BY Capgemini
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Capgemini IT: GROWTH ACCELERATOR

IT trends spotted and checked by experts

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What happens

According to a recent BCG study, e-commerce only accounts for 7% of turnover in the luxury industry, but 6 out of every 10 sales are influenced by digital technology.

so what?

CEO of the Luxurynsight agency

Jonathan Siboni is the founding director of Luxurynsight, a business analytics platform specialising in the luxury sector. A graduate of ESSEC Business School and holder of a Master's in International...

In a global luxury market that is stagnating, brands are looking to digital technology to help catalyse growth. This digital technology, however, is shaking up rules within these institutions, which in some cases date back hundreds of years.

How far has the luxury industry come in terms of its digital transformation?

In all aspects of the digital universe, the luxury industry has arrived on the scene later than other sectors: you only have to look at the year that some brands created their Twitter accounts for proof of this. Before 2000, customers were obliged to physically visit a store. Then came institutional web sites and from 2005 to 2010, the emergence of e-commerce. Today, with virtual and augmented reality, we are being taken into new territories.
Digital technology impacts and changes the very face of the luxury sector, as was the case with its globalisation. Thirty years ago, major fashion houses were hesitant about opening boutiques in New York or Shanghai. Why do it when their clients would come to Paris? They soon discovered that it did not lead to a drop  in turnover in Paris itself.


Regarding digital technology, the procrastination is even greater. The luxury industry and the digital world are like chalk and cheese. The former promotes elitism, rarity and timelessness, while the latter endorses universalism, abundance and immediacy. The digital world is not favoured territory for brands, but they have come to realise that it has become unavoidable terrain.  

How can the lost ground be made up?

Brands know how to communicate in an innovative way, but they make the mistake of speaking too much about themselves and their products and not enough about the experience. Instead of engaging in storytelling, they should listen to their customers and create their story in partnership with the latter. This is a stance which requires more humility. Brands are used to being showered with praise by fashion publications, to such an extent that they are in part financed by advertising in the press. Now, with social networks, they are confronted with negative feedback.

Major fashion houses such as Dior, Chanel and Louis Vuitton make high-end products. They are not service-based, GAFA-like companies. Even though they can build bridges between these two different worlds, with projects such as the Apple Watch Hermès, for example, their ways of operating are, essentially, at odds.  

Digital stakeholders have a "test and learn" philosophy: "I'll try it, I'll test it, it doesn't work, I'll repair it, I'll move on." By using a beta version, they are accepting imperfection. With the luxury sector, the idea is to test and test again, as many times as it takes, so that when they deliver the final product it is perfect. There are no iterations.

Despite all of this, don't brands still have a culture of collecting data?

The luxury sector likes to put things in clearly defined boxes, and it likes having clear organograms. When the position of chief digital officer exists within luxury companies at all, it is attached to either the communication, marketing or distribution department, when in actual fact such a position should be cross-departmental. Digital technology should spread throughout all aspects of the company.

Although data collection is indeed carried out in stores and via social media, a macro data approach is lacking. By mapping tourist flows and correlating this information with exchange rates, brands could, for example, adapt their stock according to the boutique's location or the country rather than basing decisions on intuition.   

Who cares?

  - Major luxury brands need to focus on their modes of communication and their distribution policies. Burberry is a fine example. In the space of 10 years, the London-based fashion house, which had become almost obsolete as a brand, has become a recognised brand once again thanks to digital technology. So as not to tarnish their image, brands are treading carefully, focusing on the quality of the customer's experience as well as their brand's prestige - obviously - private sales and high-end services.   

- Digital technology is changing the way products are developed. 3D printing is being used to make tailor-made jewellery, personalised sunglasses and custom-made fashion accessories. As for fabrics, they are becoming "connected". Ralph Lauren's connected polo shirt measures its wearer's physical activity (heart rate, body temperature, number of footsteps, number of calories burnt etc.). Furthermore, use of the blockchain can also help in the fight against counterfeiting.    
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