Five Reasons Why Chinese Luxury Should Go Digital

on July 10 2012 | in Digital Retail | by | with No Comments

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E-commerce in China is becoming a world of its own. Already, e-commerce sales stand at $283 billion and climbing, an increase of 68 percent in the first quarter and a number larger than the GDP of Pakistan. Now, online luxury retail is taking off. As many brands struggle with embracing the innovation (and profit) of the Digital Age and maintaining exclusivity, Ogilvy and Mather, Beijing provides 5 compelling reasons why luxury brands should go digital.

1. Ubiquity

The Internet is everywhere nowadays and basically inescapable in any facet of life. Avoiding it can be seen as a failure to adjust to the times, and alienating oneself from their market. Furthermore, technological innovation goes way beyond the Internet. Ogilvy and Mather cited systems being developed where  a digital application is wired into a dressing room mirror, enabling the luxury shopper to “try on different luxury bags with different kinds of shoes. The shopper can also get opinion from friends via a special mobile application that broadcasts the fitting room pictures.” These days in retail, fortune favors the creative.

2. Younger Buyers

One of the most compelling reasons to embrace the digital age is to embrace the new rich of China, where 80 percent of wealthy consumers are under the age of 45. For these young shoppers, technology is a vital part of their lives, and they are likely to patronize those stores that recognize that – and avoid those who don’t.

3. Social Currency

With some many wealthy people in China, “experience is becoming more important than expensive”. It’s no longer enough to have an pricy product: one needs to have a pricy product with an exotic story behind it. Luxury stores must learn ways to use digital technology to facilitate this sort of story sharing. Ogilvy and Mather give the example of Dunhill’s Day 8, a lifestyle channel that covers, “the new and the noteworthy topics such as creativity, travel, culture, elegance and intelligence. It almost seems that the brand has developed these topics after understanding interests and preferences of its customers and prospects.”

4. Community

Chinese luxury brands are facing great difficulty right now keeping brick-and-mortar stores staffed by knowledgeable, skilled employees, making it very difficult to create a community around even top luxury brands. Due to the shortage of trained staff strains customer service and after-care service capabilities of many brands, digital innovations offer some respite. It’s not only just about online customer support. Luxury brands can use technology to create forums of customers who enjoy their luxury brand purchases so much, that they are willing to offer advice and create a community of new buyers.

5. Youthful Energy

While all brands want to feel young, not all brands want to market to young people: “they need to balance youthful energy with elegance.” And integrating technology into marketing strategies is one way that luxury brands can do this. According to Ogilvy and Mather, “This engagement can lead to valuable insights about the product designs and also help in keeping the brand relevant to future customers. Mercedes Benz did something similar when they started interacting with Generation Y in order to get feedback on vehicle designs.”

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photo credit: michael davis-burchat

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