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Luxury report: The move to multichannel

Investing in online, particularly social media platforms, is key for retailers’ growth in the luxury sector.

With digital marketing listed high among the different areas of business that respondents invested in for 2012, it comes as no surprise that the internet, and social media in particular, are crucial to the growth of the luxury sector.

Almost 33% said up to a fifth of their business comes from online sales, while 22% said online sales account for between 21% and 40% of turnover. More than 90% expect online sales to account for even more of their total turnover in the next 12 months, with 56% citing online sales as the biggest growth area for their business. Any reservations that luxury brands had about selling their collections online have disappeared, with 100% of respondents unconcerned about their products being sold on a stockist’s website rather than a bricks-and-mortar store.

Martin Newman, chief executive of ecommerce consultancy Practicology, says these figures are encouraging and expects bigger growth for the luxury sector from online sales. “The [businesses] who take that leap are the ones that link their multichannel functions, and I’d say department stores [have a better chance] because they have a broader product proposition,” he says.

Mark Henderson, chairman of the London Luxury Quarter and non-executive chairman of British tailor Gieves & Hawkes, says click-and-collect is a “phenomenal” opportunity for luxury brands: “The majority of luxury purchases are pre-considered and that is an enormous opportunity for luxury retailers, certainly the [‘collect’] opportunity because shopping is an experience of temptation.”

Luxury brands have embraced social media – 97.1% are on Twitter; 94.3% on Facebook; 57.1% on Pinterest and 37.1% on both Instagram and Google+. Brands and indies need to step up their game though, with only 57% of brands and 45% of indies on Twitter. 57% of brands have a Facebook page, while 41% of indies do so.

Newman believes social media offers the biggest opportunities to brands “because they have a stronger relationship with the end consumer, it’s about how you leverage social media and create a community,” he says. “I question the traction of Google+, but if a brand isn’t on Pinterest, it’s missing out. Pinterest seems to have the highest level of engagement where the engagement is very product-focused. Facebook is harder – people are engaging with friends and family on it.”

Infor’s Robert McKee agrees: “Today, Facebook is a community – a very successful community – but luxury fashion companies have the ability to create their own communities. Brand loyalty in mainstream fashion is very much ‘easy come, easy go’, but luxury fashion enjoys a prestige factor that is not afforded to the mainstream. Whether it’s brand loyalty or conspicuous consumption, the merchandise is sought-after. This brand loyalty represents a group of people with like interests – or – a community. Luxury companies need to begin building their own online social communities around this brand loyalty. Listen to your communities. From colour palettes to silhouettes, your community has an opinion and they’re anxious to share that with you.”

Most businesses – 97.1% – use social media for brand awareness, which topped the list above marketing in second place, customer service in third place and sales ranked last.

It is encouraging to see that 68.6% of respondents have a daily presence on social media, with 8.6% using different platforms “more than 10 times a day”. With the purpose of social media being instant and regular engagement with customers, a strong presence on these sites is a must.

Industry view

‘It’s a powerful way to build consumers’

Guy Salter

Guy Salter

Guy Salter, Deputy chairman, Walpole

Social is a hugely influential communications channel. A lot of luxury brands are reticent about engaging with their consumers via social media, as it can be difficult to retain control. But if harnessed in the right way, it is a powerful and effective way to build a brand’s consumer base, generating customer engagement and loyalty, attracting visitors to online stores and driving sales. Everyone is still learning.

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