Heritage brands like Louis Vuitton, Goyard, and Dior have introduced product personalisation tools without contaminating the brand’s DNA. Buyers have been invited to express their personality through monogramming, customised embroidery services, hot stamping, and appliques.
While China is an important global growth engine for many luxury brands, it is predicted that an over-dependence on this market could have catastrophic effects if forecast consumption slowdown and modest economic growth take hold in 2020. Investors and market watchers have already identified warning signs, such as job cuts in major international industries and China’s soaring debt-to-GDP ratio.
The US economy, the world’s largest, is also showing signs of slowing. According to the Duke University/CFO Global Business Outlook survey, 48.1% of US CFOs predict that the US will enter a recession before the 2020 presidential elections, while 69% expect the country to enter a recession by the end of the year.
These indicators mean that many players in the luxury industry need to diversify their strategy to remain relevant in 2020, and in the coming years. The predicted global economic downturn could see many luxury brands that have not recovered fully from the 2008 GFC fail in coming years as competition increases and consumers demand more from luxury market retailers.
- Strategic digital storytelling
According to McKinsey, almost 80% of luxury sales are influenced by online marketing. It is vital that luxury brands examine their digital strategy, prioritising innovative distribution channels. Storytelling is essential to the marketing of luxury goods. Making use of the many digital marketing tools and innovations available, brands can capture the imagination of consumers who want to identify with a group or personality through purchasing.
Using communication channels such as Douyin, WeChat, and Weibo, brands can immediately broadcast their message, reaching the consumer through stories, Mini Programs, and live-streaming features, all popular formats in the Asia region to reach a younger consumer base.
- A shift to the human side of digital disruption
A skills shortage in the coding industry has meant that one small demographic of people is speaking for billions of people. However, as more people globally are learning software development skills, social media, analytics, and creative digital design skills that singular voice is beginning to change. Luxury brands need to invest in employee development so they can remain relevant to a new generation using the platforms that young people are familiar with.
While traditional media has been a staple marketing tool for luxury brands, marketers also need to understand how social media platforms can attract a new audience. Using influencer marketing, posting vlogs and attracting new customers through the publishing of high-quality content are all proven marketing methods that focus on the personalisation of marketing.
- Influencer marketing
The perception of influencer marketing remains positive. According to a report by Influencer Marketing Hub, Google searches for Influencer marketing has continued to grow, with robust growth from US$1.7 billion in 2016 to US$4.6 billion in 2018. Key Opinion Leaders are a dynamic marketing and communication tool because they not only connect with their audience but in most cases, they also have a specific target demographic. This perceived one-to-one communication comes across as more honest and dependable than traditional advertising campaigns.
Research shows that peer-to-peer marketing is seen by consumers as more trustworthy and genuine than celebrity endorsements. As many of influencers often have a large audience and high engagement rate, brands can tap the KOL resource to communicate with users and come up with curated offers that respect the needs and wants of the consumer base.
- Personalisation
According to McKinsey, Chinese consumers are becoming “more global, [and] more demanding.” The traditional one-size-fits-all approach isn’t reaching target audiences anymore. The personalisation of advertising has been developed in response to a desire for individualism and authenticity in marketing. Younger consumers seek unique, custom-made products that identify them as belonging to a certain group, be that sporting, socioeconomic or other. Some heritage brands, such as Gucci, known for their iconic logo-bearing goods, is a great example of using models, such as model and actress Ni Ni, as influencers.
- Data is king
Premium brands are expected to produce high-quality content based on behavioural data. Increasingly, brands are creating experience-driven content marketing through customer data integration. Luxury brands are more likely to take further steps to understand and analyze unstructured data coming from social media, weblogs, and emails, while creating marketing strategies that leverage the power of both structured and unstructured data.
Data analytics will continue to optimise the customer’s experience and deliver personalisation at a larger scale. This drive towards targeted advertising and content personalisation is vital to the success of brands who want to remain relevant in an environment where consumers are more informed than ever before.
- User-generated content
Authenticity has become a buzz word in luxury marketing, but overuse of the word means people have not embraced the concept. While people want transparency and truth from brands, luxury brands have yet to hit the target. Legitimacy issues can be easily solved by improving dialogue with consumers and prioritising customer advocacy.
Allowing customers to tell their luxury-brand story is one way of inviting customer loyalty. Luxury items often have a special story for casual buyers, and while these customers are not the target market, they do attract aspirational buyers, a captive audience in the Asia region.
- Identity-based consumer behaviour
In a globalised community, building on the concept of local identity and sustaining local communities (glocalisation) generates healthy growth. Marketing needs to understand the local market and respect the local culture. Some high-end fashion might not be appropriate in some markets where women or men choose to dress modestly. This does not mean that those brands cannot compete in such markets, only that advertising needs to be sensitive to local customs to ensure a marketplace response.
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