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Tag: Deloitte

  • Excerpts from the just-released IAMAI-Deloitte report titled 'Metaverse – The Hype, Possibilities, and Beyond'

    Tracking the Metaverse

     

     

     

    By Our Staff

     

    The Internet and Mobile Association of India (IAMAI) in association with Deloitte launched a report titled ‘Metaverse – The Hype, Possibilities, and Beyond’ at Digital Marketing Conference, ‘Marcon 2022’ in Mumbai on Monday (Dec 12).

     

    The report was launched by Sreeram Ananthasayanam, Partner, Deloitte. The event also saw a panel discussion after the launch.

     

    Here is the Executive Summary of the report:

    Technology is getting affordable, scalable, and trustable, and transforming business models and consumer expectations. Robust and scalable digital infrastructure and applications are enabling personalisation for a generation that prefers differentiated experiences. In addition, alternative technologies (Decentralized Autonomous Organizations [DAO], Decentralized finance [DeFi], Nonfungible token [NFTs]) are disrupting digital ecosystems by disintermediating intermediaries and decentralising ownership. Technology is building decentralised trust to make processes and transactions efficient, transparent, and seamless.

     

    One such technology is Metaverse, which refers to an immersive, interactive, and live virtual environment, distinguished by its ability to transport the real-world experience into a virtual world. In this world, people across locations can interact live and work in real time. This is supported by a digital economic infrastructure powered by virtual digital assets. Metaverse is a confluence of technologies that aims to integrate businesses in innovative ways, enhances operational efficiencies and transactions, and provides an experience par excellence. It creates new market avenues, which are futuristic, yet revolutionary. The exponential nature of technology growth is only going to make it more feasible and affordable. Several enterprises and customers are foraying into this space that is redefining business models and customer expectations.

     

    In this report, we aim to understand how businesses engage and interact with each other in a Business-to-Business (B2B) and Businessto-Consumer (B2C) ecosystem. We believe that adopting Metaverse is possible through the merging together of the physical and digital worlds (phygital). It will help businesses reduce costs, collaborate in real time, overcome logistics issues, provide enhanced opportunities and productivity, improve feedback processes, and offer possibilities for product and service augmentations. All these will not only generate revenue but may tilt the competitive advantages in favour of those ahead in the adoption curve. It will enable businesses to take a step towards introducing environment friendly policies and sustainability.

     

    Metaverse is a ‘virtual world’ with real people in digital avatars, who come together to interact and transact. Hence, the boundaries for work and play are blurred. Such a concept is hard to understand, monitor, and regulate because of the undefined rules and unimaginable complexities that may exist. In the following chapters, we begin with our understanding of Metaverse as the world is still exploring its confluence in the Phygital space. We also debate on the possibilities of different types of Metaverse architectures and their potential across enterprises. Subsequently, we discuss the challenges that will likely arise while implementing the Metaverse ecosystem and the possible measures to sustain business in a dynamic marketplace.

     

    There is also a section that provides an overview of the applications of Metaverse and its potential across sectors. We will discuss the art of possibilities for enterprise Metaverse and how it will help enterprises scale and diversify their businesses and opportunities by using the myriad elements of the Metaverse economy. While most of the current use cases on Metaverse primarily relate to the B2C segment, this report also explains the potential enterprise-grade use cases that address the B2B segment.

     

    Conclusion of the report:

    The Metaverse technology is likely to see exponential growth in the coming years with rising awareness about its applications and rapid advancements in the digital infrastructure and digital natives gaining purchasing power.

     

    On one hand, as the supply side of the Metaverse ecosystem develops, more organisations are likely to reorient their business to take advantage of this evolving technology. Several organisations have already announced their Metaverse offerings, which may help achieve the required scale and demand to improve cost-effectiveness and adoption rate. On the other hand, the demand side of this ecosystem. has been driven by demography, along with phygital worlds, virtual work/play facilitated due to the pandemic, and Moore’s law playing its role in making the infrastructure affordable.

     

    The success of Metaverse penetration will depend on the time organisations take to understand its relevance to their business and the pace of this ecosystem’s development. The ability to ramp up the technical skills and readiness, and deal with rising cyber threats will be critical to its adoption. Governments can play an important role through the right regulatory policies and incentives for new-gen tech adoption.

     

  • The acquisition will augment Deloitte’s media industry prowess

    Meenakshi Menon’s Spatial Access is now a Deloitte company

    By A Correspondent

     

    It’s formal and final. It’s was rumoured to have happened in February this year, but now the official commuique has been issued. Deloitte Touche Tohmatsu India LLP (Deloitte) has acquired Spatial Access, the leading advertising and marketing advisory and analytics firm, founded by Meenakshi Menon. The move will  enhance Deloitte’s advisory capabilities and enable brands to make more efficient advertising and marketing (A&M) decisions.

     

    Speaking on the acquisition, Chandrashekar Mantha, Partner, Media and Entertainment Industry lead, Risk Advisory, Deloitte India said “Deloitte strengthens its foothold in the advertising and marketing advisory space by enabling our clients to enhance the effectiveness of their marketing spends which are directly aligned to their business objectives. Our endeavour is to help brands address their business challenges by introducing value added, and differentiated tech-enabled solutions across the A&M value chain,” he added.

     

    On working with Deloitte, Menon added: “We are excited to be a part of Deloitte. At Spatial Access, our differentiator lies in understanding the key challenges of the advertising and marketing fraternity. We have an insiders’ view of the industry.

     

    This proposition – combined with the need to scale up the impact of marketing through the technology and analytics skills of Deloitte is poised to provide a more holistic, effective, and efficient solution suite on a larger platform and most importantly, deliver significantly enhanced value to our stakeholders.”

     

    Spatial Access had a team size of around 30 people and over the last 15 years has carve a niche in the industry with its media spends advisory specialisation.

     

     

  • We are now living in the customer-driven economy, notes the report

    Retailers achieve steady growth despite challenges: Deloitte

    By A Correspondent

     

    The Top 250 global retailers generated aggregated revenues of US$4.31 trillion in fiscal year 2015, representing composite growth of 5.2 percent, according to the Global Powers of Retailing 2017: The art and science of customers global report from Deloitte.

    “Slow economic growth in major developed economies, high levels of debt in emerging countries, deflation or low inflation in rich countries and a protectionist backlash against globalization were among dynamics which contributed to a challenging economic environment for retailers,” explained Dr Ira Kalish, Deloitte Global Chief Economist. “And yet people still need to shop, so the industry carries on. In some places and with some cohorts of shoppers, the outlook for retailers is favorable.”

    Commenting on the India market, a Deloitte India spokesperson mentioned that “Despite policy hurdles and other operational challenges, Global retailers consider India as one of their key markets and want to grow as India grows. While growth has surpassed most of other Global markets, India’s Retail market is young and promising.”

    The rapid shift to e-commerce is quite literally transforming the retail landscape in India. With ecommerceforming an integral part of the overall growth of retail sales, retailers are rationalising their physical footprint and intensifying their e-commerce presence. “Use of technology and social media is going to be one of the critical factors among the retailers operating in a young, vast and fragmented market like India,” Deloitte India spokesperson said

     

    Global Powers of Retailing Top 250

    For the third year in a row, revenue growth for the Top 250 apparel and accessories retailers outperformed other product sectors. Historically, this category of retailers has also been the most profitable, and fiscal year 2015 was no exception. However, retailers of fast-moving consumer goods¹ (FMCG) are, by far, the largest companies (average retail revenue of nearly US$21.6 billion) as well as the most numerous (133 retailers accounting for just over half of all Top 250 companies and two-thirds of Top 250 revenue).

    The level of retail globalisation appears to be at the same level as the previous year. Two-thirds of Top 250 retailers operated outside their home country borders and on average, they had retail operations in more than 10 countries and derived nearly one-quarter of their composite retail revenue from foreign operations.

     

    The art and science of customers

    Global Powers of Retailing 2017 also discusses the art and science of customer engagement to help retailers design fresh experiences, enabled by the right technology, and strengthen customer loyalty. What was once considered futuristic is now table stakes. Retail innovators know technology is no longer supplemental to the shopping experience, it is fundamental. Technology alone, however, is not enough. Customers are seeking new and surprising products and experiences.

     

    The five trends identified in the report are:

     

    • Less is more. Customers are defining themselves less by how many things they own and more by how curated their lives are in terms of possessions and experiences.
    • “Following” economy. Customers are seeking experiences and products that reflect the personal brand they promote on social media.
    • “Retailisation” of the world. The maker movement, the sharing economy, and other factors have made it increasingly difficult to define what a retailer is and does – non-traditional retailers are developing new business models to serve customer needs, such as subscription services and flash-sales.
    • On-demand shopping and fulfillment. Relevancy will be determined by the ability of retailers to meet the on-demand mindset of the modern customer.
    • Exponential living. Exponential technologies, like artificial intelligence, robotics and virtual reality are changing how we live and how we will shop.

     

    “Over the last 20 years we have seen a seismic shift in retail and the customers that retailers serve” says Vicky Eng, Consumer Business Retail Sector leader, Deloitte Global. “We are living in an era where customers are in the driver’s seat more than ever before and they are craving authenticity, newness, convenience, and creativity. We are living in the customer-driven economy.”

     

  • Tech and consulting firms like IBM, Deloitte and Accenture are now vying for a slice of the A&M pie

    Are tech majors better at creative?

     

    By Ravi Balakrishnan & Amit Bapna

     

    The year started with a flurry of acquisitions. Within a week, three agencies, two German (ecx.io and Aperto) and one American (Resource/Ammirati) became part of a giant conglomerate. They had an impressive roster of clients: Victoria’s Secret, P&G, Airbus, Australian Airlines, Volkswagen and Siemens. But the real draw was each of these shops being at the vanguard of digital.

     

    A specialisation of great interest to the entity that acquired them — not one of the usual suspects like WPP or Publicis, but IBM. Over the last couple of years Big Blue has built Interactive Experience, widely reported to be the world’s largest digital agency. According to Ad Age it clocked revenues of a $1.9 billion in 2015. Global rivals Deloitte with Deloitte Digital and Accenture with Accenture Interactive are also vying for a slice of the marketing pie, venturing into spaces that were previously the exclusive preserve of marketing communication companies. Sapient started life as an IT services company, and was among the first to make marketing muscle a priority, buying The Nitro Group for $50 million in 2009. It was in turn acquired by Publicis in 2015, pursuing its stated objective of becoming digitally driven.

     

    So, why is this happening? To paraphrase Georges Clemeancu, has marketing and advertising become too serious a matter to entrust to marketers and ad men? Are the tech giants here to fulfil WPP CEO Sir Martin Sorrell’s prophecy: “the future of advertising and marketing services belongs as much to Maths Men (and women) as it does to Mad Men”?

     

    It’s a bit of everything. Rajdeep Endow, managing director, Sapient believes it’s inspired by the shift of advertising from communication to experience: “The time between consumption of a brand story (through mass media) to experiencing the brand (through website, ecommerce, social media, etc) has shrunk to a single click. There’s tremendous pressure to create experiences consistent with brand promise.” And therefore the opportunities for erstwhile system integrators to augment capabilities and get into the CMO conversation, he says. It’s also because these firms are trying to upsell. While they may host and collect data, true value lies in analysis and insights. Professor Jagmohan Raju, author and professor of marketing at Wharton observes, “These companies are pretty good at, for instance, guiding CEOs in developing new products and services. They are applying the same level of sophistication to marketing decisions. They already have C-suite access.”

     

    Access gets them a foot in the door, skills get them all the way in. Realising the limitations of insights based purely on advanced analytics, IBM’s trying to crack brand mentions in unconventional spaces: unstructured data online and on social media which could be text, video or voice.

     

    Says Rajesh Nambiar, general manager, IBM Services Integration, “The traditional way of computing can’t make sense of this. To decipher it in a big data world you need cognition and intelligence built into systems.”

     

    Which gives tech driven firms a rock solid proposition. The ability to do things that are still on the wishlist of many agency CEOs: being true partners to marketers, creating solutions that impact business. Nambiar says, “We formulate the problem, see if there’s a better way and then build and deliver. An agency can build and go away but we have no choice but to show results.” It’s an area few agencies dare to tread. Especially in India, in spite of a lot of chatter, the epic quest to “move beyond TV” often ends a few metaphoric blocks down the road, in the adjacent spaces of films on YouTube or 5 second clips on Vine.

     

    Agencies have a history of partnerships with marketers, a legacy of work that’s worked and creative chops. But tech firms are catching up. Sapient brought on board ad veteran KV Sridhar as chief creative officer of its digital offering SapientNitro. The buzz in IBM is that it’s moved from hiring from e-schools and b-schools (engineers and MBAs) to include d-schools — designers. In universities like Wharton, according to Raju, marketing students prefer tech companies to traditional ones.

     

    IBM is upping the ante on creative. Not via importing talent but taking employees through training modules on design thinking. Says Suparna Menon, associate partner & practice leader -Interactive Experience at IBM “Our engineering teams don’t see this as fuzzy, lofty stuff. They see it becoming real business requirements that they design systems around.” The key, simply put, is to restate a problem: for instance, designing a system to have flowers around a house as opposed to designing a vase.

     

    A lot of this upends many ad agency creatives’ pet theories on how good advertising is made: flashes of intuition and insights derived from a life well lived. Menon says, “When you lose to the competition, you realise that relying just on intuition which is art led and not science led does not drive business outcomes.”

     

    Depending on who you talk to, this shift has either caught agencies unawares or is the wakeup call they need. Rajesh Kumar, head of marketing -Indian Subcontinent, SAP observes, “I wouldn’t call the death of large agencies just yet but there is certainly a death of the large agency thinking.” Some Indian shops have seen the writing on the wall. They are hiring people with analytic skill sets, acquiring digitally driven shops and, in a few cases, urging marketers to look further afield when it comes to solutions. Poran Malani, president, Ogilvy South, and head of Ogilvy’s global hub based in Bengaluru says of the conflict, “Do we have the ability to assimilate knowledge and use it to inform our creative? Or do these companies have the clout now to add that creative component?”

     

    At least for the moment, the jury is out. Rishi Dogra, formerly with PepsiCo and current CMO, babajob.com, believes, “At a marketing ops level, we need a singular partner who deeply understands the consumer journey across all touch points. This is the opportunity as no single entity can hold their own across the physical and digital universe — from wall paintings to app store marketing.”

     

    If agencies are constrained by their reputation for being TV guys, the tech giants are held back by lack of top of mind recall. They are not yet the first port of call for a marketing solution. While powerhouses in the digital space globally, Deloitte and Accenture declined to comment on this story. Even IBM is reluctant to reveal the strength of its local Interactive Experience operation. What it’s confident about though is the opportunity it represents. Ask Nambiar and he says, “In my mind, it’s as big as the industry itself.”

     

    Source:The Economic Times

    Copyright © 2016, Bennett, Coleman & Co. Ltd. All Rights Reserved

    Licensed to republish

     

  • The consulting firm presents its forecast for the year ahead, sans any numbers

    M&E Sector Outlook 2016 by Deloitte

     

    We were a little surprised receiving this from Deloitte’s communications agency. Normally consulting firm presentations come with PowerPoint decks or PDFs justifying the words, but this one had only prose. But, guess, it works for those not interested in the numbers and projections.

     

    The media and entertainment sector has evolved over a period of time and even though it has many sub-segments, the industry overall is growing at a fast pace. Certain segments of this sector have grown exponentially whereas other have grown at a steady pace. This sector is growing 10% annually over the past five years. If one has to list the sub-segments of this sector then it would include television, advertising, social media, print, film, radio, music, gaming, animation and OOH, among other smaller sub-sectors.

     

    Television and print media continue to shine by contributing the largest share of advertising revenue. In future the same trend is expected to continue. Digitisation has helped improving the customer experience by improving the viewing quality. Digitisation is also leading to segmentation of the television content. Regional channels are growing at a faster pace. Print industry is a fragmented one, with both national and regional players in the market. Aggressive campaigns like Make in India, Swacch Bharat etc. have heavily spent money on the print medium. Regional editions have been steadily growing.

     

    Digital and mobile platforms are becoming preferred mediums for advertising after the television and print mediums. Internet has grown gigantically from 10 million users to 100 million in a decade and from 100 to 200 million in just three years. The stakeholders are analyzing the user/customer behaviour on the web and accordingly are targeting and customising the advertisement content. Recently, there is a trend of using videos for advertising over the digital platform as they seem to be more effective than just words and images. Apps can do everything that websites can, but in a more intuitive and a convenient way. Mobile adverti through various apps and mobile sites is now gaining momentum. The highest traffic on mobile platform is drawn by the social media sites. Large population of India is active on social media. It is also noted that there is an increasing trend observed for the number of people in the age group of 35 to 65 years who are downloading apps for social media.

     

    The Indian film industry is the largest producer of films globally. Revenue from overseas market is growing and will continue to do so. Indian movies are now also available on Netflix app. Regional movies too are becoming popular. Domestic exhibitors are willing to give more screen space to regional content. The limited shelf life of films has resulted in the film being premiered on the television within three months of its’ theatrical release. The number of screens in Tier 2 and 3 cities still remains limited as compared to urban areas.

     

    Radio has also seen a good growth rate as well. New upcoming sectors like E-commerce have aggressively advertised to gain market and have used radio extensively in their ad campaigns. Advertisers no longer see Radio as an add-on medium but it has become an integral part of their media plans. This medium also gained attention of many as a mass medium with popularity of PM’s address to nation through his show “Mann Ki Baat”.  The Phase 3 license auctions have also given a boost to the industry – the reach and competition, both, have increased tremendously.

     

    India’s recorded music business will nearly double in size over the next five years. The number of music apps and streaming apps will steadily increase on the mobile platform over the next few years.  The revenue business models for these will also evolve over the period. People are getting ‘hooked’ onto these apps and thus CDs too soon are on their way out.  The transformation in which music is consumed will result in many iconic music stores closing shop – e.g. Rhythm house in Mumbai.

     

    Gaming has benefited and grown, thanks to the mass availability of smart phones in the country. Android and iOS offer a low-cost alternative to expensive gaming systems. Monetisation of games is difficult as pay model for downloads is not a preferred mode.  Thus gaming will have limited growth as compared to the other sub-sectors.

     

    Presence of VFX industry is felt in all segments i.e. films, television and advertisements. Few movies that were nominated for Oscars had the VFX work been done in India. The demand for local animation content has been rising over the past few years. Popularity of “Hanuman”, “Chota Bheem”, “Pakdam Pakdai”, is increasing amongst the younger generations.

     

    We spend a lot of time outside our home – getting from one place to another. Therefore, outdoor advertising is still here to stay.OOH advertising such as at airports, malls, metro stations etc., has gained popularity. With digital use, digitized hoardings have changed the traditional OOH platform.  Here too centralized feeds and monitoring of eyeballs etc. will help ‘specific-target’ campaigns and will help fuel the growth trend in OOH.

     

  • The internet has leveled the playing field forcing execs to rethink tigh controls typical of luxury goods, notes a Deloitte report on 'Global Powers of Luxury Goods'

    The Impact of Social Media on Luxury Goods

     

    Presenting excerpts from Deloitte Touche Tohmatsu Limited (DTTL)’s  1st annual report on ‘Global Powers of Luxury Goods’

     

    Controlling all aspects of business has been the hallmark of luxury brands. From product design to sourcing of raw materials, to distribution and marketing, luxury brands have kept tight control, thus guaranteeing brand-appropriate quality and service levels. While companies serving the mass channel took to outsourcing manufacturing and sourcing of materials to support more rapid growth, purveyors of luxury goods continued to do it the old-fashioned way, satisfied with their healthy profit margins, although perhaps with muted revenue growth.

     

    The internet has changed all that, forcing executives to rethink the tight control typical of luxury brands. The internet leveled the playing field, putting more power in the hands of the consumer with a platform that enables them to shop on their terms, when and where they want, while providing price transparency. Consumer expectations regarding price, value, and brands have all been elevated by increased information and access, and this ubiquitous access undermines one of luxury’s core tenets-exclusivity. The lack of intimacy in the virtual world can diminish brand loyalty, and the ease of comparison shopping and the fluidity of pricing further exacerbate the control issue. What follows is a closer look at the challenges and opportunities that this digital revolution presents to luxury brands.

     

     

    The Indian luxury goods market appears to be on a lower growth trajectory as pointed out in the Deloitte Touche Tohmatsu Limited (DTTL) 1st annual report on ‘Global Powers of Luxury Goods’. In 2012, India once had the fastest growing luxury markets in the Asia pacific region. India grew much faster than China but lost steam due a lack of sustenance of the growth which once made the country an attractive market.

     

    “The entire luxury goods market in India has seen a significant dip in the growth rate and is likely to see a couple of more turbulent years. However, the long term outlook remains positive and India’s luxury market is expected to rise with a strong performance. To supplement this long term growth trajectory, holistic implementation of new reforms and initiatives by stakeholders and regulators would only facilitate the vision,” said Gaurav Gupta, Senior Director, Deloitte in India.

     

    ‘Global Powers of Luxury Goods’ highlight the fact that along with Indian markets, many emerging markets like China, Brazil and Russia have seen deceleration of growth in the past year. This follows a period of rapid growth that was driven by several factors. Going forward, the emerging world is likely to have a year or two of disappointing growth while imbalances are unwound.

     

    In the last five years, the expanding global middle class in the emerging markets has supported growth in the luxury sector and is continuing to grow through 2018. According to Euromonitor the emerging markets like Asia Pacific, Latin America, Middle East and Africa combined together accounted to 9 per cent of the luxury market in 2008 these figures spiked to 19 per cent in 2013 and is expected to leap up to 25 per cent in 2025.

     

    The developed economies like U.S. and Europe benefits from the emerging markets. Over the 2012 to 2017 Euromonitor projects China to lead the tourist expenditure growth followed by India and the other emerging Asian countries. The appetite for American and European brands in the underpenetrated markets is strong and growing many luxury companies to expand its international presence hence creating opportunities in emerging markets like India.

     

    Ubiquity versus exclusivity

    E-commerce is the fastest growing retail channel, accounting for up to 20 percent of a retailer’s or brand’s total volume. According to WWD (December 16, 2013), industry sources estimate Amazon’s fashion business at $95 billion in global revenues in 2013; it is considered one of Amazon’s fastest growing businesses, with an expanding portfolio of aspirational brands. Luxury brands, however, were late to e-commerce, with many assuming that the aesthetics of their selling experience in the designer’s atelier or the flagship ‘maison’ would be difficult, if not impossible, to replicate on the internet.

     

    The potential loss of exclusivity and the prestige associated with luxury brands’ bricks and mortar locations are hurdles that can be difficult for luxury brands to overcome, but they are surmountable, and some brands have clearly embraced the technology-one can shop Louis Vuitton’s website for selected handbags, accessories, and shoes and its social media tab connects the user with Louis Vuitton on Facebook, YouTube, Google+, Twitter, Instagram, Pinterest, and Foursquare.

     

    Ultimately, luxury brands, like most consumer-facing brands, need to deliver an interactive, exciting and efficient shopping experience to all their customers regardless of channel, from flagship to mobile and everything in between. Many luxury brands reluctant to sell online have begun to use their websites to house brand stories, fashion shows, celebrity product sightings, and the like.

     

    Social media

    With the advent of social media, consumers had a new voice, increasing their individual and collective power, and communities of both brand advocates and critics sprang up. While this erodes message control for luxury brands, the internet, along with mobility and e-commerce, is one of the most effective means to introduce new products globally and provide instant gratification to shoppers in any part of the world. Moreover, social media can be used effectively as a vibrant storytelling medium for luxury brands, communicating brand heritage and iconography to a new audience of potential clients.

     

    The visual nature of Instagram, the social photo and video sharing app purchased by Facebook in 2012, makes it a natural platform for luxury and fashion brands. Users have been known to spend hours tracking their favorite brands, looking for a particular fashion silhouette, or posting pictures. With 150 million monthly users, Instagram is a powerful new social media platform: according to Pew Research, most of its users are between the ages of 18 and 29, and about 17 percent have incomes of $75,0001 and above.

     

    Michael Kors ran the first company sponsored advertisement on Instagram on November 1, 2013 and, according to Nitrogram, which ranks the most popular brands on Instagram, the brand’s increase in followers was 16 times more than it would have been following a non-sponsored post. Nike, Gucci, and Louis Vuitton all have official Instagram presences and each company has millions of followers on the platform.

     

    Omnichannel

    As retailers and mass brands have adopted omnichannel or channel agnostic distribution strategies to keep pace with consumer expectations, luxury brands would be wise to acknowledge that the internet has radically altered the path to purchase with shoppers nimbly navigating from cyberspace to store visits in pursuit of their desires. The virtual world is vital in the discovery and path to purchase. According to a recent Deloitte U.S. study, during the 2013 holiday season, omnichannel shoppers- defined as consumers who shopped online, on their smartphones, and in-store-spent 76 percent more than store-only shoppers in total2.

     

    Consumers are spending increasingly greater portions of their day online and are connected with smart phones and tablets. As uncomfortable as this change may be, for luxury players, it is participate or perish. While an entire brand’s assortment needn’t be available for sale on the internet, a luxury brand can offer, for example, a select group of accessories that help promote its brand story and keep the customer happy.

     

    To remain relevant, luxury brands have to go where their consumer and new consuming audiences are-social communities. Consumers have extremely high expectations for luxury brand sites, from design layout, functionality and ease of navigation, to brand iconography, and strength of overall brand presence. A brand strategy that encompasses the internet holistically can be successful generating interest, brand affiliation, and, ultimately, evangelism, where a customer feels compelled to share ‘brand good news’ with others through social media or word of mouth. Aspirational or premium brands such as Coach, Kate Spade, Michael Kors, and Tory Burch have been quick to adapt to the internet, as well as to social media and omnichannel strategies, and increasingly we see the most exclusive luxury brands joining the ranks.

     

    **

     

    The internet has created new distribution channels for luxury fashion brands to keep up with consumer demand for the latest fashion at a value price. In addition to ebay.com, where individuals and businesses bid on used and never-worn fashion items, flash sites such as Gilt.com provide discounts up to 60 percent off original prices, while Rent the Runway allows for temporary ownership of designer apparel and accessories, and TheRealReal.com is an online consignment shop of designer and luxury products.

     

    Custom and bespoke initiatives

    Luxury brands can retain exclusivity while still broadening their client base with the expanding market for luxury goods with custom made products, limited editions, and exclusive assortments for the internet, wholesale and flagship locations. These efforts create demand, drive store/site traffic, and elevate exclusivity while sustaining the distance between a luxury brand and a mass fashion brand. Moreover, client involvement in product design, from Van’s and Nike’s $100 sneakers to a Louis Vuitton bag for $60,000, creates an emotional attachment with the brand, driving loyalty and brand advocacy.

     

    From communication to conversion

    According to Elizabeth Canon, founder and president of Fashion’s Collective, luxury brands have spent the last few years exploring the risks and opportunities that existed for them on social media and e-commerce: “should a luxury brand have a Facebook page? How should they collaborate with bloggers? How should brands translate their offline store experience to an immersive web store?” It is likely that going forward such brands will increase their focus on how big data can increase conversion and on tracking global consumers, with return on investment and data metrics supporting branding and marketing decisions.