Luxury fashion brands were once infamously technophobic. Unlike direct-to-consumer (D-to-C) brands born with digital in their DNA, luxury was slow to embrace e-commerce.
Iconic names and signature styles were enough to secure a loyal following, and most high-end consumers preferred to shop in stores. But recently — especially during the pandemic-induced e-commerce boom — this has all begun to change.
In a bid for consumers who now demand a sophisticated, engaging and inspiring digital customer experience, many luxury brands are pursuing digital transformation at warp speed. Some are even transcending their digitally native competitors.
6 Ways Luxury Brands Have Become Digital Transformation Leaders
Blockchain, the distributed ledger system that underpins cryptocurrencies like bitcoin, has emerged as a trustworthy way to track the provenance of luxury items and ensure payment security.
In April, LVMH, Prada, and Richemont announced they were joining forces to establish a blockchain consortium that will allow shoppers to track their purchases and authenticate goods.
Since cryptocurrency prices began to skyrocket in 2017, a new class of “crypto-rich” people emerged. By accepting crypto payments, some brands are creating exclusive customer experiences, such as limited-edition items that can only be purchased with cryptocurrencies.
Swiss watchmaker Hublot sold a limited-edition watch to celebrate Bitcoin’s 10th anniversary in November 2018. Only 210 watches were available for sale, each of which sold for $25,000 worth of bitcoin.
3. Virtual Fashion
Some luxury brands have launched lines of digital-only items that video gamers can purchase to dress up their avatars in virtual worlds. Gucci created a limited collection of accessories, shoes and handbags for Roblox, where it has the chance to meet the youngest class of luxury admirers.
The entrance of high fashion into the virtual world represents a new era of commerce, with some predicting the virtual fashion market will exceed $400 billion by 2025. In early June, a virtual version of Gucci’s Dionysus Bag with Bee sold for $4,115, higher than the price of the real bag.
4. Livestream Personal Shopping
In August 2020, online retailer Moda Operandi launched a unique, digital take on the trunk show model. With COVID-19 cases ticking up and in-person fashion shows no longer an option, the platform launched Moda Live, in which designers present their new styles straight to online audiences, and shoppers can pre-order clothes straight from the catwalk.
Non-fungible tokens (NFTs) are a type of cryptocurrency that convert digital images into unique, verifiable assets that can be bought and sold through blockchain. Their emergence this year captured the attention of both luxury shoppers and the media, with sales of memes, videos and other forms of digital art raking in hundreds of thousands of dollars.
Some luxury brands have begun selling branded digital art to collectors, too. Watch brand Jacob & Co. auctioned its first-ever NFT watch in April. The highest bidder won the digital watch for a cool $100,000.
6. Augmented Reality
Augmented reality (AR) has proven to be one of the most effective ways to create immersive experiences, allowing shoppers to “try on” products from the comfort of their own homes. Brands like Burberry, Gucci, and Dior have launched AR programs that enable shoppers to test out handbags, sneakers and makeup.
For Luxury, There's No Turning Back on the Road to Digitalization
As younger shoppers start wielding more buying power, luxury brands that have already begun catering to their “digital desires” will be positioned to succeed. They will be able to offer the most innovative and inspiring customer experiences, while tech laggards will be seen as a relic of the past.
Ofer Fryman is the CEO and co-founder of Syte, a product discovery platform that includes e-commerce site search, visual search, personalization engines, product tagging, and more.
Related story: Visual AI is the Key to Human-Centered CX in E-Commerce