Isabelle Harvie-Watt, Global CEO Havas LuxHub & CEO Havas Media Group Italy, led a panel discussion as a keynote speaker on how technology is reshaping the luxury industry‘s future and how “Luxury companies need to think like disrupters” at Condé Nast International’s first Luxury Conference, hosted by Suzy Menkes in Florence Italy Thursday April 23rd, 2015.
Her insights into how technology has already changed both business and consumer sides of the luxury industry and how rapid digital development is accelerating this change was discussed with two successful protagonists in the sector: Francesco Bottigliero, CEO Fiera Digitale & e-PITTI and Reginald Brack, Senior vice president, international head of retail, watches at Christie’s.
Harvie-Watt highlighted how for the past decade luxury companies have been trying to focus concentrated efforts in cracking the digital code but not as successfully or as quickly as they should have done. She sites examples of “good digital disrupters” in the form of Apple Watch or Uber or Farfetch that give the fashion and luxury industry a potential roadmap to rethink their own business and adapt to become stronger than ever.
Isabelle Harvie-Watt said: “Luxury companies need to think like disrupters, rather than simply play defense and prove out The Innovator’s Dilemma. The industry’s success in decoding digital is now a matter of survival.”
She shared five principles that form the basis for that roadmap.
#1: Think like a platform
Examples of platforms such as Uber, Farfetch and James Edition offer new source of supply, new source of demand, and a new way to connect the two. By providing tools and infrastructure that facilitate interaction between buyers and sellers and based on the quality of these interactions, which can be enriched by curation, content, CRM or community, they offer seamless experiences that consumers covet. This new source of value (think convenience, speed or frictionless experience) disrupts the luxury industry by designing and driving adoption of new behaviors.
#2: Understand your data
Traffic reports and data management aren’t confined to the web. Smart retailers are already using in-store analytics that mirrors web analytics, tracking and measuring consumers’ movements and activities in the physical world like they do on websites. In-store passive data measurement has the power to seamlessly connect the dots between the consumers, channels, and the various lines of business within a retail organization — and it significantly contributes to a successful and optimized Omni-channel strategy. An example is designer eyewear company Warby Parker with their built in custom iPad-based point-of-sale system for use in their retail stores, which ties directly into their unified customer database. Customers who have ordered online and come into the store, will have all their data (order and prescription) at Warby Parker’s fingertips.
#3: Your Store is your marketing channel
As Angela Ahrendts has said: “I don’t want to be sold to when I walk into a store. Because that’s a turn-off. Build an amazing brand experience, and then it will just naturally happen.” She isn’t alone in her approach. Kit & Ace, a luxury active wear brand, has opened a shop in New York that doubles as a community table, place where people can eat together and exchange ideas. Menswear brand Bonobos’ GuideShops are made for showrooming. All of them sell distinctive lifestyles and use their physical settings to articulate what they are about. There’s an appeal in the consumption rituals that these brands create. It is designed both to keep customers longer in their stores and to effectively transform into cultural and social hubs.
#4: Organize for Innovation
Modern luxury companies (like Apple, Burberry, Farfetch or Ringly), aim to combine their brand with technology and with their business, branding, design and tech teams working closely together. Technology isn’t an afterthought, it’s at the core of their business. Traditional luxury companies have yet to get there. Digital commerce is still a single-digit percent of their business, and because it is small, it gets minimal attention. The vicious circle ensues and their danger of becoming The Innovator’s Dilemma case study increases. What companies like Burberry and Apple are doing right is to attract a winning mix of talent that spans many disciplines and nurture a non-linear, interactive organizational process. They live and breathe a truly customer-centric, Omni-channel approach. It guides their brand vision, strategy and brand behaviour across all their consumer touchpoints.
#5: Know your customer
Next-gen luxury consumers think about luxury in terms of experience and technology. Instead of acquiring things, they’d rather activate. Rare and authentic experiences like running ice marathons in the Antarctic or climbing Kilimanjaro are the new bling. With the experiential luxury sector consistently outperforming other sectors of luxury goods, luxury brands are challenged to become purveyors of self-expression and lifestyle. They cannot compete based on their product offerings alone. Smart brands have been quick to claim a spot in the luxury sector that is now diversified beyond fashion, watches or jewellery. In fact, $10,000 bicycles are all the rage among affluent consumers on the West Coast, just as SoulCycle is on the East Coast. Showing off your new Apple smartwatch or the latest iPhone makes you more popular than buying the latest fashion trend. The true modern luxury is all about the blend of style, craftsmanship and function and a seamless integration into the consumers’ life, regardless of whether there is an on-off switch.