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How luxury fashion is adopting digital in 2021

Historically, luxury fashion has differed from the rest of the fashion industry. The methods by which they drive sales - such as sponsoring events, influencers, and focusing their efforts on premium brick-and-mortar locations - have kept their marketing and technology separate from cheaper brands. Their stores are often situated in the best possible locations, and many people travel to different cities and countries to visit them. The desire for the glamorous, in-person experience has always been reflective of the brands’ luxury status. Anyone can sell clothes online but only the best of the best can afford to have beautiful stores all around the world. 

However, with the rise of the COVID-19 pandemic, consumers’ eyeballs have been increasingly turning to digital channels - with traditional luxury retail stores unable to open and travel for fashion screeching to a halt. Consequently, luxury brands are now having to bite the bullet and adopt digital practices to bridge the gap between offline and online experiences.

The effect of COVID on luxury fashion

COVID-19 has had a particularly strong negative effect on the luxury fashion industry. A McKinsey report found that economic profit in luxury fashion had fallen around 93% in 2020, compared to a net growth of 4% in 2019. Large fashion companies have opted to close hundreds of their stores globally, and the change is particularly hard on luxury brands, where the experience and glamour of the shopping experience is only truly created in brick-and-mortar stores. 

Instead, these companies are investing billions into creating the most creative and immersive online experience they possibly can to try and bridge the gap. For example, Zara rolled out a $2.7 billion plan to integrate digital and AI solutions into their company. Fashion brands are having to find innovative ways to create full immersive experiences in digital, due to the reduced need for and effectiveness of physical storefronts. 

So what do these innovative digital solutions look like? 

Essentially, companies are providing digital means to measure, deliver, learn and optimise shoppers’ experiences, creating a digital substitute for online stylists, and bridging the gap between online and offline services. 

One early adopter of digital solutions was luxury makeup brand Sephora, which as early as 2016 began to develop an Augmented Reality (AR) feature called VirtualArtist on their app, which allows customers to scan their face on the app and see what various makeup products will look like before buying. Sephora also uses customer data in their app to provide personalised recommendations based on previous purchases, customer reviews, skin types, and more. It is these sorts of innovative solutions that luxury brands are increasingly turning to as of 2021. A whole industry has been created to cater to this industry, with digital agencies across Europe everywhere popping up that purely specialise in the luxury fashion space and helping grow these new, untouched channels. For example, Launchmetrics is a growing digital marketing company that specialises in fashion and beauty brands, offering data-driven platforms to help analyse and manage industry-specific aspects like influencer marketing, sample distribution, and digital showcases.

Luxury fashion brands are also adopting marketing tactics that are different, and in a way, smarter. Purely growing sales is not the main KPI any more. The key KPI as of 2021 is growing brand equity and affinity amongst the market, which is something they were previously able to do through their brick-and-mortar locations. Essentially, it is just brand and reputation that separates fashion and the luxury fashion market.

What will happen as a result of these changes?

The short-term changes are obvious: COVID-19 is forcing luxury brands to “digitise or die'', as with most companies in all industries around the world. Online events like fashion show live streams and social media influencer takeovers are being adopted out of necessity. 

Online sales in luxury fashion and beauty products are also growing like never before, and are expected to triple by 2025, becoming 20% of the luxury market in the process. This proportion is rather low compared to other industries, but the nature of luxury fashion is that many customers will always want the full physical experience as they shop. That aspect will always remain, and so luxury brands will have to strike a balance: digitising where it is prudent, while maintaining the high-end experience niche that makes their customers come back. 

Until only recently, digital solutions like apps and online shopping had largely been seen as devaluing and lowering the perceived value of luxury items, because non-luxury brands use those platforms as a cost-cutting measure. One luxury fashion executive described luxury brands as “resistant to digital commerce”. However, the fact remains that mobile and e-commerce are becoming the norm in this decade, and for luxury brands, there’s a combination of both choosing, and being forced, to move with the times and digitise.

Published by Will Eddowes