Luxury Goes Digital By Fiona Sanderson

Fiona Sanderson, joint MD of The Luxury Channel, discusses how the global luxury industry has not only embraced the Web but sees it as a major player in global brand extension.

Luxury Goes Digital

Just two clicks into the Chanel web site and you’re aboard a luxurious night train departing Paris in the newest Chanel No. 5 movie starring Audrey Tautou and directed by Jean Pierre Jeunet. Four clicks into the Versace site and the 2009 Spring/Summer Collection launch begins streaming in near perfect clarity. After the slowest of starts, the global luxury industry has not only embraced the web, it is seeing it as a major player in global brand extension.

The slowest of starts?

Ten years ago, luxury brands on the web were defined more by their absence than presence, and pioneers – like LVMH and Aquascutum – could almost be counted on one hand. Five years ago, the average download time was 19.6 seconds, but Versace took 97.3 seconds to download and Burberry at 102.3. Luxury brands were faced with how to maintain their exclusivity while exposing themselves to the openness of the Internet, plus their OSFD – Obsessive Store Fixation Disorder — which saw the likes of Prada ploughing $83-million into their Epicenter store in Tokyo and $40-million into their New York flagship. Symptoms of OSFD include the belief that the luxury brand experience must be touchy-feely and restricted only to Xanadu-like emporia. Brands were unsure they could recreate that in-store, personal experience online, keeping existing customers happy and attracting new ones, all while protecting their brand image.

The Internet proved them wrong

In 2004, growth in internet searches for jewellery exploded by 1,290%, watches by 372% and perfume by 300% – that’s compared to 83% for CDs and 49% for books. More revelatory was who was buying, where the research company Ledbury found that 47% of affluent purchasers had bought a product over the net costing more than £250, compared with only 16% of their less well-heeled counterparts. Significantly, according to the Ledbury research, 77% of affluent purchasers did not agree that a luxury brand becomes less exclusive if it sells its goods online.

Today, the wealthy are virtually all online. In most developed countries, internet usage among the affluent is 95%-plus, and most enjoy the online luxury brand experience. Along with penetration and bandwidth speed, the evolution of almost instantaneous video streaming and the realisation that every computer screen is also a personal cinema made this possible. In 2006, Chanel shelled out $14 million for their ground-breaking Moulin Rouge epic, and every luxury good marketer realised that in addition to the television and cinema advert audience, millions more would watch the full three-minute version on YouTube. The $14-million budget was actually a bargain!

Luxury Goes Digital

Video has become a critical part of any luxury brand extension. It can show off the incredible craftsmanship of a Louis Vuitton or Breguet where users watch videos highlighting design and manufacturing. At the Yves Saint Laurent website, the latest collections are highlighted in a series called 24hrs. Tod’s site features a short film starring the face of their brand, Gwyneth Paltrow, and directed by Dennis Hopper. On the Hermes site, whose eclectic “world of Hermes” does an excellent job of imparting brand identity to the user, one video is simply a tight 30-second shot of a woman’s be-ringed hands riffing on an electric guitar. It’s fun content created to highlight their Espionne rings and Soupçon fingerless gloves.

Next year, 2010, will see a watershed event when worldwide IPTV subscribers will exceed 20 million. Thereafter, analysts predict, it’s into the stratosphere for private video channels delivered via broadband to the most niched of niche markets. And that means the market for luxury online can only continue to grow.

Tweet Trunk – Louis Vuitton and Twitter

Louis Vuitton is taking its first steps in the world of social media with the launch of its own Twitter forum. The page will be tied to the Louis Vuitton US operation and will include Tweets on new launches, celebrity tie-ups, parties and design collaborations.

Daniel Lalonde, President and CEO of Louis Vuitton North America explained, “With this new presence on Twitter, we hope to provide not only additional customer service to our clientele, but also a unique look at all aspects of Louis Vuitton. This new forum will allow us to communicate the extensive characteristics of the brand to a broader group.”

Vuitton is also building the e-commerce offering on its US website, having recently carried outfits first exclusively online product launch.