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June 2020
10 Min read
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Luxury-Goods Industry Research.
Los ricos también lloran

Anna Hlukhykh

Client Service Manager Development and improvement of client service strategies, research, marketing, and analytics.

Luxury-Goods Industry Research.
Los ricos también lloran
15 votes

The world will never be the same… the world of luxury brands for sure. The postulate says that the more you earn in peacetime, the more you lose in a down economy. Could someone please tell this to the Kardashian family?

Having faced the 2020 reality, the representatives of upmarket brands had to make every effort to survive in the future. Every aspect of the market, from creation to distribution, marketing, and the supply chain, and, which is most important, end-user interactions need to be reconsidered in line with a changing world.

Based on the example of global studies by expert companies and our desk research on a specific segment of the luxury market, we want to tell you should avoid doing (and what to do, if this “don’t” has already been done!).

Business Analysts Forecasts

Last year, the market for luxury goods increased by 7% and reached 281 billion euros. Many bet in 2025 and the amount of income of 320-365 billion euros. However (damn COVID), according to the latest forecast of the consulting company Bain & Co., for the first time in history sales of the luxury products will decrease by more than 20% to 35%. Euromonitor International analysts believe that the luxury sector will suffer the largest losses compared to other categories of consumer goods in 2020. And we can well believe this because in the first quarter the global crisis has already made its own adjustments to the development (or rather, the decline) of the industry. A decrease of about 25% in the first quarter of 2020 should accelerate in the second. And it can lead to a minus of 226 billion euros in the world’s wallet!

Consumers fear infection in retail outlets, even if they sell luxury items. Many people do not see the point in buying personal luxurious items of high-end luxury brands such as leather goods, clothes, and shoes, watches, or jewelry from the latest collections at present. Even if we talk about luxury brands wholesale. In the foreseeable future, there will be a few opportunities to wear or use them. In addition, consumer confidence was eroded, and spendings were redirected to the primary necessities.

In the number of key countries, economic crisis and quarantine have made adjustments to our forecasts and to the market. The most affected market is in the Asia-Pacific region. China, the main consumer of premium goods with a share of more than 50%, was the first to take the onslaught of coronavirus. It will take a long time to return to normal. At the same time, the situation in Europe and in the USA has worsened. Sales of top-range products in China will decline in 2020 by 22% ($68 billion). The US will end the year with a decrease in sales of 52 billion US dollars. Nevertheless, all business analysts agree that the luxury end of the market will return to its previous levels relatively quickly due to the growth of e-commerce.

The Reincarnation of Luxury Goods Business

While the sales in traditional stores were not possible, online sales were gaining momentum. Championship among the countries in online sales has been won (by whom do you think?) – China, of course. It was the first to pave the way for recovery, and Chinese consumers intend to gain a foothold in the status of the most active online shoppers. Despite the worsening situation in the industry, by 2025 they will account for almost 50% of the market. Online luxury purchases have increased during the crisis. Within 5 years, they will grow to 30%.

During total isolation caused by pandemic, it became clear to everyone that digital marketing is one of the best things that has happened to luxury brands in a long period. And in order to survive and rehabilitate after the crisis, it is necessary to develop all channels of interaction with the customers.

This will promote new products and services. The accessibility of website, application, and social networks opens up opportunities for creating personalized offers and providing individual services to even more consumers.

Digital distribution channels expand the playing field for luxury brands, allowing them to reach new clients and interact with customers on the Internet from all over the world — even in those areas where the brand does not have stores. Unfortunately, not everyone is working on improving and expanding its digital channels.

Concrete Example of “Don’t Do That”

We conducted research and analyzed the website of a company that sells luxury goods (more than 7000 models). For the study, we involved users from 5 countries. They were picked up by the company’s target audience. The users rated the site’s efficiency and functionality by the following criteria: searching for the site on the Internet, the first expression of the site, on-site search, product presentation, and further consultation. Here are the results we’ve got:

Positive points:

  • quick loading of site pages (<2 sec);
  • convenient navigation (search on the site is simple and clear);
  • presentation of the products (description, visualization, filters).

However, even these indicators are inferior to competitors.

Negative points:

  • “Clumsy” interface of the site (photos, videos are not displayed correctly). Imagine that you decided to make a purchase for 30k euros, get to know the company for the first time, and the media on the platform is cut off by 20% because of the wrong web-page slicing. How do you such a lux?
  • A silent chatbot (no answer for several hours), which is unacceptable for any brand, especially the luxury one. If you claim you have a chatbot, it should work properly.
  • Indifferent support (the customer service representative asked for the client’s name only at the end of the conversation for sending a letter).
  • Incorrect email marketing (the respondent did not receive a letter with additional information after communicating with support, but still receives mailings about promotions and discounts).
  • No WOW-effect (it does not correspond to the luxury brand). Not only they failed to achieve some kind of customer surprise (only a bad one), they also didn’t manage to comply with the customer service standards.

As a result, we can say that the support system is not working well at all. When you spend a fair amount of money for the goods, you expect to be served accordingly.

We measured the feeling of uniqueness for a client among our respondents and asked what could make a site top-quality. As a result, we got an average indicator of 2.2 out of 4, which already confirms that the site does not correspond to the declared quality.

Luxury Brand Research

Luxury Brand Promotion Guide

In fact, luxury lags behind other consumer sectors when it comes to understanding and applying digital technology. The speed of technology development jeopardizes their current business models.

If you claim that you are a luxury brand, then you must comply with this. Therefore, it is necessary to constantly work on the company’s image, develop its channels of interaction with the audience, and monitor the trends.

Here are some simple tips from Scheduling:

  1. Search engine promotion. However, there is a number of nuances. When promoting a luxury product, you need to choose the right keys, and make a link to the lifestyle of a wealthy person, apply narrowly targeted keywords.
  2. Advertising: banner and viral. It guarantees an increase in recognition. The first priority is non-intrusiveness and expectation of returns (visitor click), and visibility. Luxury brands should avoid provocations, the virus ad (not the Corona) in this segment is different in its prevalence since by default the TA is much smaller.
  3. Minimum SMM and SERM. There are no reviews of many luxury brands on the Internet at all. Even if the real TA of luxury goods and services is registered with social media, they are not likely to subscribe to communities and the public. But among themselves, such people are rather willing to share their impressions of the services they use and about the companies that provide them.
  4. PR promotion. The emphasis should be on cooperation with authoritative resources, closed portals, and projects on the network. However, the role of content quality remains decisive, as always.
  5. Attractive site interface. Analysis of the bounce rate and conversion efficiency proves that the site’s visual attractiveness has a significant impact on its benefit. And given the fact that there is not so much time to create a positive impression, it is worth designing it in the best way.

In order to understand where exactly your site is flagging, first of all, it is necessary to conduct its audit and identify areas for improvement. In addition to this, there are many different tools designed to test your digital channels. You are welcome to find more solutions on the 4testers website that will definitely help you in developing your own platform. After all, your site is the face of the brand! Even in such a difficult time, it must be saved.

A nice and highly functional site is a must-have, but if the staff doesn’t leave script answers, doesn’t answer for a long time, doesn’t provide a client with the relevant information and doesn’t solve his problem, even a well-designed website will not save the situation. In a luxury segment, the average check is several times higher, but the number of customers is less. This is an ideal chance to give maximum attention to each customer and ensure he is thrilled with the exceptional customer experience.


Luxury is attention to detail, originality, exclusivity, and above all quality.

Angelo Bonati, Panerai CEO
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