Luxury Shopping in Mapping the new luxury customer journey through social media

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1 Luxury Shopping in 2016 Mapping the new luxury customer journey through social media

2 2 Preface The announcement that Instagram is testing a new function that will allow users to buy items seen in brand photos has revived conversation surrounding social commerce. Past attempts by social channels (including Instagram, Facebook, Twitter and Pinterest) to implement commerce capabilities have had little success - and as GlobalWebIndex discovered earlier this year, only 11% of Internet users say that being able to buy directly through a social channel would encourage them to make a purchase. While implementing point of purchase capabilities into social media would, on the face of it, appear to be a logical way to hasten the customer journey, brands may actually find it more effective to focus their efforts on the discovery phase. In this report we ll explore what role social media plays in the new luxury customer journey, and offer our solution for how brands can optimise social media to enhance the discovery period.

3 Shifting the Parameters of Luxury Marketing 3 During a survey with A. T. Kearney, one Gucci shopper proclaimed that today Consumers crave fashion discovery, and the thrill of finding the next it brand. While heritage and craftsmanship still play a crucial role in cementing a luxury brand s position in the market, the next generation of luxury consumers are hunting for on-trend products, a sense of freshness and cultural relevance. It is undeniable that social media has significantly shifted the parameters of luxury marketing, with premium brands no longer entirely exclusive to only the most wealthy of shoppers. While much of the general public may still be restricted from owning a luxury product due to the price, they are able to experience a luxury brand and have some form of a relationship with them through social media. Furthermore, as middle-income consumers become increasingly exposed to the world of luxury, the idea of saving to purchase a luxury item has become desirable - making this group a promising market for high-end brands. While the significant majority of luxury sales still happen in-store rather than online, it is undeniable that the shopping habits of new luxury consumers have been transformed by digital and social media. Regardless of their position within the customer journey, new luxury consumers embrace an always-on attitude and it is arguably the prepurchase stages that have now become central to the shopping habits of young luxury shoppers, with social media becoming one of the key drivers for product desire.

4 The New Luxury Customer Journey 4 Customer Journey Discover Explore Reassurance Consider Purchase Advocate Brand Penetration Visibility Intrigue Engage Persuade Convert Loyalty Consumer Insight 80% of luxury shoppers use social media on a monthly basis 1 in 5 Instagram users follow a luxury/fashion account Music is the most common interest discussed in relation to luxury fashion Half of luxury consumers use p2p interactions to shape purchase decisions 40% of luxury purchases are directly influenced by consumers digital experience 83% of hyper-affluent consumers use online to help inform their purchasing decisions E-commerce represent just 6% of luxury sales In 2014 online luxury sales increased by 20% to an estimated 9 billion 30% of luxury customers brag about their purchases online Consumers control 99.63% of the online conversation surrounding luxury fashion Thoughts & Feelings Wow! This looks pretty cool oooh! I love their Instagram page. So many nice photos I ll share this photo with my friends. See what they think I need a new coat and this is perfect. I m in town tomorrow, I ll try it on then It fits a treat! I must have it This brand is so cool. Will have to keep an eye on them

5 The New Luxury Customer Journey 5 In their 2015 luxury consumer survey, A. T. Kearney discovered that approximately 50% of sales from brands such as Fendi, Tory Burch and John Varvatos were coming from consumers under the age of 35. These luxury buyers do not shop in the traditional sense, but have established their own journey. + + Reassurance: New luxury consumers can be described as social media socialites. They care about the opinion of others, and will look to use social media to receive instant peer approval. + + Consider: While three quarters of luxury purchases come from brands the consumer is already familiar with, the idea of being at the forefront of something new is thoroughly desirable - particularly if there has been a positive and enriching digital experience to date. + + Discover: Rather than merely becoming aware of products through advertising, luxury consumers are now actively seeking out new and exciting brands through publications, influencers and social media. + + Purchase: While luxury online sales are increasing, most still take place within a bricks-and-mortar store with shoppers wanting to inspect for perfection. + + Explore: Once discovered, the consumer starts educating themselves on the brand s identity and service. What s more, they begin unconsciously evaluating the brand s content and communication - comparing and contrasting them to similar brands. + + Advocate: The new way to generate word-of-mouth has been driven by a trend to share information on recent purchases through social channels, often through photos.

6 Analysing the Interest in Luxury Brands Across 12 Months Data was gathered using Google Trends from Nov Nov Brands have be ranked based on the average weekly interest across 1 year Google s data has no direct quantitative meaning, but rather provides insight into the relative popularity of search terms 30 10

7 Key Insights 7 Beyond website referrals, search plays a crucial role in the discovery phase of the luxury consumer journey, with the top search terms for luxury brands being generic opposed to specific products. + + Luxury watch brands slightly differ to their fashion counterparts, as people are more likely to search for particular model ranges rather than generic product terms. For example, in the last 12 months Nautilus was one of the top keywords in-relation to Patek Philippe. + + Despite being one of the most digitally active and followed luxury brands on social media (a total social media following of over 38 million), Burberry has actually driven less Google searches than many other luxury brands. + + The top three brands that drove the highest volume of searches across the last 12 months, are also three of the most followed luxury brands worldwide - Louis Vuitton with a total social audience of over 33 million, Gucci with over 35 million and Chanel over 49 million. + + While in early November 2015 searches for Balmain rocketed due to the launch of their H&M collaboration collection (with them becoming the most searched luxury fashion label), they were unable to maintain any of this momentum - with searches quickly dropping back to a similar level as before.

8 Our Thinking 8 Many of the conversations around Instagram s testing of shoppable tags in photos has been focused on the future of e-commerce capabilities on social media. However, arguably what Instagram is really testing is how to enhance the discovery phase and make the consumer journey a more efficient experience. This theory can be supported by an announcement made in June of this year by the global head of business and brand development at Instagram, James Quarrels, who stated that they had deliberately not adopted a buy now mentality, and would rather spend time with retailers to figure out what information would best enrich the user experience. As Quarrels put it, People just don t see an image and say, OK, got it, done. And now that social media posting (including Earned Media) is one of the biggest sources in which the general public discover new products (alongside search engine activity), it is a must for brands and marketers to draw out as much of this type of information as possible to better understand what drives the purchase decisions of their customers. For luxury brands in particular, gathering this type of information will allow them to stay ahead of the curve. With some market experts estimating that by % of luxury sales could happen online, highend brands need to start strategically planning how they ll be using search and social to best optimise both paths for their marketing strategy. With Instagram finding that 60% of its users, use the platform to discover new products and services, their investment into shoppable tags primarily aims to aid and enrich the product discovery phase. This will allow Instagram and retailers to learn more about how individuals consume information via social channels, which could then be used to optimise social media advertising.

9 Our Thinking 9 The top three most searched for luxury brands in the last twelve months (Channel, Gucci and Louis Vuitton) have all produced enriching social media presences where they use contemporary influencers and celebrities to maintain a sense of trendiness that aligns with the interests of new luxury buyers. For instance Chanel have used Keira Knightley and Kristen Stewart in recent social media content, while Gucci have dressed the likes of A$AP Rocky and Brie Larson for niche cultural events. This is similar to a tactic that Calvin Klein recently adopted, where they tapped into a host of youth celebrities (such as Justin Bieber, FKA Twigs and Kendall Jenner) for their #MyCalvins underwear campaign. With their racy photos and edgy copy published across multiple digital and print channels, the campaign had a notable impact and created a significant buzz within fashion circles. As well as this, the campaign helped increase underwear sales by 13% and aided in establishing an early bond between Calvin Klein and the Generation Z crowd. Regardless of whether or not they directly create a purchase that can be measured back to social media, they have still created brand impact and installed a sense of intrigue. This initial impact is crucial if brands want to drive individuals through the customer journey and create a lasting calvinklein Instagram feed calvinklein While this content can be used as a driver for discovery, these top brands ensure that they create multiple touch points across the pre-purchase stages of the consumer journey through quality imagery, a brand story and snackable product information.

10 The Hello World Social Media Checklist 10 Brands that fail in keeping up with the new expectations and communication habits of luxury buyers risk losing competitive advantage and becoming blotted out of the consumer s mind. By implementing a progressive and multifaceted social media strategy, luxury brands can create greater opportunities in positioning themselves at the forefront of their industry and establish themselves as one of the new leaders of luxury culture. Are you prepared for the next generation of luxury buyers? WANT TO LEARN MORE ABOUT HOW SPOTTING ONLINE TRENDS COULD ENHANCE YOUR SOCIAL MEDIA STRATEGY? GET IN TOUCH WITH US AT HELLO@HELLOWORLDGROUP.CO.UK Have you Established a clear set of objectives and fixed an overall vision for your social media presence? + + Fully explored the arsenal of social media channels that will best help you reach your desired audience? + + Utilised social listening to better understand the wider online habits of your audience and customers? + + Developed a range of comprehensive personas that cover the different audience and customer profiles within luxury culture? + + Mapped a range of detailed customer journeys to better understand the various touch points of luxury consumers? + + Established the best practises for SEO social media copy? + + Initiated communication with a young, aspirational audience on a direct level and in a manner that resonates with them? + + Reviewed and adopted emerging social media and online trends in the luxury industry? + + Optimised social media advertising and paid-for promotion to help accelerate brand awareness and reach a relevant audience? + + Set-up a process to gather in-depth knowledge of the best practises of your current social media posting habits?

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