NEW YORK, United States — On Friday, BoF attended the LuxuryLab Innovation Forum, a half-day conference hosted by Scott Galloway, associate professor at NYU’s Stern School of Business and founder of LuxuryLab, a think tank that attracted attention earlier this autumn with a report ranking luxury brands by their "Digital IQ."
Billed as TED for the luxury business with "high-velocity presentations," the forum may have felt a bit unfocused at times, but from the stream of speakers, three important themes emerged.
THE DIGITAL TIPPING POINT
In the last five years, cost and time-to-market for digital assets have come down dramatically, while adoption and engagement rates amongst consumers have skyrocketed. "We have reached a digital tipping point," observed Scott Galloway in his opening presentation.
Next up was Martin Nisenholtz, head of digital operations at The New York Times. "We've seen a massive shift in consumer behavior," he said, citing internal statistics, as well as an eMarketer study that showed a doubling in digital media consumption from 2004-2008, with the fastest growth coming from affluent baby boomers. Indeed, luxury consumers are twice as active online as the general population, said the next speaker, Bart Sayer of global management consulting firm Booz & Company.
But with notable exceptions like Louis Vuitton, Ralph Lauren and Burberry, luxury brands are failing to fully embrace the digital zeitgeist. "Luxury firms are under-invested in digital," said Mr. Sayer. They are falling behind, either because they don't have the digital competence, or their digital teams are not empowered within their organisations.
But it's not too late to take action. Despite the ongoing economic turmoil, now is the time for laggards to make major strategic investments in digital innovation, said Mr. Galloway.
We agree. While other companies are holding onto their cash, forward-thinking luxury brands will dramatically increase their investment in digital media and derive huge competitive advantage and future growth for doing so.
THE NEW LUXURY
Many of the speakers at the LuxuryLab event also noted that luxury was evolving, citing cultural, generational and psychographic shifts amongst affluent consumers. "Luxury as objects is giving way to luxury as experience," said Ron Pompei, founder of creative services firm Pompei A.D.
While luxury goods that give individual pleasure and convey social status have fulfilled fundamental human needs since the dawn of time, their form has been variable. Today, affluent consumers are becoming less interested in traditional status symbols and more interested in "content-rich status experiences," said Mr. Pompei, advising Prada to better integrate the cultural content created by Fondazione Prada with the brand's marketing initiatives, both online and off.
Luxury is also becoming more personal, observed Chandler Burr, The New York Times perfume critic and one of the most entertaining speakers of the morning. In a talk entitled "The History of Scent Design in Three Acts," he described the shift like this: "It's the difference between you wearing the perfume and the perfume wearing you." For Mr. Burr, luxury is becoming less about the cult of the creator and more about the individuality of the client.
But that doesn’t mean the new luxury is more accessible. Quite the opposite. "The new luxury is true luxury," said branding guru Cindy Gallop, insisting that to fulfill their fundamental societal function (classifying and connecting people) luxury brands must be both unapologetically elitist and highly social.
CONVERSATIONS, COMMUNITY AND CULTURE
The third major theme of the day was the obsolescence of "command and control" thinking and the growing importance of online conversations, community-building and brand culture. "If you're not living as part of the conversation, you're not living," said John Demsey, Group President of Estée Lauder.
In the one-way media world of the past, where consumers were mute and companies monopolised communication, brand managers focused on image. But in today's many-to-many digital landscape, where brands are "participants" in a distributed and fragmented conversation with and amongst vocal consumers, image isn't enough. It's the set of intentions and actions that make up a brand's culture that matter most.
"Brands are no longer at the centre," explained Greg Shove, founder and CEO of Halogen Network. "People are talking about and remixing brands all over the internet." In this new reality, he advised luxury companies to listen to what people are saying online, participate authentically and build digital applications that inspire, educate, support or entertain people.
"Brands should engage around interests and communities," said Bart Sayer, citing successful digital platforms like Nike+ and Nike Playmaker which enhance the way people run and play football, attracting and inspiring authentic positive conversations and community around shared passions, not just products. "Nike just gets digital," he said.
We wish we could say the same for the majority of luxury brands.
The Business of Fashion was an official media partner of the LuxuryLab conference.