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Original Article

Sustaining the luxury brand on the


Internet
Received (in revised form): 19th January 2009

Uché Okonkwo
is recognised worldwide as one of the pioneer luxury business strategists. A true luxury industry veteran and expert, she
has closely collaborated with renowned luxury companies including LVMH, Richemont, Louis Vuitton, Gucci, Christian
Dior, Burberry, Piaget, Tiffany’s, Rémy Martin, Oscar de La Renta, Coty Prestige and Fabergé as well as selective retailers
Galeries Lafayette, Barneys New York, Selfridges and Bergedorf Goodman. She is the Founder and Executive Director
of Luxe Corp, the pioneer Luxury Strategy & Management consultancy company based at Paris’ famed Place Vendôme,
with a worldwide clientele. She is also the founding head of The Luxury Centre at ESC Rennes School of Business, the first
research centre established by a business school dedicated to luxury management research. She is also the author of the
2007 bestseller, Luxury Fashion Branding (Palgrave Macmillan), the first business text to provide a strategic and analytical
perspective of the luxury business and a reference in the field that has sparked subsequent academic and management
interest and publications. Her next book Luxury Online (2009), will be the first text on luxury in the context of the
Internet, e-Business and new technologies. Uché has conducted seminars on luxury management at several business
schools including Harvard and ESSEC Paris and sits on the board of several luxury entities including the Global Luxury
Forum. She is also a fellow of the American Luxury Marketing Council. She has an MBA from Brunel Business School at
Brunel University, London and is finalizing a PhD from Ecole Superieur de Commerce, Rennes, France.

ABSTRACT Luxury is neither a product, an object, a service nor is it a concept or a


lifestyle. It is an identity, a philosophy and a culture. As a business sector and
management discipline, these characteristics signify the presence of challenges in
the integration of luxury branding within the Internet and digital environment and
the requirement of intricate strategies to overcome them. Recent publications have
raised the issues of the compatibility of luxury and the Internet, the suitability of
luxury goods in the virtual environment and strategic approaches to maximising a
luxury brand’s presence online. Others have indicated that the Internet is a ‘dilemma’
that luxury requires to overcome through avoiding e-Commerce, whereas other
literature have suggested that the Internet is purely a channel of communications
for luxury brands. The question of the state of luxury in the digital context, however,
remains largely unexplored, particularly with regards to the particularities of luxury
management, which have posed a challenge in adopting digital technologies in the
sector over the past two decades. Until recently, the luxury industry showed low
commitment towards integrating advanced Internet technologies and its accompanying
interactive and digital tools in the sector’s marketing and overall business strategies.
They also seemed to be pushed to be present and conduct business on the Internet
as a result of evolving consumer needs and expectations. Notable international
brands such as Versace and Prada did not have corporate websites until 2005 and
2007, respectively. The economic as well as consumer societies have also expressed
bewilderment at the slowness of the luxury industry in establishing an online presence
Correspondence:
Uché Okonkwo in comparison to other sectors. These parties have been right to question this crucial
E-mail: author@luxuryfashion
branding.com issue particularly since the Internet has become an indispensable channel of modern

© 2009 Palgrave Macmillan 1350-23IX Brand Management Vol. 16, 5/6, 302–310

www.palgrave-journals.com/bm/
Sustaining the luxury brand on the Internet

business. As an industry that is known for innovation, avant-gardism and creativity,


it may not be apparent why luxury brands and digital technology have been perceived
as incompatible since the advent of the Internet and digital communications
technology. However, as with every case of reverse human behaviour, this may be
explained through the examination of the very core of luxury. This paper examines
the core and scope of luxury as a business disciple, particularly in the dimension of
branding within the digital context. It investigates the true nature of luxury as a
current management science and identifies its key drivers and their scope of
integration within the Internet environment. This paper has been adapted from a
section of the forthcoming book, Luxury Online.
Journal of Brand Management (2009) 16, 302–310. doi:10.1057/bm.2009.2

Keywords: luxury; branding; e-Business; sensory goods; Internet; webmosphere

INTRODUCTION ascertain their position in the society,


Luxury has been built on the foundation remains a part of today’s reality and the
of certain principles that can neither be practice of distinction remains prevalent in
ignored nor compromised.1–7 It is a culture all cultures, irrespective of economic situ-
and a philosophy that requires under- ation. Therefore, the core role of luxury
standing before the adoption of business has stayed basically unchanged although this
practices because its intricacies and output role can currently be created and controlled
are essentially different from other types of by each individual according to his/her
goods such as daily consumer goods.1,8,9 dreams, goals and means. This new order
Luxury’s original function and raîson d’être however means that luxury remains in a
is also significantly different from those of superior position as it acts as a pointer for
other product or service sectors. This func- defining the new codes of social distinction.
tion is rooted in the social classes of the Therefore, the consumer still looks up to
past civilisations and societies when royals, the luxury brand in many ways although
nobles and aristocrats used ostentatious the relationship is currently evolving
consumption to stamp their superiority and beyond the existing ‘top-down’ model.
maintain their distance from the lesser priv-
ileged. In societies such as the Roman LUXURY AND THE INTERNET
empire, class distinction was such an inte- If the unique relationship that luxury has
gral part of the society that the colours of with its clients were to be placed in the
the shoes of each social class were decreed context of the Internet where the consumer
by the ruling class.1 Although this structure is in total control and expects to be looked
has more or less disappeared from our cur- up to, it would likely lead to resistance,
rent society, what has not changed is the apprehension and anxiety from the top (the
fundamental need of man to show his dis- luxury brand); and confusion, surprise and
tinction, to be admired, recognised, appre- disappointment from the bottom (the
ciated and respected through differentiating luxury client). This has been the situation
himself in most cases with his possessions. of luxury in the Internet virtual environ-
This form of indirect stratification, which ment in the last decade and explains why
meets the innate desire of human beings to several brands were slow in establishing a

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Okonkwo

web presence and why brands like Chanel The reality is that luxury can be successfully
and Hermès continue to resist integrated positioned online1 and as a result several
e-Commerce leaving their consumers at luxury brands have currently adopted
the mercy of fake luxury goods traders who e-Retail and have identified this channel as
are currently rampant online. one of their fastest growing distribution
A major existing paradox however lies channels. A disparity and gap between
in creating and retaining the ‘desire’ and existing literature and current business
‘exclusivity’ attributes of luxury brands on practice has therefore been raised and
the mass and classless Internet world and at remains unexplored.
the same time maintaining and enhancing Luxury itself has always had innate char-
the equity of the brand. Another contradic- acteristics that are intricate to its very being
tion that luxury brands face online is the and comprise of elements that speak more
task of increasing sales and the risk of over- to passion than reason.1 These include
exposure while maintaining a fragile per- originality and creativity in product and
ception of limited supply.10 These factors retail conceptualisation; craftsmanship and
are inherently peculiar to the Internet precision in creation and production; emo-
whose central features appear to be the tional appeal and an enhanced image in
opposite of luxury’s core elements. The brand presentation; exclusivity and limit in
characteristics of the Internet and e-Retail access and high quality and premium
are a global reach; a pull marketing approach pricing, all for a specific clientele. The
where customers are drawn to information application of all these elements often
and purchases, rather than a push medium requires an unwavering dedication to per-
where customers are driven by advertising; fection that sometimes defies logic, and this
a lack of physical contact with the goods oftentimes requires a rather narrow
and human contact with the sellers; a low approach, which has consequences for busi-
switching cost as it takes only one click to ness management.14 The natural reaction to
switch between websites; fast and conven- any possibility of interrupting this approach
ient; more product variety and access to and thought process would be ‘apprehen-
viewing them; availability and accessibility sion and resistance’, which has been the
irrespective of time and location; less pow- initial reaction of luxury to the advent of
erful sales as it is easy to say no to a com- the Internet.
puter; a universal appeal and uniform More so, the noncorporate structure in
information.11–13 These characteristics indi- which luxury has been operating over the
cate that the Internet as a medium of com- previous centuries until the late nineties
munications and retail is available to a mass acted as a catalyst for the narrow view of
consumer base, which is in direct disparity the business activities linked to luxury
with the niche consumer base that luxury e-Business.15 On the surface, the above-
goods have always targeted. The second mentioned characteristics of luxury do not
indication is the lack of physical contact seem to be compatible with the main fea-
with the goods and their sellers. Luxury tures of the Internet, which include mass
goods are regarded as sensory in nature,12 access and mass appeal, hence another reason
and this means that the human senses of for the initial resistance to the Internet.
visuals, smell, touch and feel are considered In addition to these luxury characteristics
imperative in selling luxury goods. These that initially led luxury away from the
above factors imply that luxury goods Internet, the Internet was also a victim of
are unsuitable to be placed and retailed on misconceptions, which resulted in its unat-
the Internet according to exiting research. tractiveness to the luxury sector. These

304 © 2009 Palgrave Macmillan 1350-23IX Brand Management Vol. 16, 5/6, 302–310
Sustaining the luxury brand on the Internet

presumptions range from the long-held try’s increased efforts towards adopting new
consensus that the Internet is a channel for digital technology (Club e-Luxe Quarterly,
the retail of price discounted products, Issue 0011).16
damaged goods and counterfeits; or that However, luxury on the Internet has not
online advertising overexposes a brand’s come of age. In fact, online luxury is still
image and damages its equity; or yet again very much in its infancy and as a result, the
that luxury clients are not inclined to industry at large draws its references from
making online purchases.1 sectors like telecommunications, automo-
An additional source of the initial resist- biles, FMCGs and publishing although
ance is from the reality that luxury thrives these sectors do not necessarily have the
on progressive evolution in business and culture, values and mechanics of luxury.
creation rather than dramatic changes. This For example, luxury brands draw their ref-
explains the visible struggle that the industry erences from independent retailers like
has been undergoing in its attempt to strike Net-A-Porter.com, Amazon.com and
the right balance between satisfying the Apple.com in e-Merchandizing and e-retail
requirements of luxury in a changing models and rely on others like My Space
market context and consumer orientation, and Face Book for online community
driven by the Internet revolution. Fortu- models. The disparity between all these
nately, modern business applications have references could explain the general con-
made it possible to develop, adapt and apply sensus that the digital world does not nec-
e-Business strategies that will enable luxury essarily have added value for luxury brands
to thrive on the Internet without compro- beyond their websites.2 The luxury industry
mising its innate qualities. The strategies, still lacks standard feasible procedures in
styles, systems and applications to optimise e-Business areas practices ranging from the
luxury’s positioning online have been choice of digital marketing techniques for
explored in the forthcoming book from products, brands and categories; the choice
which this paper has been adapted, and this of websites for advert placements; the type
article explores the challenges that luxury of advertisements to display; the measure-
companies are facing in adopting advanced ment of online advert effectiveness;
internet and e-Business practices. approaches to Web 2.0. platforms, such as
In recent years and particularly in the last blogs and social networks; the development
3 years, the luxury sector has shown signs of e-Boutiques and its e-Merchandising and
of commitment towards advancement in e-Customer Relationship Management
e-Business and regaining its position as a (e-CRM) tools and other multiple issues.
truly innovative industry. For example, However, these challenges will be over-
Louis Vuitton’s launch of the Soundwalk, come through a reorientation as a result of
the first digital product by a luxury com- the recognition of the power and influence
pany introduces a new chapter to the of the Internet on the industry. This power
extension of luxury product categories is currently influencing behavioural change
beyond physical products to virtual prod- in the online consumer society as they drive
ucts. Giorgio Armani’s reconstruction of its their own online experiences particularly
Milan flagship store in the virtual world, in the current context of the economic
Second Life; Cartier’s creation of Internet slowdown.
downloadable music and films and Ritz- In order to create an online luxury expe-
Carlton’s launch of Internet-based short rience, luxury first requires an under-
movie series shot in its different hotel loca- standing of the scope and extent of the
tions are all testimonies to the luxury indus- digital world. The cyberspace is a world of

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Okonkwo

hyper-interconnectivity, thanks to the that several luxury brands are still strug-
Internet whose platforms now go beyond gling to accept.
the computer to include Smart Phones, The luxury industry faces both multiple
PDAs, MP3 Players and other peripheral challenges and opportunities on the Internet,
devices. With Internet penetration rates which are not immediately apparent, as
increasing annually and the functions of the their identification requires a strategic and
Internet expanding beyond information systematic approach as well as profound
exchanges to include services and commu- understanding. The Internet serves as an
nities, a new social order has been born ample breeding ground for the evolution
online.17 The average consumer is now of luxury, both in the creative aspect as
only a click away from being connected to well as in communications and business.
thousands of people throughout the world Before understanding these opportunities,
sharing the same passions, values, tastes, it is important to evaluate the main chal-
ideas and lifestyles. lenges of luxury online.
The question of selling luxury goods The principal challenge and main draw-
online should no longer be raised as the back that luxury companies face in their
rapid rate of Internet penetration and move towards adopting Internet strategies
e-Retail in different global markets empha- is that of corporate orientation. As already
sises the existence of an online consumer mentioned, the intricate features of man-
base. 18–20 In addition to these, flexible aging a luxury business means that luxury
payment systems such as credit cards and companies are structured and accustomed
special in-house customer accounts have to functioning in a manner that is unac-
substantially contributed to the diffusion of customed to radical change. However, the
luxury products and have led to increased arrival of the Internet has created an imper-
luxury goods purchases.21–23 These, in ative need for a change of corporate orien-
addition to the closure of the information tation from rigidity to reception of the
gap, have led to an unprecedented thirst undisputed transformation brought about
for information and acquisition of luxury by digital technology. The struggle that the
by increasingly informed wealthy clients. luxury industry has been undergoing is less
Also, the continuous growth in standards in changing existing corporate strategies
of living and increasing consumer and more in acknowledging that operating
product knowledge has given rise to access on the web platform requires a new way
to luxury goods and services by more of thinking and re-thinking existing prac-
consumers,18–20 and several of them are tices across all business aspects.17
exposed to luxury online. This change of orientation also means
Currently, more than 171 billion recognising the important place of the
e-mails are sent daily, more than 180 Internet and new technologies in the overall
million websites exist in the cyberspace corporate strategy and allocating the appro-
and more than 112.8 million blogs exist priate place for this channel in corporate
in multiple languages.24 This signifies that planning. This means incorporating a core
the Internet is not only a powerful tool Strategic Business Unit with a focal point
that influences millions worldwide but that on the Internet and dispensing the multiple
it is also currently being driven by users functions of the department to suitably
who now have the clout to control mar- qualified personnel who would in turn
keting communications and messages from liaise with annex departments. Several
companies and to influence the way fellow established luxury companies currently do
consumers interpret them – something not have Internet departments and those

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Sustaining the luxury brand on the Internet

that do have assigned personnel with solely these multiple aspects for the optimisation
technical competence to this department of efficiency and performance.
although managing a luxury e-Business Although the Internet was introduced
function requires competence in business, with the principal role of communications,
techniques and creativity. The reality is that it has evolved beyond the communications
technicians may be skilled in ensuring that function. However, in order to effectively
a website functions properly and may also communicate online, a luxury brand is
monitor web traffic but they are in most required to first separate advertising from
cases ill-equipped to make strategic deci- communications because advertisements
sions linked to e-Communications, are one-way and the Internet now requires
e-Commerce, e-Branding, e-Marketing interactive communications where the
and e-CRM. The e-Business unit should receiver is engaged in a 360° conversation
ensure that the extensive functions linked with the brand through one click of the
to these activities are integrated in a depart- mouse. Therefore, understanding how to
ment designed to function as a complement approach e-Communications both through
to the marketing, branding and communi- the brand’s own website and other appro-
cations business units and executed by priate websites goes far beyond advertise-
skilled and capable managers. Majority of ments. Luxury brands currently need to
both established and emerging luxury com- understand how to ‘converse with’ their
panies are still struggling to understand the publics because the Internet has evolved
scope of the Internet and how to allot a beyond being a channel of information and
place for it within the internal organisation. retail to becoming a real ‘world’ that
Others are trying to overcome the wide- includes the social web where consumers
spread practice of internal competition also congregate, connect and communicate
between departments for sales revenue and among themselves in an independent way
clients. that excludes both the luxury brands’ direct
The second fundamental challenge facing participation and the influence of online
luxury companies in their approach to magazines. This was proved to Cartier in
e-Business is the unfounded consensus that 2008 when the brand decided to launch an
the Internet is simply a channel of com- online community on MySpace.com.
munications through websites and adver- The third challenge facing luxury’s
tisements or of distribution through e-Business integration in the virtual envi-
e-Commerce. Thus, several brands end up ronment is related to effectively repre-
approaching the Internet as another adver- senting the brand essence online through
tising medium that is evaluated the same its own website. There have been several
way as other media like magazines, televi- articles and debates on how to effectively
sion and newspapers. The Internet is not a translate the brand characteristics and core
single or dual channel that serves one or identity of a luxury brand onto its web-
two business purposes but it is a multidi- site.5,25 The current pattern that luxury
mensional channel that serves multiple pur- website creation has been following places
poses including communications, branding, an emphasis on strong visuals through flash
customer services, design, retailing, con- animations, product images, videos, music
sumer analysis, client networks or congre- and more recently, downloads. Although
gation, marketing, customisation and these represent essential design elements of
product development, as well as managing website creation, they are insufficient in
logistics, supply chain and operations. Dig- brand image projection, and they cannot
ital technology enables the assembling of exist in isolation without an integrated

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Okonkwo

website design approach. Luxury website behaviours, attitudes, value systems and
design includes having a balanced approach interests of luxury clients worldwide. This
towards other web design dimensions like behaviour change is reflected in the way
usability and functionality, content and they interact with luxury brands both online
relevance, design and aesthetics as well as and offline and their evolving expectations.
creating a luxurious webmosphere (web + The vastness of the cyberspace and the pro-
atmosphere). This is why on some websites lific way that luxury clients use the Internet
like Van Cleef & Arpels, the webmosphere have also resulted in an additional challenge
is enhanced at the expense of content, of segmenting and profiling them online
whereas on other websites like Dolce & (quantitative); understanding how their
Gabbana, the content is more developed online attitudes are reflected in their offline
than the usability and webmosphere. relationships with the brands (qualitative).
Fourth, the luxury sector is facing the Wealthy clients currently congregate and
challenge of understanding that the cyber- participate in online exchanges through dis-
space includes an entire universe comprising cussions, debates and events linked to
a virtual world that exists beyond a com- luxury brands, on websites like A Small
pany’s website. Although the development World and Luxe-Mag.Com.26,27 They go
of a website remains essential, applying an as far as validating or rejecting luxury brands
integrated strategy that will ensure the for several reasons, and in the process, influ-
appropriate positioning of a luxury brand encing thousands, if not millions of clients
in the cyberspace has become imperative. and potential clients.
The cyberspace includes not only the world The sixth challenge facing luxury online
of websites but also that of forums, blogs, is related to e-Retail, which is directly con-
communities, networks and 2D and 3D nected to revenues and one of the measures
platforms. Luxury brands currently require of the success and growth of a luxury brand.
to be appropriately positioned in the cyber- Two fundamental questions linked to
space beyond their own website as the con- luxury e-Retail are ‘What to sell?’ and ‘How
trol of the brands’ image online is currently to sell?’ The former is related to under-
shared with online consumers. standing whether all the product range in
The fifth area of challenge for luxury each category should be displayed in the
companies as they navigate their way in the e-Boutique or not. If not, then there is the
virtual world is linked to the luxury con- additional question of whether the choice
sumers, who are apparently the reason why of the appropriate products should be based
several luxury brands were forced to go on price, product category, geographical
online in the first place. For a long time, market, client segment, demand, competi-
majority of luxury companies were reluc- tion, logistics and so on. In addition, the
tant to adopt the Internet until it became question of making access to the website
apparent that the wealthy segment of the open or restricted has been raised. There is
consumer population had embraced the also the issue of catering to different geo-
Internet and was using it not only beyond graphical markets and possibly different
information search but also for shopping, languages, and managing the distribution
converging, sharing and influencing others. and logistics systems from different storage
Several luxury brands however mistakenly locations. The second fundamental ques-
believed that wealthy consumers would tion of ‘how to sell’ is linked to the devel-
stay the same after a decade of being opment of the e-Boutique and in designing
exposed to the Internet. The reality is that the selling space beyond strong aesthetic
the Internet has changed the orientation, elements but also to feature an enhanced

308 © 2009 Palgrave Macmillan 1350-23IX Brand Management Vol. 16, 5/6, 302–310
Sustaining the luxury brand on the Internet

webmosphere and optimised e-Merchan- before the clients settle into the inevitable
dising and e-CRM tools that would lead life pattern on their chosen online social
to a memorable experience. This is appli- communities.
cable to both luxury companies selling Although the Internet has been in con-
products and those selling services online. stant evolution and that online behaviour
Understanding how to re-create the store has been in constant transformation, the
design and atmosphere online and pre- core purpose of the Internet, which is to
senting the products in such a way that the converse, remains unchanged even as the
clients are immersed in the brand universe technology, attitudes and behaviour evolve.
and forget that they are staring at a screen The same applies to the core of luxury,
is a definite challenge. Only a few luxury which has remained unchanged although
brands have been able to achieve this online, the luxury sector itself has undergone
notably Viktor & Rolf’s website, Cartier’s several transforming evolutions over the last
website for its Love collection and Chris- two centuries.
tian Lacroix’s dedicated website for his col- The crucial questions linked to the chal-
lection for La Redoute. lenges luxury brands are facing online are:
The final challenge that luxury brands
need to overcome to ascertain appropriate — How has the Internet evolved to this
online positioning is their approaches to the point where the consumer has taken
Social Web also known as Web 2.0. This the lead in online brand perceptions
encompasses the phenomenal changes and relationships?
taking place in all manners of use-to-user — What are the real challenges and oppor-
communities such as blogs, vlogs, plogs, tunities that this evolution has brought
mlogs, chat groups, social networks, virtual to the luxury sphere?
worlds and other 2D and 3D platforms that — How is this remarkable online eco-
congregate consumers. The evolution nomic revolution going to re-define
towards the social media and the blogo- luxury management practices?
sphere has put the phrase ‘The consumer is — What impact would it have on the per-
king’ permanently in marketing vocabulary. ception that future consumers will have
In this world, the consumer is in total con- of luxury?
trol of not just receiving and interpreting — And what can be done about all of
messages from luxury companies but also these?
of deciding their legitimacy, endorsing
them (or not), spreading this endorsement Their answers and solutions may be attained
(or worse still, condemning the brand) and through a strategic integration of specific
generating discussions about the brand tools, techniques and applications that strive
while influencing millions around the to enhance the brand value and equity
world in a matter of hours and in some while creating exceptional online experi-
cases, even minutes. This phenomenon also ences. The pointers, indicators, strategies
shows that the Internet is rapidly becoming and general guidelines that will enable the
the most important and critical marketing advancement of luxury e-Business lie in
medium, and this will be even more prev- understanding the core of luxury and how
alent in the near future as the social web to approach the Internet and digital tech-
goes into full bloom. But the challenge for nology in the current competitive market
luxury companies remains how to approach context and challenging economic climate.
the social web and engage luxury clients in The Internet remains a key source of value
a strong dialogue at this critical early stage for the positioning of luxury brands on a

© 2009 Palgrave Macmillan 1350-23IX Brand Management Vol. 16, 5/6, 302–310 309
Okonkwo

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