lessons learned by the luxury goods industry resonate with wealth managers catering to exactly the same high net worth individuals. This article looks at the online experience for luxury goods firms in the UK.

The lessons learned by practitioners in the luxury goods industry resonate with wealth managers catering to the same high net worth individuals. Trends in the luxury sector – such as the technology aspects discussed in this article - are a barometer for the wealth industry in general. With that point in mind, this publication is pleased to share these insights from Shayda Youseffian, associate at Charles Russell, the law firm. As ever, the views expressed here are not necessarily shared in full by this publication.

There is no longer a need to convince the luxury brands industry of the importance of having a presence online. In the past the luxury goods industry has had a reputation for being sceptical about the benefits of the online world for their business. However, a quick look at the likes of LVMH, Prada, Tiffany & Co and Porsche shows that online luxury is in full force and growing rapidly.

Digital media has penetrated almost all aspects of home and work life. Many luxury brands are taking full advantage of the wider customer base available across the globe. By making products internationally accessible via the internet, a luxury brand’s digital presence can help to enhance a luxury brand where it still does not have physical stores. A number of luxury brands have successfully tapped into the emerging markets, such as China, where the growth of retail sales is increasing year on year. The luxury buyer in China engages in the digital space much more actively than any of their international counterparts. Without providing an online channel where consumers can purchase goods directly from a website, luxury brands are neglecting a valuable opportunity.

The challenge for a luxury brand is keeping its online image consistent with its offline values.  Many luxury brands have deep rooted history and heritage that they do not want to lose online, but experience has shown that the sensory experience can successfully be translated onto the online environment.

Chanel’s “Inside Chanel” micro-site features videos representing the people and events that shaped the brand and is a classic example of a luxury brand effectively harnessing its heritage through its use of digital media. Similarly Chloe has successfully showcased its limited edition 60^th anniversary collection through a series of eight mini films celebrating the designers who have contributed to the label since its formation.

In Britain, Burberry is frequently heralded as the most innovative luxury brand online. Many other British luxury brands are now gathering momentum and following suit.

Burberry’s example is a good one to follow. From live streaming runway shows and enabling customers to click and reserve items during shows to its exceptional use of social media (Christopher Bailey, Burberry’s CCO, personally updates the company’s Twitter account posting behind-the-scenes photos). Its famous opening of its Beijing store featured virtual image technology, animated footage and holograms – all streamed live on its website. It even launched official accounts on four Chinese social media platforms to honour the occasion.  Recently Burberry held a Kaiser Chiefs concert at its flagship store marking the launch of Live at 121 Regent Street and content from the event was shared live through the Burberry Twitter and Instagram accounts using #LiveAt121.

So how can other British luxury brands follow Burberry’s lead?  There are a few factors that these brands should consider:

-- As customers become more digitally clued up and confident online, luxury brands need to keep up. Customers are increasingly demanding about the efficiency of websites and will waste precious little time persevering with a site that is difficult to navigate and which suffers technical hitches. Particularly with luxury, customers expect to receive high customer service, even without the presence of a sales assistant. This translates to useable websites, first class services (such as same-day delivery and gift wrapping services), simple transaction processes and easy returns options. Hermes, for example, provides a three-hour delivery service for ties ordered online. Convenience is key.

-- Any online strategy should compliment a physical presence i.e. a flagship store where customers can see, feel and engage with a brand's products and get to know the brand's identity. Then there should be a seamless integration between the store, website and other online channels, including mobile. This will ensure that brands stay true to their identity and increase awareness and loyalty for their brand, without alienating existing customers. 

-- British luxury brands need to create an international name, particularly to be successful in emerging markets.  To achieve this luxury brands need to be available across as many digital platforms as possible. Many luxury brands have struggled to master the mobile platforms owing to the challenge of creating a luxury experience through the small screen of a smartphone. Investment is required, in advertising and marketing, as well as in technology.  Luxury brands should no longer appeal only to their customer base but should create such a buzz around their product that fans aspire to own their products. Social media can be effective for this. This includes being present on local social media platforms. The use of local celebrities for effective endorsement is also adopted by many brands. 

-- Social media is used effectively by luxury brands by actively engaging and interacting with customers. Porsche, well known for its use of social media, honoured its 5 million Facebook fans by letting them collaborate to design a 911 Carrera 4S vehicle. Many other luxury brands use social networking channels such as Facebook, YouTube and Twitter and now the luxury brands at the cutting edge of digital are embracing Pinterest and Instagram too. Where the online users go, the brands must follow. It is important here to consider what policies and procedures are in place for reputation management. Internal policies and procedures are needed to effectively manage the risks to a brand’s reputation (particularly crucial for luxury brands) of using social media.

-- Online consumers need to be continually stimulated. Keeping content fresh and updated is important. Interactive features and shareable content helps to achieve this. Some luxury brands are beginning to offer exclusive features to customers, such as personalisation (for example Louis Vuitton personalising its luggage on request and Ralph Lauren customising its shirts). Product sharing and product rating features are also beginning to be used by luxury brands online. Loyalty programmes could be exploited much more than at present, particularly as consumers are spending much more time and energy searching for the best deals online.

-- There are rules which apply to businesses which provide goods and services at a distance, including online (such as the Distance Selling Regulations which give customers certain cancellation rights and impose obligations on suppliers to provide consumers with transparency and information). The rules that apply in the UK will also apply to wider Europe.  Outside of Europe, businesses will need to consider local legislation.

-- The online environment can be very useful for a luxury brand in terms of obtaining valuable customer data. This data can be used to track customer behaviour and respond by providing personalised targeted content.  This must obviously be conducted within the parameters of the rules of data protection and privacy laws, including what you can and cannot do with cookies. Transparency is key: you need to tell users what data you collect, how you will use it and who you will share it with. You will also need to set out what cookies you use on your site and explain what they do. Bear in mind that certain activities will require explicit consent of users. For example, the use of cookies needs to be approved by users, as well as most direct marketing activities online.