Internet Marketing and Promoting Luxury Brands
Many observers believe that it's time for the luxury brand owners to start taking the Internet more seriously. Generally speaking, luxury brand owners have low ambitions for their Web sites, and for the most part fail to achieve them. The lack of e-commerce can be partially explained by problems surrounding exclusivity deals with retailers. But it can only be fear of damaging the brand that explains the overall lack of interest in the Internet among luxury brands. Aquascutum Corporate Gifts has thrived on Regent Street for 150 years, selling a range of archetypal British goods. In 1998, Aquascutum Corporate Gifts launched a Web site. The experience of Aquascutum suggests luxury brands can reconcile their need for exclusivity with the potential of the Internet. Most luxury brands have spurned the Internet, certainly for any kind of selling, seeing its 'find a bargain' reputation as damaging to their image. But those that have gone online are proving there are other ways to benefit. (Report by Alex Blyth).
According to the Web site of the Bond Street Association, "At the start of the seventeenth century, the Bond Street area was a boggy and unpleasant patch of open countryside; but by the mid-eighteenth century it was a paradise for the fashionable shopper, offering an increasing abundance of rich treasures." At the start of the twenty- first century, while Bond Street is still home to many of the most desirable brands in the world, many have Web sites that could well be described as "boggy and unpleasant". The neglect reflects the wariness and even disdain with which those brands have tended to treat the Web. However, many observers believe that it's time for the luxury brand owners to start taking the Internet more seriously.
Generally speaking, luxury brand owners have low ambitions for their Web sites, and for the most part fail to achieve them. The top luxury brands searched for on Kelkoo are Burberry, Armani, Gucci, Louis Vuitton, Bang & Olufsen, Tiffany's, DKNY, Chanel and Oakleys. Only half of these directly sell products online. Some luxury brands, such as Prada, settle for a holding page only. Others like Garrard, Burberry and Versace go to the other extreme, valuing design over function and using lots of clumsy Flash animation.
Site Confidence offers a service measuring the usability of individual Web sites. In tests run between 15 and 21 December 2003, the average download time for 100 random UK Web sites was 19.6 seconds; the Versace Web site took an average of 97.3 seconds, and the Burberry Web site a staggering 102.3 seconds.
Daniel Letts, consultant at brand agency Wolff Olins, complains: "There are too many luxury brands stuck in some kind of 'skip intro' time warp. Versace is a particularly annoying example, and doesn't even offer a 'skip intro' option. The online experience turns you off." Ledbury Research recently surveyed views of luxury brands online from 1,000 consumers with more than$200,000 in liquid assets and contrasted the findings with those from 1,000 average consumers. MD Marc Cohen singles out Bulgari as worst in the sector, saying, "It has a terrible online presence."
Luxury behemoth LVMH, which owns dozens of brands including Louis Vuitton, Moet & Chandon and Parfums Christian Dior, is one of the few to have embraced the Internet. It owns the popular and well- designed E-Luxury site on which it sells most of its brands. However, the company refuses to reveal exact sales figures and declines the opportunity to discuss the Web site. It gives the impression it's somewhat embarrassed by the site. Rather than using any of its many corporate or brand sites for the dirty business of e- commerce, it has set up a sub-site, given it an apparently unconnected brand, and then kept quiet about the whole thing. By and large, the luxury sector seems to want to pretend that the Internet doesn't exist.
Taking the fun out of shopping
Michael Peters, founder of brand agency Identica, offers his thoughts on why luxury brands spurn the Web. "Luxury designers have been investing heavily in retail outlets. For example, Prada invested $83m [pound 46m] in its Epicenter in Tokyo last year and $40m [pound 22m] in a New York store. The physical surrounding and personal attention of luxury stores continue to remain important to the customer. The Web eliminates the fun of shopping."
Peters argues that the Internet offers a shopping experience diametrically opposed to that offered by high-end retailers. "The Web is all about being a smart shopper, saving time and money, and finding eclectic goods. Luxury brand shopping should be about an experience that feels exclusive. Luxury brands don't want people to associate their products with getting a bargain online. It could be extremely damaging to the brand."
The lack of e-commerce can be partially explained by problems surrounding exclusivity deals with retailers. But it can only be fear of damaging the brand that explains the overall lack of interest in the Internet among luxury brands. This has resulted in a curious mirror image of the mass market. While Argos, Dixons and their ilk continuously strive to be ahead of each other in site design and functionality, luxury brands seem almost to use the low quality of their sites as a badge of exclusivity. Although they don't say it aloud, the subtext comes over loud and clear: real luxury brands don't have successful Web sites.
The luxury market is certainly a more suitable home for the snob than the iconoclast, but a few, like Kevin Baker, MD of Aquascutum Corporate Gifts, have succeeded by challenging the orthodoxy. Aquascutum has thrived on Regent Street for 150 years, selling a range of archetypal British goods. In 1998, Aquascutum Corporate Gifts launched a Web site, with Baker convinced it would be a key sales channel. "I believe strongly that the Web is essential to the luxury market," he says. "Our Web site isn't just a 3D brochure, it's a 3D shop. In fact, it's not dissimilar to Amazon. I had no fears that it would devalue our brand. There's now a fairly blurred line between exclusivity and scale. For instance, LVMH turns over more than $1bn a year, so just how exclusive can it be?" Baker adds that the Web site has been an unqualified success. He expects it to account for 20% of sales by the end of 2004.
The experience of Aquascutum suggests luxury brands can reconcile their need for exclusivity with the potential of the Internet. Kelkoo marketing manager Dorothea Arndt argues there's a demand for it. "Over the past 12 months, growth in searches for luxury products has far outstripped that for mass-market products. For example, searches for jewellery grew by 1,290%, watches by 372% and perfume by 300%, compared to CDs, which grew by 83%, and books by 49%." The research by Ledbury found that the affluent are more likely to consider buying from the Internet than from mail order. 47% of them had bought a product worth more than pound 250 online in the past 12 months. In comparison, only 16% of average consumers had done so. Finally, 77% of affluent consumers don't agree that a luxury brand becomes less exclusive if it sells its goods online.
There would appear to be three tangible benefits to luxury brands in using the Internet more fully. First, most luxury brands have only a handful of outlets across the globe. This potentially excludes those customers who can't get to the Champs-Elysee or Rodeo Drive. A Web site means the expensive goods are available to anyone around the world. Second, the target market for luxury goods tends to be the cash-rich and time-poor, who place a high value on convenience. As Paul Dawson, head of usability at design agency Conchango, puts it: "Given the option, who wants to walk down Bond Street in the rain when you can sit on the sofa with a glass of wine, surfing the Web?"
Need to know
Even if luxury brands aren't prepared to sell online, there's no reason not to use the Internet as a means to disseminate information and create desire. Many of the people who buy products such as Prada, Versace and Bulgari will want to buy from a shop that feels exclusive, but may want to use the Internet to find out where the shop is and what products are available. They may want to go online to make an appointment with a personal shopper. Most importantly, it could be an opportunity to reinforce the brand as it exists in- store. Prada, Versace and Bulgari, with their disappointing Web sites, are at best not benefiting from the opportunities offered by the Web. At worst this negligent approach could seriously damage their brands.
However, few would advise luxury brands to mimic Amazon in its use of the Web. There's a real danger that ill-judged online forays could hurt a luxury brand.
Steve Adams, head of interactive communications at brand agency Dragon, offers this advice: "Tell the brand story, but don't focus on the history. Talk about where the brand is going in the future. Create a balance between design and function. Resist the temptation to go overboard with technology. Don't dilute users' trust by sharing data with other firms or email too often with irrelevant information. Be careful with incentives like competitions as they can cheapen the brand. Invest in search engine positioning, as users who are taken to the many discount luxury goods shops can soon get a negative perception of the brand."
Clearly, there's much to get right. However, those that have already done this are now reaping the benefits and gaining a degree of competitive advantage over those who still stay aloof from the Internet. It took around 150 years for the luxury-brand owners to transform Bond Street; it's highly unlikely that they'll be given as long to transform their Web sites.
On the whole, luxury brands have neglected the potential of the Internet.
Luxury brand owners tend to perceive the Internet as not exclusive enough and so potentially damaging to their brands.
But firms like Aquascutum Corporate Gifts and Berry Bros & Rudd believe it's still possible to have an 'exclusive' Web site.
According to research, affluent consumers are prepared to buy luxury goods online.
Luxury brands could benefit in three ways from having successful sites: ability to sell to a far wider audience; offering customers the indulgence of convenience; and providing a space in which potential customers can do research and develop desire.
Care must be taken to maintain brand values when developing a luxury brand Web site.
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