxury brands
The shift to digital presents several challenges for luxury houses, which must carefully navigate maintaining their exclusivity while adapting to new consumer expectations.
- How to attract only a selective clientele?
Unlike mass-market brands, luxury doesn't aim to attract a broad audience. The challenge is to draw affluent clients while preserving the exclusivity and allure of rarity. Luxury brands must develop digital strategies that specifically target these consumers without diluting their premium positioning. This can include personalized experiences, exclusive online events, or shopping platforms reserved for VIP clientele. - How to engage millennials and Chinese consumers?
These two segments have become crucial for the growth of the luxury sector. Millennials, who prioritize experience, sustainability, and authenticity, have different expectations from traditional luxury consumers. Additionally, Chinese consumers now account for more than half of global luxury purchases. - How to retain existing clients?
Loyalty is a cornerstone of luxury, where relationships are often personal and exclusive. Recreating this proximity online is a major challenge for digital strategies. Brands must reinvent the online customer experience with highly personalized services, exclusive loyalty programs, and impeccable customer service. The ability to maintain trust and offer bespoke service, even online, is essential to retaining long-term clients.
Digital: a new opportunity for haute couture customer experience
Human connection is at the heart of luxury brand experiences
Luxury is first and foremost a unique experience, where every detail, from discovery to purchase, is meticulously orchestrated to offer an escape and a privileged moment. Emotion is the guiding thread of this experience, and each interaction with the brand reflects its values, history, and universe.
In physical stores, the human element plays a central role. Employees embody the brand and guide the customer through an extraordinary journey, tailoring each interaction to meet their individual expectations. This personalization is one of the strengths of the luxury sector.
Now, the challenge is to integrate the human touch and emotion into digital interactions, recreating that exceptional experience online.
Digital: A new point of contact
While digital might initially seem like a barrier, it is actually a remarkable opportunity for luxury houses. It offers a new channel of interaction with affluent consumers, providing a way to stay connected at all times. With technological innovations driven by the digital world, luxury brands can now become true media, conveying emotions. For instance, Cartier has successfully depicted the panther symbolizing its brand through a powerful, emotion-filled video.
Not being present online does not stop luxury consumers from using this channel—80% of them do so*—and as we’ve seen, the rise of Web 2.0 has deeply altered consumer behavior. Now "consumer-actors," social media is their preferred place to express their views on luxury brands.
*Study by Bain & Co for Farfetch
Engaging with clients through digital channels is essential to communicate and build relationships with both satisfied and unsatisfied affluent customers. In either case, the goal is to turn them into true brand ambassadors and create engagement.
The digital gift card, a newcomer born from the web, can be a tool for luxury houses to enhance customer relationships at key points of the after-sales service and extend the overall experience. By offering a predefined-value e-gift card, whether as compensation for dissatisfaction or simply to reward a satisfied customer, it can be seen as a thoughtful gesture from the luxury house. It also serves as an invitation to return and immerse oneself in the brand’s luxurious world, creating yet another opportunity for a memorable experience, strengthening the relationship with the client, and fostering long-term engagement.
Digital: a remarkable opportunity for physical luxury stores
While digital is a new point of contact, it must be seamlessly integrated into the brand’s ecosystem to deliver an exceptional and cohesive experience. Omnichannel experiences are a clear expectation among affluent consumers. 78% of affluent customers (compared to 60% of other French consumers) go online daily and use an average of 4.9 devices (versus 2.9 for others).* They expect to be able to search, purchase, and interact with luxury brands across all interfaces, at any time.
*Study by Wavestone via Digitalcorner 2017
Luxury houses are reimagining the customer journey to be both online and offline. The story, values, and vision must be conveyed consistently across both web platforms and physical boutiques. The challenge is to follow each client seamlessly throughout their journey, wherever they may be.
While online shopping is growing in importance, physical stores remain the heart of the luxury customer experience. This is why most luxury brands are crafting strategies to bring customers into their stores for purchases.
Digital gift cards offer a powerful tool to bridge the gap between online and offline. Customers who have shown interest in the brand online can be invited to the store with a fully personalized digital gift card—a welcome gesture that will motivate affluent consumers to extend their luxury experience in the physical world.
Haute couture-level hyper-personalization of the customer experience
Whether in-store or online, the customer experience can be completely personalized through new technologies. Luxury houses have successfully leveraged hyper-personalization to strengthen relationships. This new dimension allows brands to engage with each customer on a deeply personal level, further enhancing their experience.
For instance, whether a customer visits a website or enters a store, they can be immediately recognized, and their preferences will guide the experience, based on their past interactions and stated interests.
Lancôme, for example, offers an online questionnaire about the customer’s skin type and characteristics, allowing the brand to suggest perfectly suited cosmetic products.
In luxury boutiques, "clienteling" recreates the same personalized intensity found online. Sales associates, equipped with tablets that provide customer information, can deliver a unique, tailored relationship with the highest level of attention.
Other digital tools can further enhance personalization in-store. Many retailers are embracing "phygital" experiences, and luxury brands are no exception. Luxury boutiques are being redesigned to integrate digital tools that open doors to the virtual world, enabling endless possibilities for deeper personalization. For instance, Burberry’s London store has implemented digital stations where customers can personalize their scarves on the spot.
