Digital IQ Index 2011, Greatest Year-Over-Year Gain or Loss, 2010 vs. 2011 Digital IQ Percentile Rank | Source: L2

NEW YORK, United States — On Monday, Professor Scott Galloway’s NYU-based thinktank LuxuryLab, or L2, released advance copies of their third annual “Digital IQ” report, assessing the digital competence of 49 global fashion and leather goods firms, to a small number of media outlets, including BoF.

According to the study, which will be published later today, fashion brands are embracing digital innovation with enthusiasm and have been amongst the first to pilot forward-thinking marketing initiatives on platforms like Foursquare, Tumblr and the fashion flock’s current obsession, photo-sharing app Instagram. “Some programs could best be described as bleeding edge,” says the study, referring to Ralph Lauren’s experimentation with ‘4D’ projection mapping technology.

But a closer reading reveals that a majority of fashion companies — in a sector which trades on being perfectly contemporary and thinks in terms of trend cycles — still regard the rise of digital media as a trend to be exploited, first and foremost, for its PR and image value.

“Brands are seeking the halo of innovation that comes from inspired online programming,” says the study. “However, most fashion brands still approach digital as a series of pet projects rather than presenting a coherent multi-platform strategy.”

While digital darling Burberry claimed first place in the rankings, more revealing was the poor performance of top brands like Hermès and Prada which have failed to keep pace with innovation, falling from “Gifted” in 2009 to “Challenged” in 2011. “Hubris has infected them with complacency online,” says the study, noting that Prada still doesn’t maintain any official presence on social media, including Facebook, where a “rogue page” maintained by a Prada brand loyalist has attracted more than 800,000 fans.

Interestingly, the report also reveals that the European conglomerates which own many of the world’s top fashion houses appear to be doing little to facilitate knowledge sharing amongst their brands, evidenced by wildly uneven digital competence scores within the major groups. At LVMH, for example, Louis Vuitton is ranked “Gifted,” while Givenchy came in 48th place amongst the 49 brands included in the study. At PPR, Gucci is ranked “Genius” while Balenciaga, one of the industry’s most forward-thinking brands in terms of design, remains “Challenged” when it comes to digital.

Download the full Digital IQ Index here

Vikram Alexei Kansara is Managing Editor of The Business of Fashion

“When you look at the most popular blogs, each one has a very distinct style and they’re not all the same….even with street style blogs, you know what a Tommy Ton photograph looks like.”

Tavi Gevinson, commenting on the success of her blog Style Rookie at the L2 Innovation Forum, alongside Christene Barberich of Refinery29, Lauren Sherman of Fashionista.com, and BoF’s Imran Amed.

Tavi Gevinson | Source: Style Rookie

NEW YORK, United States — As the Luxury Industry prepares to welcome Generation Y — the largest generation of new consumers since the Baby Boomers — Luxury Lab has just added one Tavi Gevinson to its speaker list for the upcoming Generation Next Forum.

I last heard Tavi speak at the Independent Fashion Bloggers Evolving Influence conference during New York Fashion Week, where she had the entire room enraptured with witty comments, incisive insights and a professional confidence far beyond what one might expect for a 14 year old fashion blogger. Tavi also recently participated in BoF’s global livestream of the Fashion Pioneers interview with Jefferson Hack. Needless to say, at BoF we are all big fans of her Style Rookie blog and the Forum is worth attending just to hear what an extraordinarily smart 14 year old has to say about what brands mean to someone in her generation.

Speaking of brands, this week Luxury Lab also released a new ranking of Gen Y consumers “prestige” brands, measuring the affinity for 105 iconic brands, and the results were eye-opening indeed. According to Scott Galloway, founder of LuxuryLab, “Gen Y goodwill is arguably the closest thing to a crystal ball for predicting a brand’s long-term prospects. Just as Boomers drove the luxury sector for the last 20 years, brands that resonate with Gen Y, whose purchasing power will surpass that of Boomers by 2017, will be the new icons of prestige.”

There was quite a bit of variation between males and females in the overall ranking, with males preferring car brands and females preferring fashion and beauty brands. But one brand resonated strongly with both sexes: Apple.

Indeed, unprompted Apple is the number one brand among men and number nine brand among women according to the survey.  And, when asked what their most likely next prestige brand purchase, the number one answer for both men and women was Apple, a testament to the primordial importance of technology to Generation Y.

In line with Jefferson Hack’s comments to us the other night during Fashion Pioneers, and contrary to conventional wisdom, print is not dead for Generation Y. According to the Luxury Lab survey, print magazines continue to be an important source of information on prestige brands for Gen Y. Print is the number one source for women and number two source for men.

But of course, Generation Y has also wholeheartedly embraced social media and blogs. One in five survey respondents “like” a prestige brand on Facebook (this is the new Facebook language for being a ‘fan’), and one in ten follow a prestige brand on Twitter. Almost half have signed up to receive email from a prestige brand and almost one in 5 consider blogs one of their top three sources for information on prestige brands. Detailed survey results will be presented by Scott Galloway at the Luxury Lab Generation Next Forum.

The Business of Fashion is an official media partner of the LuxuryLab Generation Next Forum, to be held in New York City on 14 May, 2010. Tickets can be purchased here.

LuxuryLab Innovation Forum | Source: LuxuryLab

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.

Digital IQ Ranking 2009 | Source: LuxuryLab

NEW YORK, United States — In the first-ever ‘Digital IQ’ ranking of the top luxury fashion brands’ digital competence, Louis Vuitton has come out on top, followed closely by Ralph Lauren. Both are ranked as ‘genius’ in the wide-ranging qualitative and quantitative study which covers 109 brands across the luxury spectrum, not just fashion. The study was authored by Scott Galloway, Clinical Associate Professor at NYU’s Stern School and Founder of LuxuryLab, a thinktank with a focus on luxury and new media.

“2009 represented a tipping point concerning the importance of digital competence in the luxury industry,” says Galloway. “While the industry grappled with double-digit revenue declines, traffic to luxury brand sites increased an average of 61 percent. With this study, we’ve devised a metric these companies can use to benchmark specific features of their digital competence against their competitors, and highlight which area each firm stands to gain the greatest return on incremental investment in digital.”

To savvy BoF readers who have been reading about Fashion 2.0 for more than two years now, some of these rankings may seem overly generous. Sure, Prada put out that amazing Trembled Blossoms film and Dolce & Gabbana might get some extra bonus points for putting Bryanboy, Tommy Ton, Garance Doré and Scott Schuman in the front row in Milan yesterday, but do these brands really have a ‘gifted’ internet competence? (Note: The Digital IQ ranking was completed long before last night’s blogger frenzy in Milan!)

Even then, taken at face value, the ranking would still suggest that fashion brands, the heretofore undisputed masters of image creation and marketing sophistication, are failing to harness the real potential of social media, clumped together as they are towards the middle of the overall ranking.

There are only two fashion brands in the top ten, Louis Vuitton and Ralph Lauren, ranked #6 and #7, respectively. Before them, consumer electronics naturally makes a strong showing with Apple at #1 and Sony at #3, but should the top fashion brands really be satisfied in being judged less competent in internet communication than BMW at #2, Audi at #4 and Porsche at #5? These companies can’t even sell their products online. Then again, many fashion brands, including Chanel (ranked ‘average’) and Marc Jacobs (ranked ‘challenged’) still don’t sell their own products on their own websites, even though they clearly could.

Yesterday’s Women’s Wear Daily carried an excellent survey of the state of social media in fashion today and an in-depth look into the Digital IQ survey, calling 2009 “the year of social media” and outlining the online fashion stampede to setup i-Phone apps, social media sites and Facebook pages, amongst other things. But I couldn’t help but thinking that part of the point is being lost in this social media frenzy. It’s kind of like Fashion’s Night Out. Everyone seems to be joining the party without really stopping to think about the what the overall opportunity offers.

First and foremost, social media is about listening to the conversations that consumers all over the internet are having about our brands. Indeed, in the social media age, our brands are increasingly defined by our consumers. Do you know what your consumers are saying about your brand? Regardless of whether you agree or not, you can be sure they will share it with hundreds of friends, contacts and strangers on Facebook, Twitter and YouTube, and hundreds of other sites that make the entire internet increasingly social.

Only once we have understood these two aspects of social media — listening and sharing — in addition to broadcasting, can we strategically engage in a dialogue to achieve our various business objectives to have the best products, the right customer service, the strongest brand image and plenty of profits. In short, social media is far more than a simple marketing tool. Indeed, it will continue to dramatically change the industry as we know it.

For those of you who are interested in continuing the conversation on social media, I invite you to attend the LuxuryLab Innovation Forum in New York on November 6th, for a one-day event to explore the rapidly changing luxury landscape. Amongst other things, the results of the Digital IQ index will be dissected in detail, and speakers including Tina Brown (Founder and Editor of the Daily Beast), Daniel Lalonde (CEO of Louis Vuitton North America) and Francois-Henri Bennahmias (President and CEO of Audemars Piguet North America) will share their ideas in high-velocity presentations modeled after the fabled TED conference.

BoF is pleased to be an official media partner of the event, and if all goes as planned, I will also have a chance to share my own thoughts with the expected audience of more than 300 luxury executives. You can register for the conference here.

Imran Amed is Founder and Editor of The Business of Fashion