- The luxury sector is using technologies to further grow their vision
- Ecosystem partnership, an important factor in building a new luxury model
- Millennials and Generation Z are the drivers of the circular economy on the luxury market
Mazars, the international audit, tax, and advisory firm, published its new report, Conscious, collaborative, connected: making over the luxury business model, in partnership with the Arianee project consortium. In a recent material, we discussed both global and local findings, with a focus on the challenges encountered, the new ways of doing business, and the new players of this generation. This time, we will focus on a major factor that the luxury sector needs to evolve, as well as the most valuable resource we have nowadays – technology.
The luxury sector has always prided itself on offering consumers a chance to own pieces that are timeless and whose value and appeal will endure. But this doesn’t mean that the way it produces and sells them should stay constant too. In an unsettled society like ours, where the new technologies are changing the way we work and learn, companies must adapt to survive and grow.
How to appeal to today’s tech-savvy consumers: enhancing the customer experience
Online shopping is not a new concept for the majority of people, but during this pandemic, everyone got used to go online and order their favourite products – from food and house necessities to comfortable clothing, gifts, and smart devices. Consumers are now used to click on a few buttons and wait for their goods to arrive.
We often find ourselves with a few more fashion pieces in the basket than what we had first planned to buy, just because the brand showed us what items are similar or what items go hand in hand. This is how brands are using data to get closer to customers and capture their preferences.
Luxury sector leaders believe that clienteling services have become the leading edge in luxury’s pivot to customer experience, especially services coming after the initial sale of a luxury product. Many of these services used to be slow and information-poor, including for VICs (Very Important Clients). They have now recognized the relationship-building opportunities with VICs and the new luxury cohorts. Across the board – from top-end jewellers to affordable luxury dressmakers – frontrunners are experimenting with clienteling innovations.
„Some of the initiatives include recycling programmes for customers seeking sustainable consumption, an online luxury rental service, partnerships with secondary market platforms, as well as upgrades to the brands’ own repair services. With a little bit of help and involvement, luxury brands are developing ongoing contact with their customers, not only to capture data but also to help change their product orientation. We, as consumers, tend to be more loyal to a brand when we witness little changes that are helping the world be better”, mentioned Ella Chilea (photo), Audit Partner, Mazars Romania.
Fostering a culture that supports your partner ecosystem
Technological transformation in luxury fashion is changing more than how brands interact with their customers; it is driving systems and culture change as well. Brands are learning how to collaborate with technology partners and build ecosystems that deliver the innovations they need.
For luxury brands accustomed to controlling every detail of their brand equity, such partnerships are a significant modification of the underlying business model. Luxury’s supplier relationships are typically long-standing; tech partnerships, on the other hand, are new relationships. Luxury brands have had to cede a degree of control to reduce the risks and costs of their technological transformation.
„What brands get in return is the chance to achieve scale, particularly in various areas of marketing. Online presence is one of the strongest advantages that a company has, and with the help of storytelling, brands can put themselves out there, in front of people that may have never heard of them before. Technology plays an important role both in today’s life and in the luxury industry. This has an impact in the sales area and in helping to validate product accuracy by removing counterfeit products from the market.”, mentioned Alina State, Audit Supervisor, Mazars Romania.
The luxury industry has waged a battle against counterfeiters for years. Fake luxury merchandise is estimated to account for 60 to 70% of the €3.8 trillion of annual counterfeit trade flows. In response, luxury brands have been litigating, tightening their supply chains and distribution channels, pressuring governments for regulatory change, and more forceful implementation of existing laws, and investing in systems to authenticate their products.
Luxury authentications sometimes involve scientific techniques such as the Raman spectroscopy for gemstones, or technological solutions, such as hard-to-remove holograms or RFID tags woven directly into a textile or label. Some pilots combine these tools with blockchain solutions to create a secure data record of a product’s provenance, from its initial listing through to whenever and whoever makes changes to that record over time.
Millennials and Generation Z: sustainability ambassadors
Many resale platforms were launched to encourage a sustainable approach to luxury consumption – a goal shared by many of luxury’s new customers, especially by HENRYs (High-Earners-Not-Rich-Yet), who, from early on, have been enthusiastic customers for luxury resale and rental platforms. Millennials and Generation Z luxury customers are loyal to every brand they take a like in and trust. They follow every move on social media and are up to date with campaigns, products, or brand influencers.
„In Romania, we are witnessing as well younger people who are speaking up when a brand doesn’t align with their sustainability vision. They have been drawn to secondary luxury markets because they offer more sustainable consumption and the opportunity to contribute to economic circularity. They are building communities online where they are re-selling certain fashion pieces that they do not wear anymore or that doesn’t fit at a very decent price, they are learning how to recycle a product or they communicate to others which fashion stores in Romania are collecting products for recycling; they even learn how to repair certain items that they love. This generation keeps luxury brands accountable at every wrong step they take to help their world do better.”, mentioned Ella Chilea, Audit Partner, Mazars Romania.