March 7, 2012 11:03 pm

Digital media: Industry slow to embrace the internet

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The world has largely turned to digital media for consumer information, sharing thoughts about products and brands and, most importantly, to make purchases.

Most industries are harnessing the internet, social media and mobile tools to build their brand image and increase sales.

But the luxury jewellery and watch industries have been slow to adapt.

L2, a think-tank for digital innovation, in a study of eight speciality retail categories, found that luxury jewellery and watch brands ranked seventh in what the organisation calls its “Digital IQ”, a combination of a brand’s website functionality and content, digital marketing, social media platforms and mobile phone use.

In a later survey of 35 luxury jewellery and watch brands, only Tiffany & Co and Swarovski stood out as having innovative and well-rounded digital strategies.

Scott Galloway, L2 founder and professor of marketing at the New York University Stern School of Business, says there are cultural and business reasons for this performance.

“The majority of these brands are run by [baby] boomers and are family controlled, which can result in an unhealthy level of insularity. And since most are privately owned, there are no financial analysts breathing down their necks to answer difficult questions about their lack of digital strategy,” says Prof Galloway.

“From a distribution perspective, watch and jewellery brands have traditionally sold through third-party retailers that not only manage inventory but also the relationship with the end consumer. The shift to digital requires both a shift in operations to facilitate a direct-to-consumer selling channel and a much larger strategy for managing these relationships.”

Fewer than 30 per cent of the brands in last October’s study were ecommerce enabled.

“The majority are reluctant to display prices online, facilitate in-store pick-up, encourage user reviews, or link to third-party retailers, all of which lead to higher rates of both online and offline conversion, says Prof Galloway.

Selling “hard” luxuries online has always been a touchy subject.

In addition to the issues regarding their traditional distribution networks, there has been a perception in the industry that consumers will not purchase expensive pieces online in large enough numbers to warrant an ecommerce platform.

This is changing as the data are revealing that consumers will buy just about anything online, including expensive adornment.

Tiffany & Co, Pandora, Cartier, Bulgari and David Yurman, are the most purchased luxury brands in the US, says Pam Danziger, founder of Unity Marketing, an affluent consumer and luxury market research group.

“There is very little hesitancy to buy online within reasonable price ranges,” she says.

“Obviously, nobody wants a $5,000 jewellery piece in a box sitting on your door step, but marketers can make sure deliveries of high priced goods are made to the person’s hand,” says Ms Danziger.

“Online is not some brand new medium, it’s been around a long while and will be around many years more.”

Jonathan Chippindale, chief executive at Holition, a UK-based company that specialises in 3D augmented reality, says that, ultimately, it is the consumer, not the luxury brands, who will decide what he or she is willing to purchase online.

“A brand can make a conscious decision not to offer an ecommerce capability but, if the consumer prefers to purchase online, that decision will probably mean lower sales revenue,” he says.

He says one of Boucheron’s best customers, living a mere two blocks away from the Place Vendôme store, reportedly prefers to buy online.

“I do not see consumer-generated barriers to the notion of luxury operating ecommerce, quite the opposite. The challenge is for luxury brands to see ecommerce as an opportunity and then to design the experience so it feels on-message, even if the beauty and physicality of the product and the quality of the service is absent.”

Jean-Christophe Bédos, the new man at Birks & Mayors

Jean-Christophe Bédos, the new man at Birks & Mayors

Jean-Christophe Bédos, the former president and CEO of Boucheron, who is about to take up the same role at Birks & Mayors, the North American luxury jeweller, was one of the few early proponents of using the internet and then social media.

Boucheron created ecommerce capabilities on its website in September 2007, before many of its peers.

During a presentation at the 2010 FT Business of Luxury Summit, he challenged luxury executives to get more involved with digital media, in particular social media, saying: “If you decide not to be there, you are totally losing what can be said about you and therefore I think you’re not facing your responsibilities as a brand manager.”

Mr Bédos says that, at the time, he felt he was making a “bold” statement, but now his peers are more in agreement with his views, even though it represents a cultural shift from the way luxury brands communicate with their customers.

Traditionally, communication has meant the brand speaking as the voice of authority to a passive audience. This has changed to an interactive and multi-dimensional conversation over a variety of digital platforms.

“It’s not a forum where you speak at people. It’s a forum in which you speak with people,” he says.

“They want to give their opinion. And they want to tell us, the brand, what they think about us. This is a huge shift in the way luxury brands have to market themselves.”

Luxury companies have accepted this message, according to Prof Galloway, by coming up with innovative social media campaigns to engage and interact with their current and aspiring customers while maintaining the integrity of their brands.

“Watch and jewellery brands are some of the most responsive of all prestige verticals when it comes to their fans,” he says.

“Not only do they have some of the highest levels of user generated content, but they also achieve high interaction rates on Facebook, garnering engagement three times that of their fashion and beauty counterparts.”

One luxury brand that has been aggressive with a combined social media and online strategy is Montblanc.

It started a Facebook page in 2009 that now has more than 125,000 “likes” or subscribers.

The company has Twitter pages in the US and Japan, a YouTube channel and a Google+ platform. It launched an ecommerce site in September, 2011.

“Some topics and platforms in this extremely fast moving environment are not yet touched by us, but we are always exploring new trends and evaluating the importance and relevance for us,” says Gerd Bostel, executive vice-president, international marketing at Montblanc.

An example of a promotion that appears on all of its digital platforms is “The Beauty of a Second”, a contest that celebrates the invention of the chronograph 190 years ago.

Wim Wenders, the film director, invited Montblanc’s fans to submit one-second films of anything they wanted.

The results were spliced together into short artistic films of typically just over a minute and are shown on all of their digital platforms.

But the fan participation does not end there. Those who view the clips can then share them on their social media sites.

The campaign is creative and innovative. It has celebrity input.

It is interactive. It speaks to the brand.

And, as the title suggests, it is beautiful.

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