Luxury brands have not been immune from the downturn and need to reassess their digital strategies to thrive, writes Nicola Clark.Consumers getting their Chanel fix at the luxury brand's flagship Rue Cambon store in Paris can quench their thirst with Perrier-Jouet Champagne and marvel at the marble staircase snaking up to Coco Chanel's former apartment.
Those who get their Chanel second-hand from auction websites will have a very different experience, but their peers won't be able to tell the difference.
Just as shoppers have embraced discount sites and vouchers in their droves during the recession, a growing number of consumers are looking to get the best deal on luxury brands. However, lawsuits launched against eBay by brand owner LVMH over unauthorised sales and fakes attest to the fact that luxury brands are not welcoming these developments with open arms.
Rob Feldman, chief executive of Brand Alley, a site that stocks luxury brands such as Chloe and DVF, says that consumers are accessing such goods in new ways. 'There is no doubt that consumers are more focused on bargains, whether that's buying smoked salmon from Lidl or Miu Miu from Brand Alley,' he says.
According to Feldman, the growth of discount sites has made luxury brands far more accessible. 'Many shoppers can't justify spending pounds 500 on a Chloe bag, but when they see it on Brand Alley a few months later for pounds 150, they snap it up,' he says. This is the first taste of a luxury brand for some. 'If they can see the value in the product and are happy with it, they may buy a full-price item the following season.'
Chris Gorrell Barnes, chief executive of Adjust your Set, a full-service video agency that creates digital assets for brands such as Thomas Pink, notes that luxury brands have been slow to get into interactive media; for many, stylised, photo-led campaigns in glossies such as Elle and Vogue still form their core activity. 'Burberry is one of the few brands that has a genuinely creative online presence,' he adds.
Burberry has walked a fine line, maintaining its heritage while developing its digital platforms. Few can attend its catwalk show, but streaming online directly from the event connects the brand with a greater breadth of consumers. Similarly, innovations such as its 'Art of the Trench' site has put a new spin on the classic trenchcoat, making it an instant sellout.
Marc Jacobs is another designer who has embraced the power of the web to reach a wider audience. The brand's chief executive, Robert Duffy, has been documenting the evolution of its latest collection on Twitter and replying to customer enquiries and complaints. It also streamed its autumn show live via its website and plans to launch an ecommerce platform in August.
The perennial problem for many brands remains balancing the need to grow their brand, and increase sales, with that to maintain exclusivity. Nik Wheatley, strategic planner at media agency Media Planning Group, which works with brands such as Bogetta Veneta, says: 'Many luxury brands' whole existence is built on being untouchable, unobtainable and out of reach.' This being such a central part of their identity, many have shied away from digital activity.
Extended, targeted reach
Ironically, the recession has provided the tipping point for brands that had hitherto avoided entering the ecommerce market. As the emerging markets become more crucial for growth, a web sales platform can provide brands with an entry point.
Fadi Shuman, founder of creative digital agency Pod1, says, the key issue for many luxury brands is that it is hard to convey the quality and attention to detail online. '2010 is going to be the year that luxury brands finally get to grips with digital,' he predicts. 'The likes of Matches and Net-a-Porter have been selling online for some time and there is a feeling among some brands that if they sell direct, they may risk these relationships, but this just isn't the case.'
As conspicuous consumption has fallen out of fashion over the past few years, the privacy afforded by online shopping should not be ignored Not all consumers need to be fawned over to part with their cash. In fact, Barnes claims, '95% of millionaires prefer shopping online.'
However, Nick Gray, managing director of retail marketing agency Live & Breathe, contends that while some consumers want to get any given product for the lowest possible price, for many, the value of luxury brands is derived from everything that goes with it. This includes the 'seeing and being seen' that goes with the glossy shops, heavily branded carrier bags and bows (which now sell in their own right on eBay).
This is certainly the case in high-end department stores such as Harvey Nichols, where an eclectic selection of luxury brands are carefully selected and displayed. Georgina Murray-Burton, who heads the Harvey Nichols account at creative agency DDB London, says that purchasing luxury goods is often a sensory experience that is difficult to replicate online. 'When you see the products in situ, there is an instant emotional connection with the consumer.'
For a luxury brand, being stocked in a shop such as Harvey Nichols creates a halo effect. 'It's all about trying to maintain the value in the brand, whether that's by not selling through discount sites or brands such as Levi's battling to stop Tesco stocking its products,' says Gray.
In the digital arena, it is harder to retain that control. Not only do a multitude of sites offer second-hand or discounted goods, but counterfeits are just a click away. Brands need to consider whether using inaccessibility to maintain an air of exclusivity will drive potential customers to the secondary sale market - or, worse, to fakes.
As a result, even the most elusive and high-end brands now need to rethink their strategy. In the past 12 months, a plethora of luxury fashion brands have partnered with high-street stores on diffusion lines.
While most fashion houses are financed not through the sales of their haute couture but through the perfumes, cosmetics and sunglasses that provide an access point to the average consumer, these diffusion lines provide a different point of contact.
'This is a very clever strategy,' says Gray. 'It gives the brand a second tier of distribution without affecting the top tier.' The key is that any diffusion line must not overshadow the core brand.
Ultimately, no brand is recession-proof. Dominique Moseley, magazine and luxury publishing director at the Financial Times, says there is more confidence in the luxury market this year than last. But this doesn't mean that these brands can stand still, and many believe the failure of luxury brands to embrace ecommerce is a fatal mistake.
DISCOUNT OR DESTROY?
The thought of last season's Chanel handbags going up in flames is enough to drive even the most hardened fashionista to tears. However, for many brands, getting rid of old stock, even destroying it, is essential if they are to maintain their exclusivity.
However, in the current climate, where brands are falling over themselves to prove their environmental credentials, the controversial issue of destroying stock may well become a hot potato. As the recession puts the spotlight on maximising profits, many expect more luxury brands to team up with discount retailers to sell their past season's products, rather than have them reduced to ashes.
Have you made cuts to small regular purchases to make sure you can still afford life's treats?
'We just have to save a bit longer, which is annoying, but it makes them even more rewarding when they come.'
'The impulse buys have gone, unfortunately, but I still make sure I get them one way or another.'
'The recession is a bit of a farce, really, and I don't see why we should cut back on these sorts of things.'
'I still buy them, but tend to do a bit more online research.'
'There are loads of checks and balances you can make to keep yourself in treat purchases, so yes.'
Source: Media Planning Group Fabric Research Panel February 2010.
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