Retail Asia 2018 RA September.October 2018 (Online) | Page 20

SPECIAL REPORT
Digital transformation in the
luxury goods retail industry
It seems that the rules of the game have evolved in
the luxury goods industry as digital technologies are
leaving an impact on traditional channels. Pascal
Martin (far right), partner, OC&C Strategy Consultants
Greater China, and David de Matteis, partner, OC&C
Strategy Consultants Paris, share why companies need
to stop thinking of channels in silos.
A
fter a slowdown in 2015, the
global personal luxury goods
industry is growing again,
with consumer spending
reaching approximately €260 billion,
(US$396 billion) annually. Single-digit
annual growth in the 2%-5% range
is now the “new normal” compared
to growth rates of 10% over the past
decade. Within this environment, we
see the industry going through massive,
revolutionary changes.
Talking about a revolution
Digital technologies are disrupting
traditional channels. Once, it was
simple: suppliers talked to brands,
brands talked to channels, and
consumers talked to channels — or had
a physical experience of a brand at a
point of sale. Now, everybody is talking
to everybody.
Consumers are more curious and
they are shopping around. They engage
with conventional channels, but they
are going straight to brands — and to
producers as well — via social media
platforms and websites. Naturally,
the ‘selling ceremony’ is evolving, as
there are so many more touchpoints
for consumers to experience a product
before they enter a store.
Millennials are also reshaping the
market, introducing a different set
of values, behaviours and demands,
compared to previous generations.
Further complexity comes from Asia,
where specific needs and cultural
attitudes will necessitate tailored
approaches, especially in relation to
digital strategies.
Brands need to rethink the way they
interact with consumers and, overall,
should review the whole lifecycle of a
luxury product and the services that
support it.
Far-sighted companies are already
responding with unique brand
experiences, further differentiating their
offerings, while ensuring distribution
excellence.
While online sales are climbing,
physical stores will retain an important
role, continuing to offer the option of
touching a luxury product. When it
comes to capturing consumers’ attention,
speed is of the essence; brands will have
to accelerate their processes and supply
chain.
What is clear is that greater
transparency around the origin, supply
and mark-up on luxury goods will put
pressure on product quality and prices.
Consumers may question if it is worth
paying six to seven times as much for a
designer handbag, even if it does have a
A shift from Communication to
Consumer Engagement has to
be built into the entire ecosystem
— connecting product design,
development and supply to
consumers, giving them exactly
what they want, when and how
they want it.
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Retail Asia September/October 2018