The New Normal: For Luxury Brands, A Digital Uplift Is Long Overdue

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For too long, luxury brands have been observing digital disruption from their elevated safety zone- or so they thought. Fearing that the online sphere could hurt their exclusivity, they clung to their brick-and-mortar model, and embraced digital much too cautiously. But their comfort zone is being swept from under their feet.


Luxe labels’ glossy shops have been losing their luster. Footfall dropped by 20% in early 2016, according to Move Now Commercial Brokers, a Germany-based firm that gives real estate advice to high-end retailers. And in China, most luxury brands shut down stores last year, with Maserati’s Beijing showroom, 20 Hugo Boss stores and five Gucci locations locations among the casualties. Dwindling Chinese and Russian demand, low consumer confidence in Europe and the US, and tectonic shifts in consumer behavior are making it impossible for luxury brands to go on resting on their laurels. Since 2014, the sector has been growing at a much slower pace, described by Bain as the “new normal.”

Amid such a state of flux, it makes more sense than ever for luxury brands to turn to digital for salvation. Brokerage firm Sanford C. Bernstein predicts that web sales of luxury goods will grow twice as quickly as the overall luxury market by 2019.

Related: Infographic: Digital Vs Traditional Media – A Consumer Shift

Yet Chanel continues to sell only its perfume and skincare ranges on its online shop. Prada resisted selling on Net-a-Porter’s European platform until August this year. And only 36% of prestige watches and jewelry brands in the U.S. have an e-commerce channel, compared to 76% of more affordable labels, according to a report by business intelligence firm L2.

The unrealized growth potential of online channels for high-end retail is massive. But to unlock it, luxury brands have to realize once and for all that today’s affluent consumers are a whole new breed, with needs and priorities that the in-storeonly shopping model is out of pace with.

Here are three key expectations of the modern luxury buyer that can only be fulfilled through solid digital strategies.


Today’s constantly connected, tech-savvy and social-media-empowered consumers want the freedom to discover and purchase products whenever, wherever and however they want.

Radical innovators such as Uber, with its on-demand rides, and Amazon, with its 1-Click payments and ultra-fast delivery options, have been raising the levels of convenience that buyers take for granted. And luxury brands will have no other option than to follow suit.

Until now, Burberry has stood out as one of the few industry players daring to reimagine the traditional supply chain. Its strong digital push and bold move to make its catwalk collections instantly available online and offline give a glimpse into the future of high-end retail.

Fast and seamless payment, pick-up, delivery and returns systems -possibly operated by drones and artificial intelligence technologies- will eventually become the bare minimum.

Yes, refashioning supply and distribution require -apart from courage and imagination- sizeable IT and logistics budgets. But these investments are lower and less risky than the fixed costs of the old brick-and-mortar model, which are not only prohibitively high but also make companies extremely vulnerable to regional downturns.

In an industry that makes high-value goods in very low qualities, many labels won’t have the necessary scale to bring e-commerce in-house, but that’s no excuse to lag behind. They can outsource their online channels to multi-brand platforms. Market research firm Technavio found that multi-brand retailers have been better than single brands at providing services such as free shipping and easy returns, and will be the drivers of luxury e-tailing growth from now until 2019.

Related: Making Alliances Work For The Luxury Brand


More than ever, consumers are thirsty for unique, shareable experiences. To keep them hooked, their path to purchase must be filled with meaningful moments. As sales continue to shift online, physical stores will increasingly become spaces for branded experiences rather than points of purchase. The Marc Jacobs café in Milan and The Polo Bar by Ralph Lauren in New York are preludes to this convergence between retail and leisure.

Just like physical stores, e-commerce platforms will also have to move beyond pure sales. Through rich content, good curation and creative interaction, online channels can magnetize consumers who are on a constant lookout for inspiration and trends.

Tiffany & Co. created a Snapchat filter that allows users to try on their diamond rings through the app, and Valentino often takes Snapchat viewers on virtual tours of its showrooms around the world. Now that Pokémon Go has brought augmented reality into the mainstream, the commercial possibilities for digitally enabled experiences seem endless.

Multi-brand and multiproduct platforms have an even better chance of becoming hubs of inspiration because they can appeal to different aspects of a consumer’s identity. A man who has a thing for luxury watches is more likely to become engaged with a platform that also speaks to his interest in art and vintage furniture, than to a mono-brand watch website.


The need for personalized and exclusive goods and services has always been and will always continue to characterize wealthy consumers. Although luxury brands have traditionally feared the commoditizing effect of the web, digital -done right- has the power to not only replicate but even to enhance the industry’s targeted, exclusive offerings.

The success of online capsule collections, such as Gucci’s 18-piece handbag line on Net-a-Porter, has proven that wealthy consumers can still feel the rush of acquiring hard-to-get items even if all they have to do is click for it.

The fear of not giving customers personalized treatment is equally misplaced. With the wealth of data generated by digital channels, it’s easier than ever to tailor products and the entire brand experience to users’ personal preferences. Online luxury retailer Farfetch discovered, through data, that men made up 40% of their customer base, and then adjusted their offerings accordingly.

Disruptors in other industries have already leveraged data mining, social media interaction and logistics technologies to tear down cracked systems and build new ones. Just like Airbnb and Uber, the future winners in the luxury retail space will be those who are guided by the unfulfilled needs of today’s consumers, not by their old success formulas.

Related: Marketing To A High-End Consumer, Using The Luxury Strategy

Andreas Skorski

Written By

Andreas Skorski is the founder and CEO of THE LIST, the Middle East’s leading marketplace for luxury goods. Currently based in Dubai, UAE, Andreas started his first tech company in Germany at the age of 17, and has since successfully founded and invested in several lifestyle and tech startups.