Luxury & Social Media

Is digital important for luxury consumers?

Source: 2011 McKinsey Insights China Luxury Goods

Value of the Chinese luxury market (billion RMB)

Global share (percent)

Luxury brands are a major player China has the largest luxury market in the world…

Luxury is for the kidsThe majority of luxury consumers are relatively young…

73% of China’s luxury consumers are under 45

Source: 2011 L2 Luxury Digital IQ Report

Online shopping is increasingly common…and a massive online shopping market where consumers hang out...

Source: 2010 China E-commerce Market Statistical Report

• 60% of Chinese consumers indicate that the Internet is one of the primary sources for information on luxury goods.

• 2 out of 3 Japanese women shop online

• 34% of Hong Kong luxury shoppers seek information from online sources compared with 20% globally

Brands' official websites Vertical portals News sites Social networks Blogs0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Chart Title

Source: 2010 L2 Luxury Digital IQ Report

Sources of information for luxury goods online

Social platforms drive purchase information …and use several social channels when searching for luxury goods information.

Source: 2011 L2 Luxury Digital IQ Report

The growing importance of social media for luxuryIn the past year, luxury brands have seen fan numbers skyrocket

Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11

Apr-11 May-11

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Buzz Trend on Sina Weibo from Jun 10 to May 11

LV Burberry Armani

Buzz

Volu

me

The trends continues in ChinaBuzz on Sina Weibo grew more than 7x for Burberry over 12 months

Source: Sina Weibo

• Fashion brands use Instagram to provide a sneak peak into runway shows, photo shoots, and other events.

• Instagram, available exclusively for the iPhone, has almost 10 million users.

• Burberry is leading the way with over 85,000 followers.

Luxury brands on emerging platformsBrands experimenting with Instagram enable a different type of connection

Source: 2011 L2 Luxury Digital IQ Report

The consumer journey for a luxury consumer in digital

Social should be an integral part of the consumer journey

Pre-Purchase Post-PurchasePurchase

She searches for a brand, product or trendFor women, their pursuit of luxury good begins in a search engine

Hmm, I wonder what type of

luxury watch I should buy?

She reads a variety of trend catching blogsAlmost 50% of female Chinese Netizens are active bloggers

She watches online tutorial videos to get the right lookMost Asians spend 5-10 hours per week watching online videos

Australia

India

Hong Kong

Malaysia

Singapore

Japan

China

10.3

30

3.7

8.2

2.3

61.1

199.4

Online Video Unique Viewers (millions)

Source: comScore, “State of the Internet,” 2010-2011; ages 15+, home and work locations

She logs into a brand site to see what her friends likeSocial shopping brings social proof to the forefront

Share content and connect via Facebook

Comment on a product and share with friends on Facebook

See what the ‘most liked’ products are from your network

She purchases the product onlinee-Commerce, m-Commerce and f-Commerce are increasingly popular sales drivers

Most Estée Lauder brands will have a mobile site within 2 years

90% of brand sites that register Amazon as their top destination have their own e-commerce platforms

Luxury brands are experimenting with f-Commerce as some establish actual ‘Facebook Shops’

Sharing the purchase with social networksCreating simple and creative ways for consumers to share news of their purchase

How to maintain exclusivity in digital

Creating a brand experience through contentDrawing fans into a rich experience they can only get via social media

Daily doses of inspirationKate Spade uses Tumblr to seed fun, engaging content

Allowing fans to co-create a brand iconBurberry’s ‘Art of the Trench’ has fans and bloggers redefining the trench coat

Taking the fashion show to new levelsCreating an exclusive experience just for fans

Using f-Commerce to enable customizationProviding customers an online-only opportunity to customize their purchase

Using Facebook to drive trialLetting fans try first and share with their friends

The 5 Rules of Digital in Luxury

1. Digital is no longer a nice to haveBrands with a strong digital footprint actually sell more

Sources: Yahoo! Finance, 2011 L2 Luxury Digital IQ study,http://www.internetretailing.net/2011/11/innovative-social-media-helps-burberry-to-29-sales-growth/

56.6

23.9

19.4

12.6

8.5

0%

Burberry attributes a 29% rise in sales over six months to its use of social media and an investment in improving its e-Commerce Website.

52-Week Change in Stock Price(N=44 brands, 14 public companies)

2. Factor mobile into your digital strategyOf the 485M Internet users in China, 318M access the web through a mobile phone

Outside China…

“Half of Facebook and Twitter users are signing in from their mobile devices… mobile users are also the most active sharers on social networks.” – Karl Heiz Land, MicroStrategy, Inc.

Source: 2011 L2 Luxury Digital IQ Report

3. A social media strategy is not ‘one size fits all’Consider how to deliver localized content to audiences around the world

Dolce & Gabbana’s Social Media Ecosystem

LV’s Japanese blog on Ameblo

4. Fans want to talk about themselvesPosts soliciting user comments generated the highest interaction rates

Source: 2011 L2 Luxury Digital IQ Report

5. Danger of not participatingMisconceptions and brand hijacking

Armani is a brand

specialized in foundation cream…

http://bbs.yoka.com/thread-447364-1-1.html

Rogue Chanel fan club page on Sina Weibo with nearly 170K followers

5 Secret Elements for Luxury Brands’

Online Success Thank You!