Luxury ReCoded /

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now / next / why / luxury recoded /

Luxury Recoded /
Shifting demographics and technology adoption mean
luxury brands are forging new ways to connect with
customers, who are changing how and indeed why
they shop for prestige brands. The purveyors of the
worlds finest products are starting to reimagine the
luxury brand experience for the digital age in order to
keep pace.
By Dan Southern /
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Now / Digital technologies, and social in

particular, are often seen as being at odds
with luxury brand culture, which places a
premium on exclusivity and timelessness.
However, luxury brands are rethinking
their offering to satisfy the changing
expectations of a digital-first generation,
who are discerningly discreet about their
luxury purchases and favour self-fulfilment
over status symbols.
Next / New, tech-driven personalised luxury
services are set to emerge, that serve the
unmet needs of these new high net worth
individuals. Luxury brands are increasing
spend on digital more aggressively than
their mass market counterparts and a new
marketing manifesto for the sector is being
written. Expect investment that sets new
standards in the digital realm.
Why / Luxury customers are increasingly
technology proficient. As the market for
luxury becomes ever more globalised,
younger, multichannel customers are rising
in influence, driven by the need to use
luxury as an interface for a more unique life,
and a better sense of self. Brands that step
in to create extraordinary, tech-enabled
experiences will be better equipped to
connect with this changing audience.

Honest By /
 now / next / why / luxury recoded /
Landscape /
Luxury brands have proven resilient through the
turbulence that continues to beset the global
economy. In Contagious magazine issue 32 we
reported that in the year to May 2012, the tAg
Luxury stock Index (tracked by research, banking
and consulting firm telsey Advisory group) increased
9.7%, outperforming most major indices by over 7%.
Buoyed by the growing wealth of emerging markets
and resilience in europe, its biggest mature market,
the luxury sector (inclusive of goods, experiences
and cars) is now worth $1.4 trillion globally,
estimates global management consulting firm Boston
Consulting group.
We just naturally started asking ourselves
on every single thing we did, how do
we make it more connected, how do we
make it more digital?
reasons to be cheerful then, right? unfortunately,
the picture isnt all ros champagne. In 2012,
Burberry, LvMH and tiffany have all posted results that
raise doubts about the global demand for expensive
products, in particular highlighting slowing demand in
China, whilst analysts at HsBC have suggested that
tourists, mainly from Asia, account for between 35%
and 60% of luxury sales in europe.
this is forcing marketers to wake up to the challenge
of addressing shifting customer demographics,
rewriting their marketing handbooks as they go. As
well as adapting to a more globally balanced market,
they are having to aggressively court a digital-
first generation of newly wealthy millennials whilst
also retaining traditional markets such as the baby
boomers and gen xers who are changing the ways in
which they shop.
Make it more digital /
British luxury fashion house Burberry has been at
the forefront of the recoding of luxury. Ceo Angela
Ahrendts and chief creative officer Christopher
Bailey are spearheading a visionary overhaul of
the 156-year-old company, focusing on a younger
customer profile. In emerging markets, the company
has found that customers are on average 15
years younger than in mature markets. Meanwhile,
American express Business Insights data for 2011
has showed that while gen y consumers (those
born after 1982) account for 3% of luxury fashion
sales, they are increasing spend at a rate of 33%
per year. As a result, Ahrendts and Bailey have been
on a mission to change the way Burberry connects
with consumers: We just naturally started asking
ourselves on every single thing we did, how do we
make it more connected, how do we make it more
digital? Ahrendts recently told Fortune Magazine.
From its own social network Art of the trench, to
Instagramming its once-exclusive catwalk shows live,
everything Burberry does now reflects a digital first
organisation and it spends 60% of its total marketing
budget on digital, three times the amount spent by
the average company, according to Retail Digital. Its
new flagship store in London reflects this, providing
shoppers with an immersive luxury experience (see
case study, below).
Offline to online influence /
Many other brands are following Burberrys lead
and creating a digital footprint in step with the lives
of customers though not necessarily just to court
shoppers at the younger end of the spectrum. In
research from the IAB, 79% of affluents strongly
agreed or agreed with the statement that over the last
10 years my life has become increasingly intertwined
with technology. Indeed, smartphone penetration
amongst affluents in the us is around 60%, compared
to 48% of the general population, according to market
research company Luxury Institute.
 50 / 51

Burberry / regent street

now / next / why / luxury recoded /
Landscape /
With the growth of the mobile web and devices,
luxury shoppers like the rest of us have been
putting new tools and media to good use, researching
products on the go, discussing them with friends,
comparing prices, and buying through new devices
too, uninhibited by lofty price tags.
the brands they buy are responding in turn. once
criticised for not investing enough in digital, luxury
brands are shifting the focus of their marketing spend
towards digital more aggressively than other brands,
according to research from new york-based digital
agency Martini Media. Little wonder: high net worth
shoppers who use the internet as part of their customer
journey are valuable and growing in influence. recent
research from McKinsey and Co highlights estimates
that pure online sales, currently accounting for 3.2%
of global luxury sales, are growing three times faster
than global luxury sales overall. Whats more, 20%
of total offline sales in-store are influenced by online
experiences, such as via microsites, blogs, third party
retailers and advertising.
Meanwhile, Amex Business Insights suggests that
although multi-channel shoppers made up just 13%
of luxury fashion shoppers in 2011, they generated
38% of total luxury fashion spend.
As seen on social /
Big brands are taking note. PPR, LOral and BMW
are all major players in the market with significant
ecommerce projects underway (BMW is aiming to
be the first luxury automotive brand to sell cars direct
to consumers online). some are proving brave in the
social space too, aiming to engage customers sooner
in their decision process by developing presences
and voices on Facebook, twitter, Instagram and
Pinterest.
Far from diminishing or diluting luxury brands, the
best examples of engagement marketing in this sector
create innovative ways for users to be part of a brand
experience without paying the hefty price tag. Whilst
this might not be the most targeted of approaches,
it creates access to the brand for potential future
customers.
Harrods recently ran a Be the Buyer programme on
its Facebook page, live streaming Burberrys catwalk
shows and asking fans which products it should stock.
Meanwhile Oscar de la Renta used Pinterest as a
way to deliver live content to fans (see case study,
below). Alex Bolen, Ceo of oscar de la renta, told
Mashable: As with all of the experiments we try here,
we want people to spend time paying attention to us,
not our competitors.
Identifying a sense of purpose on social helps
brands avoid the trap of becoming a babbling brand
(i.e. talking at people without listening). Its a trap that
some luxury brands are falling into. research from
L2, a luxury think tank, estimates that the average
interaction rate or the percentage of a Facebook
community Liking or commenting on luxury brand
posts has dropped a significant 50% year-over-year.
this may be to do with the fact that some 20% of
prestige brands still do not engage in any two-way
conversation, whilst one third prohibit fan posts on
their Facebook walls.
Perhaps Facebook leaves too little room for
creativity for luxury brands that are keen to express
a sense of style and demonstrate discerning taste.
Instead, these brands are responding to a flourishing
visual culture the rapid rise in the taking and sharing
of pictures online. Forty percent of the Interbrand top
100 brands are now on Instagram, itself now a part of
the Facebook family. And of the most popular, luxury
brands feature heavily, with Burberry, Tiffany & Co.
Herms, Gucci, and Armani amongst the most highly
engaged, with casual but stylised photographs that
lift the lid on their products and day-to-day business.

Authentic experiences /
Experiential luxury is increasingly important to
customers who want to be defined less by what they
own, and more by the experiences that theyve had and
who they are. Experiential purchases (including art,
travel and leisure) account for over 55% of the overall
luxury market, according to Boston Consulting Group,
and this area is growing 50% faster than luxury goods.
According to its research, experiential purchase growth
is even outpacing goods growth in China, where luxury
purchases remain a mark of status and power.
Meanwhile, research from Unity in the US has found
that American consumers are more than three times
as satisfied with their luxury experiences as they are
with their purchases of personal luxury goods.
If luxury-goods players are to capitalise on the
experience trend, they have to move quickly and
forcefully, says Jean-Marc Bellaiche, senior partner,
Boston Consulting Group. To date, very few have
been successful in adding experiential elements to
their offerings, websites, or in-store execution. While
the lack of such elements may not yet be hurting the
providers financials, it is a missed opportunity to
boost performance.
52 / 53
Harley Davidson / authorised tours
Gucci and Louis Vuitton have been focusing
on experiential luxury as a way of helping connect
customers to their brand stories. Last year, Gucci
opened a museum in Florence, dedicated to exploring
the brands origins and preserving items from the
houses history. What really sets Gucci apart is that
it can count upon both a rich history and a reputation
for innovation and fashion authority, Frida Giannini,
creative director, told Dazed Digital last year. It is this
duality that we are celebrating particularly with the
opening of the Gucci Museum in Florence.
Taking a more radical approach, some luxury brands
are diversifying into experiential business. Mercedes
has tapped this trend, working with brand consultancy
Wolff Olins. It offers bespoke travel experiences
across Europe in its classic Gullwing models to
wealthy Chinese customers keen to see the continent
by road. Likewise, Harley Davidson has launched
Authorised Tours, curating and delivering authentic
two-wheeled travel experiences on the ultimate
American machine for travellers around the world.
now / next / why / luxury recoded /

Case Studies /
Burberry World Live, London /
Experience the digital-physical blur Contagious Insight /
Burberrys flagship is ambitious, matching the
uncompromising approach of its Ceo Angela
Ahrendts and CCo Christopher Bailey in
creating a truly digital company. Its role as a
multipurpose space aligns with luxury customers
desire for experiences: it is built as a space
that tells the brands story in a theatrical way. It
is also equipped for the practical requirements
of shoppers who make no distinction between
channels. they simply want seamless customer
service wherever they meet Burberry. shop
assistants cant be expected to remember the
name of every customer, but by equipping them
with the right data, Burberry is poised to deliver
the personalised and frictionless shopping
experience of the future.

Louis Vuitton / Art of Packing

Burberrys new flagship on Londons regent street
blurs the digital and physical with a shop that is part Louis vuitton has launched a website that teaches
event space, part innovation hub, part store. the travellers top packing tips while letting them virtually
brands largest store to date reflects all the elements pack some of the brands iconic luggage.
of its online Burberry World, and the various content
and services that can be found there such as Art
of the trench and Burberry Bespoke. shoppers
can explore an immersive digitally-enabled luxury
experience: clothes with rFID tags woven in trigger
video content relevant to the product on mirrors and
shop assistants are equipped with iPads connected
to shoppers history and preferences, allowing for a
more personalised service. Customers can also buy
items online, and then pick up their purchases in-
store. the space, a former cinema, allows Burberry
to bring some of its event-based concepts in-store,
such as runway to reality, the brands approach to
allowing Burberry guests to purchase items via an visitors to the Art of Packing site can choose to
iPad directly from the catwalk. pack one of three monogrammed Lv bags the hard-
sided Alzer model, the rolling Pgase suitcase or the
lightweight Keepall. the users must then pack the

Louis Vuitton-branded clothes and accessories in the
correct order and while corresponding packing tips
are dispensed along the way. They are, for example,
advised to button up and unfold the collar of a jacket
to reduce creasing. They can also go through step-
by-step guides to packing different items of clothing
depending on the different bags they are using.
Contagious Insight /
Louis Vuitton himself started out as a trunk packer
for the wealthy, so this interactive site is not only
steeped in practical packing insights for all, but
abounds with narrative about the brand itself.
It also complements some of the brands other
handy travel related touchpoints such as its city
guide books and Amble mobile travel guide app.
The Art of Packing is an excellent product demo
for Louis Vuittons travel bags and clothes, and
also the luxury, jet-setter lifestyle that the brand
represents. The packed bags make you long for
the organised beauty that comes with having
separate monogrammed holders for all your
belongings, rather than the crumpled mess that
most travellers end up with.
Oscar de la Renta / Bridal Boards
Fashion house Oscar de la Renta turned to Pinterest
to build interest in its recent bridal fashion catwalk
show, one of the most significant showcases in the
brands calendar.
During the immediate lead-up to the event, images
began to populate a designated bridal board on the
Oscar de la Renta brand page, allowing fans of the
brand and weddings to follow all the behind the
scenes action. Shots of models getting their hair
done and makeup applied were joined by shots that
showed the final touches being added to their outfits
before the show began.
54 / 55
Once underway, shots from the runway itself showed
the results of the hours of preparation as the models
adopted their most ethereal expressions to show their
dresses to the live audience.
Contagious Insight /
Pinterest is the perfect platform for Oscar de la
Renta, because thats where its target audience
is. The site has become a focus for brides
gathering inspiration and creating moodboards
for their own weddings, so it makes perfect sense
for this brand not only to reflect their enthusiasm,
but also to bring those women a little closer by
offering what is effectively an insiders view of
the event. In that respect, this activity mimics
Burberrys groundbreaking Tweetwalk, where
it Instagrammed backstage images of catwalk
looks for its followers so they could see the styles
before the VIPs in attendance.
Oscar de la Renta has previously used Tumblr
for similar coverage of its events: we like its flexible
and adaptive approach to social, identifying clear
space and using new territories as they emerge
to keep pace with users.
now / next / why / luxury recoded /
Case Studies /
Vault Couture / Personal Clothes Library
vault Couture is a London-based startup designed
to help wealthy global travellers catalogue their
wardrobe, keep their clothes in immaculate condition
and have items delivered to them wherever they are
in the world. subscribers to the service are able to
view their wardrobe, broken down by item, on an iPad.
In addition to viewing items, they can pull together
favourite looks and review wear history so that they
arent caught in the same look more often than is
desirable. vault Couture will also store an entire
wardrobe for subscribers in controlled conditions.
should a user be caught without the right frock for
that last minute invite to a gala, vault Couture will
arrange for the appropriate items to be couriered to
the users hotel door.
Contagious Insight /
this is a piece of remarkable service design, based
on deep insight into luxury customers, their unmet
needs and the pain points that might characterise
the lifestyle of HnWIs. As marketing as service
design (explored in our last now / next / Why
sessions) becomes an increasingly important
strategy for brands that want to add value into
the lives of consumers, vault Coutures approach
here demonstrates that even in the highly serviced
world of luxury customers, there are challenges
and issues that companies can solve.
 56 / 57

Honest by / Granular Provenance

Belgian newcomer Honest by was launched in
January 2012 by designer Bruno Pieters with the
unique stance of being completely transparent about
its supply chain and pricing.
Every item featured in the collection shoes
and apparel is accompanied by an exhaustive
breakdown of the exact provenance and cost of each
and every component part used in its manufacture,
from fabric to thread to the brand label and even the
pattern it was cut from. Sustainability is a key concern
of the company, and they avoid using leather, fur, horn
and shell, as well as offering a fully vegan alternative
to most of their products.
Even the companys retail mark-up is shown, a
margin that is calculated by multiplying the total cost
of the garment by four to work out the retail price. So,
a dress that costs 88.55 to produce will cost the
consumer 354.20 (before VAT) to purchase via the
website.

Contagious Insight /
The emergence of this brand, if nothing else,
should provide a timely wake up call to the rest of
the luxury fashion industry, which greatly prefers
to cloak products in mystery and would struggle,
one suspects, to justify the eye-watering price
tags. However, the information age is presenting
a new challenge to brands and manufacturers at
every level, and a more questioning attitude on
the part of their customers is increasingly part and
parcel of doing business with people raised on
the internet. What Honest by has done here is set
a new benchmark in transparency, and in doing
so it demonstrates to consumers that not only is
this possible, its also not unreasonable to want
to understand exactly what it is youre paying for.
now / next / why / luxury recoded /

Luxury Recoded Takeouts /

Know thy customer / there are seismic
demographic shifts challenging the luxury market.
Adapting to emerging desires requires ever
smarter and more intimate customer insights that
can fuel personal connections.
--------------------------------------
Act as a luxury lens / Brands that can offer
consumers new ways of seeing and experiencing
the world around them, through the unique and
discerning lenses that only they can offer, stand
to capitalise on the demand for experiential luxury.
--------------------------------------
Sophisticated social / the impact of social
media on luxury is difficult to quantify: but for a
new generation of customers, for brands to be
there is standard practice. As with everything they
do, luxury brands need to be exceptional in social
spaces, bringing sophisticated content, superior
experiences and unique opportunities.
--------------------------------------
Dual service approach / Classic personable
customer service is an art at the heart of luxury
and a key driver of value. But affluents also value
tech-based services and utilities that conveniently
help them day-to-day: look to deliver on both.
--------------------------------------
Behaviour matched to storytelling / As the
ultimate fantasy creators, luxury brands are well
versed in storytelling. However, customers will
increasingly look for that to be matched with the
right information and tools to help them seek out
authenticity and provenance.
--------------------------------------

If luxury-goods players are to capitalise on

the experience trend, they have to move
quickly and forcefully. To date, very few have
been successful in adding experiential elements
to their offerings, websites, or in-store
execution. It is a missed opportunity to boost
performance.
Jean-Marc Bellaiche, Boston Consulting group
 58 / 59

notes /