November 14, 2016

Three Reasons Luxury Brands Should Invest in Mobile

Every brand believes that luxury fashion brands are ripe for digital innovation, and brands that resist doing so will find themselves struggling in the future.

high-heels-shoes-luxury-rich.jpgA few weeks ago, our staff attended the very first Glossy Forum, a one-day conference examining the role of digital innovation in the luxury fashion industry. Livia Marotta, former vice president of digital at Bulgari, said in a keynote address that “digital can cause panic” for luxury brands. She noted that many avoided online business because they saw it as a risk to their identity as being “high luxury,” but now need to adapt to how younger customers want to shop. “Decisions to adapt new technology for old-school luxury brands takes a long, long time,” she said. “Brands need to treat sales as one entity and stop separating the two channels.”

Luxury retailers don’t face the same challenges that their mid- and lower-tier brethren face in part because they didn’t fall into the promotional trap that is currently tormenting Macy’s, J. Crew and others. Luxury does not draw customers in through discounting; generally high luxe is not promotional and it never will be. Sales for many luxury brands have risen lately—Gucci and YSL saw 17% and 39% jumps in comparable third quarter sales over the prior year, respectively—which puts them ahead of lower-priced retailers too.

Ironically, fashion is not an industry known for being experimental in its business. The most successful brands thrive with an image of exclusivity, with a select clientele drawn to its physical locations for a luxurious experience, enjoying a sparkling water with lemon while their couture items are pulled together. This commitment to experience and the relative stability of the market makes this the perfect time for luxury brands to modernize and invest in mobile, with a focus on engagement over revenue. These three reasons show why brands that focus on mobile in the next six to twelve months will reap benefits.

Reason 1: Nurture new audiences

The average U.S. luxury shopper is 37 years old, according to research Forrester published in 2015, whereas in Asian markets, the average luxury shopper is in the most coveted 25–34 demographic. This may not be purely a function of affordability. Luxury brands have hesitated to add e-commerce because they felt it degraded brand equity, but they’ve done so at their own peril.

In August, eMarketer found that more than one-third of U.S. consumers who searched for fashion inspiration on a mobile phone purchased items immediately, using their device. Forty percent of consumers looking online for fashion inspiration purchased in stores—but to capitalize on that audience, a brand needs to have a mobile presence, whether it’s a mobile-optimized site or a content-driven SMS approach. That’s a huge chunk of opportunity that luxury brands are overlooking in the name of image.

There’s also value in nurturing aspirational audiences. Affordable luxury brands like Rebecca Minkoff and Tory Burch have seen their fortunes rise by targeting a group of Millennials colloquially known as HENRYs—High Earners, Not Rich Yet. Luxury brands that want to focus on driving brand awareness and growing engagement beyond stores would benefit from developing a mobile strategy to get on the radar of HENRYs. Planting seeds now in younger consumers, particularly women, who are currently high earners and fashion forward could reap huge results for luxury brands invested in engagement.

Reason 2: Good content drives engagement

As an industry driven by image, fashion has a particularly unique opportunity for mobile marketing. Luxury brands already produce lookbooks and runway shows. They create vibrantly photographed fashion spreads, videos from runway shows, and collaborations with celebrities and publications. This is a perfect opportunity for luxury fashion brands, low and high, to turn existing assets into an engagement driver.

As more brands test their “Shop the Runway” concepts, mobile messaging provides a simple way to drive engagement in Fashion Week while also testing the concept behind traditional marketing methods.

For example, a fashion house experimenting with Shop the Runway could set up a mobile messaging list and send an animated gif featuring highlights from their most recent runway show. The message could include a link to a mobile-optimized Shop the Runway landing page. The content already exists; this simply provides a new method for delivery, one that feels as modern and forward-looking as the concept it’s promoting.

For fashion houses that sell limited edition collections—like Alberta Ferretti or Kanye West’s Yeezy sneaker collab with Adidas—the ephemeral nature of their product matches up nicely with the immediacy that mobile messaging pushes. When collections are limited in scope and sell out quickly, letting high-profile customers know immediately when they’re available (or giving them early access) creates even more urgency.

Reason 3: There’s an untapped market for mobile luxury

High-end fashion brands have been reluctant to invest in e-commerce, including mobile, for two main reasons: one, many of them are older businesses that are notorious for moving slowly and resisting change, and two, a number of them regard selling items on the Internet as gauche as synthetic fiber blends. But there is significant opportunity available to luxury brands in e-commerce and mobile—and significant risk if they choose not to invest in it.

Earlier this year, Yoox Net-a-Porter, one of the few pure-play e-commerce sites for designer clothing, revealed that more than one-third of their revenue came from just 2 percent of their customers. Their CEO also indicated they saw themselves as a mobile-first company within the next three years.

Part of Net-a-Porter’s appeal certainly comes from being mostly alone in the marketplace. But luxury global sales are expected to grow 2–3 percent a year, according to Bain and Company. A 2014 McKinsey report found that while luxury sales only grew 2 percent over 2013, online luxury grew 20 percent in the same time period. Being present has been an advantage for Net-a-Porter, and luxury brands that offer a strong mobile presence with robust e-commerce can likely see similar advantages.

Recent data shows that a significant portion of fashion shoppers, particularly millennials, follow a buyer’s journey, typically beginning with research on a mobile device, before committing to buy a product. McKinsey found in its 2014 study that approximately 40% of all luxury purchases were influenced by digital activity, with more than half of luxury shoppers’ search activity taking place on a digital device.

For those brands that still see e-commerce as less than luxurious, mobile is a critical way to nurture customers searching for products or looking for more information into their stores.

Even high luxe needs to innovate or die

For high fashion, exclusivity and trendsetting is everything. Their business depends upon seeming like they’re on the cutting edge. For years, luxury brands have justified minimal online presences by arguing that high-end shoppers would want the top-flight customer service that only a brick-and-mortar location can provide. Those days are over. Luxury brands, like all other brands, need to move with the times or prepare to be left behind.

Mobile optimization gives brands an easy way to retain their brand identities without sacrificing modernity. For brands that rely on word-of-mouth or engaging customers through the personal touch, SMS makes particular sense, as it allows brands to engage customers in a direct, one-on-one conversation. A good SMS platform will support segmentation and personalization, delivering customers a customized experience designed to make them feel as if a brand truly knows what they want.

Luxury brands who put these practices into place will see their engagement grow—and they won’t necessarily need to commit to an expensive advertising campaign or, zut alors, run any kind of promotion. They simply need to use their content to create an engaging message that resonates and makes their intended audience feel special. This will drive brand engagement and possibly even more revenue.