The concept of luxury fashion has been established in our society for quite a long time. We can trace is all the way back to the nineties, when Sombart defined luxury goods as “any expense that exceeds what is necessary”. We have now learned to understand the world of luxury fashion and luxury goods in general as 'products made of the finest materials, priced at the top of the market, conspicuous in their quality, often with the brand identity visible, conveying apparent status and sold only in high service venues' as the publishing house Forbes puts it.
The “richness” symbol that used to be attached to the term luxury has changed with time. Today, luxury suggests uniqueness, exclusiveness, reachable but not necessarily rich or aimed exclusively for the rich.
Back in 2013, Google pointed out that 82% of luxury purchases occurred in-store while 78% of shoppers researched online before buying. Back then, the main question was ‘How can marketers leverage the digital divide’?
Over the past few years, the luxury fashion sector has expanded its position in the consumer market landscape, developing into one of the most rapidly growing and well-performing industries, with leading brands and high-end firms experiencing impressive growth, thanks to the implementation of a variety of digital and experiential strategies that build meaningful relationships with the consumer.
With the arrival of the coronavirus pandemic, things were evidently shaken up, even for such an established and flourishing industry. The pandemic didn't just shake the financial security of thousands of consumers, it also made sales for well-established luxury firms unstable and unpredictable. Additionally, the pandemic has changed the consumer's shopping behaviour. If luxury was originally associated to richness and a form of materialistic expense, today consumers’ personal values are the moving factor, strongly guiding consumers and fashion enthusiasts throughout the process of decision-making and purchasing.
While luxury clothing, shoes, bags, jewellery and accessories continue to attain luxurious value, the decision to purchase luxury garments and goods is hugely influenced by the environmental impact, brands’ attitudes towards workers, local production, fair wages, and more.
Luxury is a brunch of the fashion industry that has always relied predominately on the in-store luxury experience.
Before the pandemic, luxury brands relied on experiential luxury as their main strategy, offering first-class experience and premium customer services across flagship stores and outlets. Now, with the ongoing pandemic and with social distancing measures still in place in several countries around the world, luxury firms are rethinking and repurposing their main strategy.
In 2020, several luxury brands started to introduce virtual formats of in-store events, as well as digital fashion shows to reveal the newest collections, with fashion guests invited to join-in remotely.
Global luxury fashion platform Farfetch observed significant changes to the way they operate as a luxury fashion firm and summarised the shifting nature of luxury fashion with 4 focus points:
1. Travel spending. There has been a significant change with luxury purchases during tourist activities. Pre-pandemic, the largest percent of luxury purchases were made by tourists in airports and at major fashion capitals around the world including Paris, Milan or New York. To aid this gap generated by the travel restrictions and the substantial drop in international travel, Farfetch implemented a cross-border activity.
2. Changing demographic. The spending power is now held by the younger generation. Farfetch studied their data and pointed out that Gen Z customers are more digitally native and therefore more open to purchasing luxury goods online without trying on or ‘feeling’ the products. This is a positive element for shopping luxury during the pandemic, meaning the in-store experience isn’t necessarily important in order to finalise a purchase.
3. Shift to digital. The shift to digital is attracting new buyers despite the challenges that purchasing high-value goods through online channels brings.
4. From big to small. The digital approach to luxury has enabled Farfetch to aid small boutiques (selling through the Farfetch marketplace) that don’t have the capability to keep up with the new digital demand.
This past year, we've seen how the future of physical stores has become uncertain. However, there are contrasting opinions about the future of luxury fashion. The first scenario sees physical stores and interaction as the focus strategy for luxury, even after the pandemic. Experts in the industry believe that the future of luxury fashion still lies in brick-and-mortar stores. In the book Future Luxe, Erwan Rambourg, Managing Director and Global Co-Head of Consumer & Retail Research at HSBC discusses that physical stores are critical to the luxury experience, which will result in the luxury sector choosing to prioritise brick-and-mortar and physical interaction over online sales. Rambourg believes that e-commerce in luxury is more about “storytelling rather than selling.”
In the second post-pandemic scenario, we see a growing market for second-hand luxury fashion. Second hand or resale was already booming in 2019, then with the pandemic and the growing financial difficulties for many, resale started to become even more common. Since then, luxury sales channels and established luxury firms have reinvented themselves to offer the opportunity to sell second-hand fashion garments, shoes and accessories.
But how does it work? Essentially, established luxury firms and sales channels create new marketing partnerships with second-hand sellers such as TheRealReal, department stores or specifically built second-hand stores. Firms and partnership stores then arrange for the used or upcycled goods to be sold to consumers. This approach to luxury fashion aims to build a relationship with today’s consumers, who desire to own luxury goods, but also care about the environmental impact of every single purchase, allowing their personal values to guide and influence their decision to buy high-end garments, accessories and jewellery.
We see that luxury continues to have a pillar role in the market. With consumer shopping behaviour and expectations continually changing and evolving, the luxury sector has done well in keeping its strong position by redefining its selling objectives and expanding its value to consumers.
With the fashion industry expected to grow by 8.7% by 2022, Google Shopping offers great opportunities for brands to boost their online sales. Consumers are spending more time online, whether it’s researching products, searching for inspiration or making purchases. Fashion brands should implement at least one of these 3 strategies to leverage the digital potential that luxury fashion holds now.
1. Customer match
With Customer Match on Google Shopping, you can use your own customer email list for Ad targeting. The data you collect from customers who have made purchases before can help you tailor ads to their style and preferences. Additional benefits to using Customer Match on Google Shopping include improving conversion rates, retaining existing customers to build brand loyalty, acquiring new customers, converting offline shoppers into online customers.
2. Customer relationship
Build a solid relationship with your customers. The stronger the brand-customer relationship, the more likely your customers are to allow the use of their personal information, which you can then use for personalised offers. Customers shop more when products match their exact needs and preferences.
3. Showcase Shopping ads
Compared to Product Shopping ads, Showcase Shopping ads are more engaging as they offer consumers the chance to discover products in a visually rich and fully curated experience, helping them make the decision to buy. Showcase Shopping will allow consumers to easily discover your products and choose their preferred items, driving more qualified leads to your brand’s website.
Are you an online merchant in the fashion industry? We hope that you have found this knowledge post useful. Find our Product Feed Optimisation Guide here and discover how to start selling more through Google Shopping today!