A new report from Boston Consulting Group (BCG) confirms that digital technology is heavily influencing the luxury sector, whether brands are ready for it or not. The implication: there is more that brands must do to catch up with fast-changing consumer expectations.
Those are some of the findings presented in BCG's new research report "Digital or Die: The Choice for Luxury Brands." The publication, based on surveys of approximately 10,000 consumers in ten countries and interviews with industry leaders, reveals that more than 85% of millennials and even 75% of baby boomers and older people who buy luxury brands are ready for so-called omnichannel interactions, ranging from e-commerce to social sharing to digital in-store experiences. And six out of ten luxury sales are now swayed by digital approaches such as researching online before purchasing offline.
Diving deeper, the report notes that luxury shoppers' readiness for omnichannel interactions does not simply mean shopping online rather than in stores, even though e-commerce is indeed surging in most luxury sectors in many geographies. It means that shoppers want integrated delivery service (31% of those surveyed), the same promotions and rewards regardless of channel (24%), and a consistent brand image (22%), among other factors. The upshot: brands must get ready to "meet" their shoppers at many more touch points on the path to purchase and then strive to orchestrate the overall customer experience.
Looking more closely at the influence of digital methods, BCG found that fully 41% of luxury shoppers research products and services online and buy them offline, while 9% practice "showrooming" - that is, they check out products at a store and then buy online. E-commerce is gaining ground, too; it now makes up 7% of the global personal luxury market, and BCG projects that will rise to 12% by 2020.
Examining the demographics of luxury consumers, the BCG study found that millennials do not have a monopoly on all things digital. Certainly the web plays a large role in their shopping behavior: 60% rate products on the web, 60% upload content about products and services, 45% check prices via mobile (even while in the store), and 43% look for promotions online (likewise while in the store). Yet older generations are nowhere near as digitally backward as some might think. In some markets - notably Japan and Russia - it is older people who are the heaviest online shoppers for luxury goods and services.
The report also describes big variations in the digital "maturity" of countries. Interestingly, the nations perhaps most closely associated with luxury fashion - Italy and France - are still very store centred; for instance, only 31% of the French luxury shoppers surveyed said they had researched their last product online and bought it in a store, compared with 47% who had done so in the US and Brazil and 46% in Japan. Money quote from Christine Barton, BCG senior partner and managing director:
"Luxury consumers expect brands to be digital and act digitally. They see all kinds of innovative digital initiatives in the wider world of consumer goods and retail. Now luxury brands have to meet those expectations. Digital approaches can help them foster valuable interdependencies with their customers in order to shape and co-create the brand experience."
Download a copy of the report here.