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

Burberry April Showers Accessories | Source: Burberry

LONDON, United Kingdom — For years, digital media experts and observers, including those on this website, have held up Burberry as an example of a luxury fashion brand that’s effectively embracing today’s digital world.

Last year, Joanna Shields, Vice President EMEA for Facebook, the world’s largest social network now with more than 700 million registered users, took that one step further. “Burberry is no longer just a fashion company — today they are a thriving media enterprise,” she said. “Burberry is now the most widely followed fashion brand on Facebook. It’s successful not just because it makes great clothes but because it understands the importance of sparking interest in the community and using social media to engage and delight their consumers.”

Of course, Facebook has its own reasons for promoting brands who have enthusiastically adopted its platform, but there is no doubt that with more than 6.5 million Facebook fans and an impressive array of digital initiatives, Burberry’s reputation as one of the world’s most sophisticated digital operators has now become a core part of its brand DNA.

So, I was surprised to receive a pre-release email from New York’s L2 thinktank about their new ‘Facebook IQ’ report that ranks Burberry 49th amongst 100 prestige brands, giving them an overall rating of ‘Average’. Only 8 months ago, the same organisation rated Burberry as ‘Genius’ in its annual Digital IQ index.

Is Burberry’s digital prowess really waning?

“One of eight minutes spent on the Internet is on Facebook,” writes L2 founder Scott Galloway in the report’s introduction. “The platform’s velocity of adoption is unprecedented, and as it gets bigger, it grows faster, both in number of users and time spent.” But Galloway goes on to knock prestige brands for “maintaining a monocular focus on the size of their Facebook community,” saying “they have failed to embrace the authentic two-way communication and marketing activation required to monetize the platform.”

These are fair criticisms of many luxury brands who have been overly focused on the race for fans rather than embracing the radical mindset changes necessitated by the rise of digital and social media. As I wrote back in February, too many brands are focused on the surface of social media as a marketing tool, without thinking more deeply about how to support core business objectives.

L2 told the FT’s Vanessa Friedman, who was also caught by surprise, that Burberry was penalised, amongst other reasons, “because it is one of the 20 percent of brands that does not allow fans to post on its wall, suggesting they aren’t yet ready to abandon command and control, because… the brand does not allow fans to upload photos or videos to its Facebook page, and because it doesn’t respond to fans or maintain any two-way communication.”

That’s a mouthful, and indeed, most of the report’s accounting of Burberry’s behaviour on Facebook is factually correct. The trouble with this kind of checklist methodology, however, is that it takes a one-size-fits-all approach, lumping brands together from across a number of sectors — automobiles, beauty, fashion, champagne — and assuming that they should all tick the same boxes, regardless of the differences in their underlying business strategies, price points, brand positioning, and product portfolios, which may actually necessitate different kinds of consumer engagement, across different kinds of media.

Despite its undeniable importance, considering Facebook separately from other channels of communication is a questionable way of evaluating success, digital or otherwise. Today, we are living in a multichannel environment where a consumer may first see a product in a magazine, research it online, purchase it in a bricks-and-mortar store, complain about it on Twitter or Facebook, and ultimately have their issue resolved over the telephone. A brand’s engagement with consumers lives across all of these touchpoints, for which different brands will, by necessity, pursue different strategies.

Take Tory Burch, for example, which was rated ‘Genius’ by the L2 report, making it the top ranked fashion brand. Positioned as an accessible fashion brand, Tory Burch products typically cost less than $500, making them readily affordable for many consumers, and accessible even to those who are only able to splurge once in a while. Part of what defines the brand is its openness, as personified by its aspirational but accessible founder who tweets from her travels, sharing experiences from her day-to-day life.

The Tory Burch Facebook page allows consumers to post to its page, even if this does not always shed a positive light on the brand or its products.

“I love your products but the quality is like a cheap chinese (sic) knock off,” writes one Facebook user, Yun Kum Collins. Other fan posts on the noisy Tory Burch page include an appeal for anti-stalking laws, a photograph of a broken Tory Burch shoe, and questions about potential Tory Burch counterfeit sites. Some, but not all, of these comments are addressed by referring consumers to a Tory Burch email address or providing links where more information can be found.

Burberry, on the other hand, has taken a different tack. A spokesperson told BoF: “Engagement on Facebook for us is not driven by replying to comments — we do that better via click to chat on burberry.com or via our customer service which engages on a personalised one to one basis. We engage fans on Facebook via one of our key strengths, content.”

Burberry is using its Facebook page as a mechanism for creating social objects, to be engaged with, shared, discussed and propagated by its fans, as opposed to using it as a primary customer service channel. In this way it is less about a “two-way” conversation between a brand and its fans and more about inspiring engagement and conversation with and amongst the fans themselves.

“Our fans are the benchmark for us,” continued the spokesperson. “The growth indicates they are engaged and sharing with their friends. We also look at how long they spend on the site, how much they spend viewing and commenting with all the different content and then move between our various platforms in a truly cross-platform, sharing community.”

This is not to say that effective handling of customer complaints is not important, just that for Burberry, Facebook may not be the best place to do so, especially with its complex hierarchy of sub-brands, product lines and price points.

Of course, this raises questions about Burberry’s openness. Doesn’t social media require that all brands be completely open all the time now? Not necessarily. Sophisticated luxury brands are generating consumer intrigue and excitement by being both open and closed, opening themselves up to consumers in some channels but also stepping back behind the veil to maintain some mystery in others.

Both Tory Burch and Burberry seem to think Facebook is an important platform, but are using it different ways, linked not just to the scale of their businesses and specific brand positioning, but also vis-a-vis the other channels through which they interact with their consumers. Does this really make one brand more genius than the other?

Part of the reason for creating these kinds of rankings, of course, is to spark a debate, and in this, L2 have clearly succeeded. As emails, blogs and tweets were exchanged amongst the digital fashion community debating the report’s validity last week, it brought into focus some of the key issues facing luxury and fashion brands as we enter a new phase of this digital revolution. If the first phase was mostly about adoption of and education about social media, the next phase will focus on strategic and creative execution to achieve business objectives.

Consider this BoF’s contribution to the debate. Things are only going to get more interesting. Burberry may have to revise its Facebook strategy if, as expected, fan posts on public pages become mandatory as of this August. It will be interesting to see how the posts of 6.5 million fans change the dynamic of the brand’s Facebook presence.

Imran Amed is founder and editor of The Business of Fashion

Digital IQ Ranking 2010 | Source: LuxuryLab

NEW YORK, United States — Last year BoF reported on the first ever ranking of luxury brands’ digital competence, and today the second ranking, published by New York-based LuxuryLab, was released first to a small number of global media outlets, including BoF.

The adoption of digital media has been explosive. Longtime readers from the very beginnings of BoF may recall our first ever post on Fashion 2.0 back in April 2007 when CEOs, Creative Directors and Managing Directors insisted to me that they would never use such tools as Facebook to engage their fans and customers. How things have changed in three short years!

According to Scott Galloway, founder of Luxury Lab, the “combination of the economic crisis, the emergence of a more digitally native Gen Y consumer, and several brands  getting huge ROI — sales and press — due to digital leadership, inspired a massive investment in both human and financial capital in digital in 2010.”

Fashion and leather goods brands dominate the top 10 and have seen the most progress. The 16 fashion and leather goods brands ranked in both 2009 and 2010 increased their Digital IQ by by an average of 24 points. Watches and jewellery companies did not fare as well, on average losing 9 points, with Rolex, Cartier and Chopard falling more than two IQ classes.

Skyrocketing to the very top of the heap of the 72 luxury brands ranked is Coach, which scored “an increase in Digital IQ of 63 points, jumping from the middle of the pack last year to claim the top spot,” this year.  Also scoring high were Ralph Lauren, Louis Vuitton, Gucci, Burberry and Dolce & Gabbana, all deemed as ‘Genius’ by the ranking, which assesses brand websites, digital marketing, social media and mobile presence.

Other fashion brands are lagging. Says Galloway, they “are sitting on their hands…hoping this whole ‘internet’ thing will go away.” Ermenegildo Zegna, Bally, Balenciaga, Chloe, Versace and Alexander McQueen are all ranked as ‘Challenged’, while Dunhill, Catherine Malandrino, Ferragamo, Zac Posen, Tods and Manolo Blahnik are ranked as ‘Feeble.’

The Digital IQ index has done an excellent job of drawing more attention to the digital revolution in luxury. I do, however, have a few gripes with the methodology and some of the rankings. Is Chanel, which has absolutely no e-commerce, really digitally ‘Gifted’? Even if they do have over 1 million fans on Facebook, e-commerce should form an essential part of every luxury brand’s business model.

That said, Facebook is certainly an essential part of a genius digital media strategy. According to the survey, 90 percent of luxury brands in the survey are present on Facebook, up from 79 percent in 2009, and the percentage of traffic luxury brands are receiving from Facebook has more than doubled in last 12 months, growing from 3.4 percent to 7.1 percent. But just having a Facebook presence isn’t enough. Now, it is how these brands use their Facebook presence that will really count the most. For example, the report concludes that brands which use  social sharing tools — for instance, the Facebook “like” feature on their site — registered annual traffic growth of 42 percent vs. 18 percent for brands that did not.

On the other hand, I don’t think every brand needs to have a Twitter account or YouTube page. The Twitter presence of luxury fashion brands has jumped from 17 to 48 percent, with an overall growth of Twitter followers of almost 1,500 percent. YouTube presence has also skyrocketed from 26 to 55 percent. However, despite these increases, the report says that traffic from Twitter and YouTube has actually decreased over the past 12 months.

Should brands really be penalised if they have made the strategic decision to hold off on certain social media tools like Twitter? The truly genius brands are those that are developing a digital media strategy that is embedded in their business strategy, and taking on specific digital initiatives that help them to get there.

Which brands do you think are digital geniuses?

Imran Amed is Founder and Editor of The Business of Fashion

If you’d like to learn more about the Digital IQ Index, join me in New York on 5 November 2010 where I will be participating in Luxury Lab’s Innovation Forum, billed as the largest gathering of prestige executives in North America, where the results will be presented in further detail. Readers of The Business of Fashion are entitled to a 20 percent discount if they use this link.

NEW YORK, United States — Making economic predictions isn’t easy these days, what with key indicators slumping one day and then bouncing back the next. But even as the global economy keeps market observers and analysts on their toes, there is one thing that everyone seems to agree on: the pre-eminence of the Chinese economy.

Last month, the Chinese government announced that it was depegging its currency from the US dollar, allowing the Yuan to appreciate within a defined band, slowly abandoning the exports-led growth strategy which has made Chinese goods cheaper in the global market in recent years. But now, as Western economies stop and start, the Chinese government is looking to sustain its growth by stimulating demand at home. Last week the IMF made projections that China’s growth rate will slow somewhat next year from over 9.9 percent in 2010, to 9.6 percent in 2011.

But still, for luxury goods companies, China offers the biggest opportunity for luxury brands in a generation.

According to the latest research from luxury thinktank L2, based at New York University, founder Scott Galloway said in an interview with Bloomberg TV, “when you look at the sheer size of incremental revenue that the Chinese market offers, especially online, you could hit singles in every market, but as long as you connect with the ball in China, your shareholders are going to be just fine.”

Percent of Luxury Consumers under 45 | Source: NYU Stern

The numbers are staggering. Galloway and his team report that 840 million people will be online in China three years from now, which means there will be more people online in China than the US, Europe and Japan combined. More than 80 percent of Chinese luxury consumers will be under the age of 45, a digitally savvy, voracious online consumer.

“You couple that kind of growth online with the fact that you have a younger more digitally native consumer, and you have the largest channel anywhere…for luxury goods, the online channel in China might be the biggest market worldwide in five to ten years,” says Galloway, with a luxury market growing at 15 percent per year.

For further information on L2′s China Digital IQ research, you can download the full report or register a free webinar from L2 to be held this Wednesday, 14 July at 10am Eastern time, 3pm London time.

Tavi Gevinson at Generation Next | Source: Luxury Lab

NEW YORK, United States — With speakers including teenage blogging sensation, Tavi Gevinson and Teen Vogue publisher Laura McEwen, last Friday’s “Generation Next Forum,” organized by New York-based thinktank LuxuryLab, examined the unique characteristics and growing influence of a young generation of consumers that’s set to impact the luxury goods industry like no other generation since the Baby Boomers: Generation Y.

Wired and Influential

Opening the event, New York University professor and LuxuryLab founder Scott Galloway, underscored the importance of Generation Y with some simple, but astounding numbers. Born between 1977 and 1994, Gen Y currently spends $150 billion a year on consumer goods. That’s five times more than their parents did at their age. They also influence another $50 billion in purchases made by others. Indeed, according to a recent report by Harris Interactive, one in every three consumer dollars spent in the United States today is influenced by someone under the age of 18.

Laura McEwen of Teen Vogue reiterated this point in a presentation entitled “Gen Y and the Dynamics of Influence,” noting that teenage women increasingly influence fashion and beauty trends and drive purchasing decisions amongst older consumers.

Gen Y’s profound influence in the marketplace is directly linked to their familiarity with digital media, said Jane Buckingham, an expert on youth trends and founder of trend marketing and consulting company Trendera. Indeed, 96% percent of Generation Y is active on at least one social networking site.

A New Definition of Luxury

But for this wired and influential generation, luxury means something different than it did to their parents. They are uninterested in conspicuous consumption and showing off status, and more interested in social engagement and experience, said Sterling Lanier, a branding expert and president of research consultancy Chatter.

“Teachers, parents and TV shows are always telling us to be ourselves,” said Tavi Gevinson, the precocious teenager behind the now widely-known fashion blog The Style Rookie. “But what we want more than anything is to belong, to feel like we’re in a clique.” For Tavi, luxury products should be like a secret society that connects you to like-minded individuals and not a mainstream, homogenised stamp of status. Brand markings should be secret emblems that only certain people recognize, she said.

When a company offers them a unique point of view, an authentic experience and meaningful connections to a community, today’s teenagers are happy to evangelise the brand. But if not, this influential, internet-empowered generation will go out and find somebody else who does — and if that doesn’t exist yet, they’ll create it themselves.

Agata Seidel is a writer and consultant based in New York. The Business of Fashion was an official media partner of the Generation Next conference.

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.

NEW YORK, United States — Catching a rare bit of television last week in between updates on the Icelandic volcano and the first ever televised British Election debate, I stumbled upon an episode of Electric Dreams on the BBC, which takes an average British family from 2010 right back to the 1970’s, stripping away every bit of modern technology in their home. Then, slowly, episode by episode, decade by decade, the family gets all of its technology back, like they are experiencing it for the first time. The key difference now, of course, is that they have the hindsight of knowing what’s to come in the years ahead.

In the 1970’s the family gets central heating, and the 1980’s sees the arrival of the first home computer, but it wasn’t until the 1990’s rolled around that one sees the huge impact of consumer technology on their daily lives. From fax machines, brick-sized mobile phones and pagers, the family rapidly integrates the gadgets into their lives, and then disposes of them just as quickly as soon as the next great thing comes along.

Growing up during this technological and communication revolution has been the so-called Generation Y, born between 1977-1994. They are notoriously difficult to reach using traditional media channels, having rapidly adopted new media and digital technologies. They rely on the Internet for absolutely everything. Indeed, no matter what new technologies were given to the Electric Dreams family, the younger generation was ultimately dissatisfied. It was too slow,too disconnected and a far cry from the always-on, always-connected, endless options of the Internet in 2010.

But how much does the luxury industry know about Generation Y? The Financial Times recently reported that Mercedes-Benz, one of the most prestigious luxury brands, has sought to actively understand and engage Gen Y consumers.

“Co-opting Gen Y will help us understand them,” said Stephen Cannon, vice-president of marketing at Mercedes-Benz USA to the Financial Times. “They are the group we need to embrace and learn more about. We took elite students from elite institutions and immersed them in our business issues. Give us your impression of the Mercedes-Benz brand. How is our brand resonating with your group? What do we need to do with the brand?”

For those of you a little more behind the curve and looking to catch-up on everything Gen Y, Luxury Lab is planning The Generation Next Forum, to be held on 14 May in New York City, dissecting “the characteristics, influence, and brand affinities of tomorrow’s affluent consumers.” 

Scott Galloway, Founder of Luxury Lab, says the forum will provide ”insight into the most important economic force since the boomers.  We know brands will need to build a competence in digital, however there’s more than that.  Gen Y’s values, shopping patterns and media consumption are dramatically different.”

Indeed, says Galloway, “the luxury brands that dramatically increase stakeholder value over the next 10 years will be the brands that resonate with Gen Y.  There will be a transition in spending power from boomers to Gen Y over the next 2 decades that will be the most dramatic economic transfer in history.”

For a limited time, BoF readers get 50% off of the ticket price for The LuxuryLab Generation Next Forum by using the code BOFREADER. Tickets and further information can be found here.

Digital Organization | Source: LuxuryLab

The Social Graph Clinic | Source: LuxuryLab

NEW YORK, United States — The Business of Fashion is pleased to announce our second media partnership with LuxuryLab, following the much talked-about Luxury Lab Innovation Forum held last Autumn.

On January 29th, the New York University-based think tank will hold its first Social Graph Clinic, “a one-day intensive workshop that takes an adroit and sober examination of social media’s underpinnings, platforms, and best practices. The objective is to enhance participants’ fluency in brand-driven social media efforts.”

Confirmed speakers include:

• Erik Qualman, author of Socialnomics who will speak on How Social Media Transforms the Way We Live and Do Business

• Shenan Reid, Co-Founder and Managing Director of Morpheus Media on Finding your Social Voice

• Fabio Freyre, Regional Vice-President of Facebook on Facebook, the Marketing OS

I will be speaking to brands on how best to engage bloggers. On that note, bloggers, let us know your pet peeves and top tips on how brands should engage with you. You can comment on this post, send a direct message on Twitter or send an email, and I will do my best to reflect your feedback in my presentation. Now’s your chance to have a say what you always wanted to say about those generic press releases, untargeted emails and unreasonable requests from fashion PRs. But please don’t just focus on the negative. What is the best relationship you have with a fashion brand and why?

Already, representatives from an impressive array of brands — including Brooks Brothers, Chanel, Coach, Dunhill, Gucci, J. Crew, Maxmara, Michael Kors, and Neiman Marcus — have confirmed their attendance. If you too would like to attend, please consider using this special BoF link to register and you will also help us to earn a commission on ticket sales to support the development of our content in the coming year and defray the growing costs of maintaining BoF. A portion of the proceeds will also be donated to the much-needed ongoing aid relief in Haiti.

A complete agenda and list of speakers is available here.

I look forward to meeting many BoF readers there!

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.