D2C relationships: Key to success for luxury brands
Building direct to consumer relationships is key to a successful future for luxury brands in the digital era
Shalina Ganatra, Senior Consultant, Salmon
The retail sector is arguably one of the most competitive industries in the world, where top brands such as, Nike, Adidas, Converse, Ted Baker and many more all compete. And many of these brands vie against each other to provide the best product and ultimately secure the customer’s loyalty.
However, for luxury brands like Burberry and Tommy Hilfiger, the challenges are very different. Previously, luxury brands effortlessly prospered because their unique selling point distinguished them from the rest. Their product was like no other: high-end and of a quality that could not be found anywhere else. But that just isn’t the case anymore.
Luxury brands now face the risk of becoming digitally disenfranchised if they don’t step up their online presence and connect their physical and virtual engagement points together. Brand manufacturers have a varied level of online maturity within luxury, but many of them have only just begun to build an ecommerce arm. Take for example, the recent news that luxury watch brand OMEGA has just launched a transactional website for US customers.
Another example where luxury was slow to adopt technology is London Fashion Week. It is renowned globally as one of the biggest events in the retail calendar. Streams of designers, creatives and, of course, customers, attend the worldwide occasion which showcases the likes of Burberry, Temperly London and House of Holland. But those attending saw the latest fashion and then used to leave empty handed – not including the freebies and branded goods of course!
No longer is this a profitable environment that brands can afford to continue, and Amazon is a prime example why. Amazon is now a platform where almost 40% of online spend goes through it. Clearly, customers will no longer wait for their favourite brands to be delivered, as they expect to have products almost immediately and through a convenient channel. Increasingly retailers like Amazon and Asos are encouraging “have it now” culture with their Prime and Premier delivery services.
Luxury brands must consider how to adapt to the digital era. They need to focus on a long-term digital strategy and create a roadmap that isn’t obsessed with technology for the sake of it, but that uses the right tech to reach and engage with their customer base. In recent years, a number of shows at London Fashion Week launched offerings where clothes were available to purchase right off the catwalk. By using the ‘see now, buy now’ model, luxury brands like Burberry offered shoppers the digital services that they have now become accustomed to, and experience online. And it’s this type of innovation that will be absolutely crucial in the future.
Although luxury brands may have their strong heritage, they do not necessarily understand the technology that is revolutionising the retail sector today and is being widely adopted by fast-fashion brands. It’s still surprising today that a number of high-end brands keep their website as a store front, but don’t provide the ability for the customers to transact. Consumers are now pushing and forcing brands to change this, and be flexible in their strategy. There’s no hiding the fact that fast-fashion retailers like Asos and New Look have increased the pressure on luxury brands to make clothes available immediately.
Ultimately, it’s not just about being a luxury or legacy brand anymore that will secure customers and a loyal following. In an era where new designers and high-end labels are being created, and fast-fashion brands such as Zara and Topshop are staples in the wardrobes of high-end shoppers, the retail market, both luxury and high-street has never been fiercer with competition.
Salmon works with leading luxury brands to keep them ahead in an increasingly digital-first world.