Tuesday, January 17, 2017

Luxury brands are struggling to adapt to the digital era

The WSJ article speaks about how luxury fashion designers are struggling to grow their brands while adapting to the digital age. 2016 marked a dismal year for the luxury fashion market, and a new McKinsey survey shows that  ~70% of surveyed fashion execs continue to have a gloomy outlook on near-term growth in the sector.

With growth harder to come by these days, companies in other markets have turned to technology and digital marketing in order to expand globally at mass scale. However, Luxury fashion brands have found this approach to be difficult because of the belief that online and luxury are very antithetical, with online being highly transactional and luxury being more qualitative and experiential. The article even went so far as to state that when digital marketing and tech become too emphasized in the brand, it can dilute the luxury experience.

I can see the point here from a transactional standpoint, but tend to believe technology and digital presence can only enhance the experience one can have with a product, whether it is functional vs discretionary luxury good. Fashion retailers will continue to be forced to turn to new types of technology and digital platforms in order to connect with tech savvy consumers who are looking for new & cutting ways to interact with brands.

I also found it interesting how some brands are toying with virtual reality to incent customers to interact online and persuade purchase decisions (they didnt reference any examples, but my imagination pictured me standing in my living room while getting fitted for a custom suit via virtual reality).

Right now success has been limited --- annual online sales of luxury fashion is forecast to increase to 12% of total sales by 2020 from 3% in 2010.


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