A New Luxury: Digital
All pictures feature Iris Van Herpen creations, I choose this brand because of their use of new technologies in their production and somehow futuristic aestethics.
In the 1980’s the concept of “Affordable Luxury” was first introduced, suddenly most of the people could afford “luxury” products. This product category changed the luxury industry and also the perception of what luxury is, especially by the masses. This set the moment when “luxury” boomed and conglomerates revenues went from millions to billions.
Now, more or less 30 years later, a new revolution in luxury is happening: Now the challenge isn’t to change what the client buys, but how he does it.
The name of this revolution: Digital Luxury
Digital is starting to claim its place in the luxury food chain, step by step companies like Net-a-Porter and Yoox are breaking profit and reaching stellar revenues (The Telegraph, 2015), not only this but luxury e-commerce revenues are predicted to surpass 10.9 billion euros by 2018 (McKinsey & Company, 2015) and remember: this is only the birth of luxury e-commerce, there still is a long way to go.
Most of these improvements that need to be completed are related with what online boutiques and retailers still can’t offer: The store experience. Even though there is a segment that is frightened with the idea of entering a luxury boutique and dealing with a sales associate, most of us can agree that the store plus the service is what drives most of the sales and converges the whole process into a memorable experience.
So for now brands with physical stores actually have the upper-hand on this issue, both boutiques and retailers must act now and focus on merging their online and offline experiences in one of two ways: Using online to drive clients into the store and create a relationship with the sales associates or investing on bringing the offline experience to the online customers. There are many ways and paths that a company can take to do this but one thing is more important, they should do it now because the digital revolution has only started.
Some brands are already profiting from digital, for example the Gucci online store ranks among the top grossing stores when compared to the physical locations, another example are brands like Prada that in some stores do a significant portion of the sales through Whatsapp, combining online and offline successfully.
As I said before, currently brands that combine physical locations with e-commerce have the upper hand, but in the future pure e-tailers may take over the game. The main reason why people buy luxury products online is convenience (Then price, wider choice, etc.) And just this one factor propelled this industry to where currently is.
Now imagine when digital can satisfy all the determinants of a luxury experience, creating the closest to a flawless experience possible at any time and location, that will be the real boom for digital and it will probably take less time to happen than how long it took for “Affordable luxury” to settle in.
With the introduction of new technologies such as artificial intelligence and virtual reality, the only issues that separate online from offline will vanish and luxury e-tailers may actually have the advantage. Combining these technologies into a virtual store would result in an experience as interactive as a real one - customized to each client, with a personal sales assistant as smart as a human-being and right at your office or living room - and this not even considering that such an experience will not be limited by real world physics meaning an out-of-this-world experience that will be closer to a video-game than to scrolling down Gilt’s sales. This will be a huge advantage for years until other technologies like nano and holographic technology catches up and allows to combine and forever change the experience in-store, but when this last step happens there are two questions to be answered:
Customers and companies will be willing to come back to traditional stores?