our actions today will shape our tomorrow...2020/05/30 · our actions today will shape our...
TRANSCRIPT
Our actions today will
shape our tomorrow( E R M E N E G I L D O
Z E G N A )
LUXURY BRANDS INA TIME OF CRISIS
Learnings on creating long-term
value following the COVID-19 crisis
A P R I L 2 0 2 0
Understand how luxury brands have
pivoted during the crisis
Identify consumer engagement best
practice
Uncover sustainable strategies that
luxury brands could use after the crisis
O U R A P P R O A C H
K E Y O B J E C T I V E S
This study was
designed to answer
3 key questions: Secondary research
A scan of news and perspective articles published
between February – April 2020
Social media analysis
A scan of luxury brands’ websites and official Instagram
accounts
Implications and strategic opportunities
An understanding of how current crisis-related tactics
might be shaping the future for luxury brands
WHAT ACTIONS ARE
LUXURYBRANDSTAKING
DURING THE OUTBREAK?
3 KEY AREAS OF FOCUS
P R O D U C T C H A N N E L SC U S T O M E R
E N G A G E M E N T
KEY LEARNINGS
S T R AT E G I C I M P L I C AT I O N S W H AT M I G H T B E N E X T ?
LUXURY BRANDS
ARE PIVOTING
PRODUCTION TO
ADDRESS PUBLIC
HEALTH NEEDS
01 03
02
C H AN N E L S
P R O D U C T
W H AT C A N B E T U R N E D I N T O A
S T R AT E G I C O P P O R T U N I T Y ?
C U S T O M E R
E N G AG E M E N T
Luxury brands
are adapting their
production lines
to manufacture
medical supplies,
from hand
sanitizer to
surgical masks
and medical
overalls
FROM DESIGNER
APPAREL TO MEDICAL
SUPPLIES…
LVMH is producing alcohol-based
sanitizers for French health authorities
Prada started producing 80,000 pairs of
medical overalls and 110,000 masks for
healthcare professionals following a request
from the Tuscany Region
Zegna converted part of its production to
produce sanitary masks
More luxury brands like Coty, Gucci, YSL,
Balenciaga, Ralph Lauren, Burberry and
others adopted similar approachesSources: BBC; Jing Daily; WWD
WHAT MIGHT
BE NEXT?
Think about product
portfolio diversification
opportunities
S P O T N E W
C O N S U M E R H A B I T S
I N FA S H I O N
Social distancing
and self protection behavior
will continue even after
COVID-19 crisis, creating
opportunities for upcoming
collections to address new
consumer needs
I N N O VAT E A R O U N D
N E W N E E D S
Fashion accessories to cater to
extended social distancing and
protection needs, such as all-
season gloves and scarves,
fashionable masks, or high-end
hand sanitizers
E-COMMERCE
AND DIGITAL
EXPERIENCES AS
SUBSTITUTION
FOR IN-STORE
INTERACTIONS
01 03
02
P R O D U C T
H O W T O TA K E A D VA N TA G E O F T H E
S H I F T I N G C O N S U M E R O N L I N E B E H AV I O R ?
C U S T O M E R
E N G AG E M E N T
C H AN N E L S
Luxury brands
are finally
optimizing their
e-commerce
experience, given
the expected
growth in the
online channel,
following a dip in
offline purchases
during the
outbreak
Sources: WARC; Forrester;
AfterPay Insights; Bain &
Company
G L O B A L LY, E - C O M M E R C E
A C C O U N T S F O R 4 % O F L U X U R Y
G O O D S R E V E N U E S
Traditionally, luxury brands have been reluctant to
embrace e-commerce, which has created challenges once
their physical channels shut down and all shows cancelled
I N C H I N A , O N L I N E A C C O U N T S
F O R A B O U T 1 4 % O F L U X U R Y
S P E N D I N G , a l s o d r i v e n b y t h e
S A R S o u t b r e a k i n 2 0 0 3
Major luxury brands regularly engage with empowered
Chinese consumers across top digital marketing and
e-commerce platforms such as JD’s TopLife, Tmall
Luxury Pavilion, WeChat, and Weibo
E-commerce
seen as a
long-term
strategy
A Bain & Company survey with senior
executives in consumer goods, apparel and
luxury industries shows 60% are planning to
overhaul the way their brands went to
market, moving away from offline
spending and toward online channels
After SARS, China
witnessed an
unprecedented
uptake in
e-commerce,
boosting
online investments.
COVID-19
might have a
similar effect in the
rest of the world
J D . C O M
Controls 17% of China’s e-commerce market
and is Alibaba’s biggest competitor
A L I B A B A
Prior to SARS, Alibaba was a B2B
platform, connecting U.S. buyers with
Chinese suppliers
During the epidemic, Alibaba ramped-up
its e-commerce channel by adding 4,000
new members and 9,000 listings each day:
a 3-5x increase over the pre-SARS rate
Due to global travel bans to China
because of SARS, international
businesses increased their use of Alibaba
In July 2003, Alibaba launched Taobao,
which became China’s number one
consumer-to-consumer marketplace,
surpassing eBay
Alibaba’s
business
grew 50%
that year,
with daily
revenues
of 10
million
RMB
Currently controls 55% of China’s
e-commerce market
The growth of e-commerce in China following SARS (2003)
JD.com
became
one of the
largest
online
retailers of
electronics
and later,
other
categories
in China
JD.com started as a chain of 12 small
electronics shops that launched an
online e-commerce site
Following interest from users on internet
forums, the brand set up a revenue-
sharing agreement with CNBest, driving
an increase in sales
As business plummeted during SARS,
JD closed all but one of its stores to
save resources
Within a year, JD launched the
e-commerce website 360buy, and invested
in building its online business
China’s
Second Largest E-tailerBiggest Consumer
Marketplace
In China
C AS E S T U D Y
Sources: DigitalCommerce 360;
eMarketer
10
© 2019 Grail InsightsDraft for internal discussion only
Immersive digital
experiences
are essential
to luxury
e-commerce
success, now
more than ever
Creating
Digital
Customer
Experiences
LIVE
STREAMING
‘SEE NOW
BUY NOW’
FUNCTIONALITY
VIRTUAL POP-UP
STORES
L IVE
STREAMING
Shanghai
Fashion Week
experiment:
the first-
ever entirely
digital event
Luxury
brands adopted
live streaming to
showcase their
new collections
Sources: China Daily;
Jing Daily; Forrester
23 Feb: Armani was the first luxury brand who decided to
showcase its Autumn-Winter collection without public, and
live-streamed the event, during Milan Fashion Week
25 Feb: Dior broadcast on Weibo their 2020 Autumn-
Winter women’s collection show in Paris, to engage Chinese
consumers
24 – 30 March: Shanghai Fashion Week turned into a digital
event. All showcases of the Autumn-Winter 2020 edition were
broadcast in China via Alibaba’s Tmall, with 2.5 million viewers
registered in the first 3 hours
26 March: Louis Vuitton is the first international luxury
brand to host a live streaming session on Little Red Book,
the Chinese social media and e-commerce platform
“SEE NOW,
BUY NOW”
AND V IRTUAL
POP-UP
STORES:
Technology
driving
immersive and
instant
purchasing
experiences
Sources: ICG;
Forrester; Vashi
Diamonds Facebook
page
“ S E E N O W , B U Y N O W ”
F U N C T I O N A L I T Y
E M B E D D E D I N L I V E -
S T R E A M E D S H O W S
Shanghai Fashion Week enabled
viewers to pre-order new looks from
the collection in real time via their
smartphones
French label Lanvin also joined forces
with the high-end e-commerce
platform Secoo, live-streaming their
Fall/Winter 2020 runway show with
the popular “see now, buy now”
functionality
V I R T U A L P O P - U P
E X P E R I E N C E S D R I V E
S A L E S
Louis Vuitton’s Valentine’s Day
exclusive pop-up store via a
WeChat mini program allowed
customers to place orders online.
Despite the outbreak, Louis
Vuitton doubled its online
sales compared to last year’s
Valentine’s season
Other brands had been already
experimenting with 3D virtual
pop-up stores on Tmall’s
Luxury Pavilion before the
pandemic (Alibaba’s B2C section
for premium and luxury brands)
Other brands are experimenting with technology to provide a personalized service normally provided in-
store: London-based diamond brand Vashi setting-up video appointments with their sales associates.
Embracing new technologies will enable luxury
brands to maintain a constant conversation with
their customers, and create a closer integration
between the digital and the physical touchpoints
WHAT MIGHT
BE NEXT?
B U I L D C R E D I B I L I T Y
Continue to invest in building trust and credibility online, with technology
investments to focus on creating an immersive digital shopping experience
STRATEGIC
IMPL ICAT IONS
Opportunities for
the future
L E V E R A G E T E C H N O L O G Y
Adopt live streaming and 'see now / buy now' technology to showcase new
collections. This can help to reach new audiences and positively impact the
brand's sustainability commitments
A D O P T S T R AT E G I C PA R T N E R S H I P S
Enhance your own websites and consider strategic partnerships with established
local e-commerce sites to boost your online reach
P R I O R I T I Z E Y O U R P O R T F O L I O
Analyze sales data to identify shifts in consumer behavior. Consider a bigger push
for promoting accessories online, as they are easier to sell through digital channels
SOCIAL MEDIA
BECOMES
INSTRUMENTAL IN
KEEPING
CONSUMERS
UPDATED ON
LUXURY BRANDS’
SOCIAL
RESPONSIBIL ITY
INVOLVEMENT
01 03
02
C U S T O M E R
E N G AG E M E N TP R O D U C T
H O W C A N L U X U R Y B R A N D S C O N T I N U E T O
B E R E L E VA N T ?
C H AN N E L S
Brands are
leveraging social
media to
communicate
positive
messages and
outline their
efforts to support
the cause…
Positive
Personal
Messaging
Sources: Kering Instagram;
Dolce & Gabbana Instagram;
Trussardi Instagram; Moncler
Instagram; Dior Instagram;
Quid.com
“ T O G E T H E R .
K E R I N G ”
C A M P A I G N
W E A R E U N I T E D ,
T O G E T H E R ,
S T R O N G E R
“ L O V E H A S N O
F E A R ” C A M P A I G N
O N W E I B O
4.2 billion views in a week
# C O N T R U S S A R D I
/ # C O N B E R G A M O
C A M P A I G N S
# W A R M L Y M O N C L E R
Positive messages series:
Find warmth at home; Find
warmth in reflection; Find
warmth in togetherness
# D I O R S T A N D S W I T H
Y O U C A M P A I G N
…Some are
taking a step
forward by
engaging
consumers
through relevant
content and
addressing their
new needs
Inspirational
Content
Sources: Oakley Instagram;
Michael Kors Instagram, Hugo
Boss Instagram; Chloe
Instagram; Harper Bazaar
B O T T E G A
R E S I D E N C Y :
a virtual platform featuring
content from designers and
artists, rising chefs and
musicians. Available via
Instagram, YouTube, Weibo,
WeChat, Line, Kakao, Spotify,
Apple Music, SoundCloud, and
the Bottega Veneta website
#ForTheLoveOfSport
At home workouts from Oakley
Athletes
The brand adopted a more
personal touch, with video
content showing Michael himself
cooking and enjoying life with his
cat in his Manhattan apartment
#BOSSTOGETHER
“Every Friday we will share
moments of inspiration and
ideas from our BOSS family”:
A series of inspirational messages
from various public figures,
recorded in their homes
Chloé Voices: uplifting content,
live interactions and
performances on Instagram feed,
Live and Stories
Most luxury
brands supported
the cause by
providing strong
financial
contributions to
local communities
Sources: Business Insider;
WWD
Corporate and
Personal
Donations
$ 1 . 4 M I L L I O N
T O T H E R E D
C R O S S
S O C I E T Y O F
C H I N A
‘ T O G E T H E R
W I T H L O V E ’ : € 3
M I L L I O N
P E R S O N A L
D O N A T I O N T O
I T A L Y ’ S C I V I L
P R O T E C T I O N
A G E N C Y , A M O N G
O T H E R S
€ 2 M I L L I O N T O
L O C A L H E A L T H
O R G A N I S A T I O N S
I N I T A L Y
$ 1 0 M I L L I O N
T O H E L P U . S
E M P L O Y E E S ,
P A R T N E R S
A N D
C O M M U N I T I E S
I M P A C T E D
D O N A T E D T W O
I N T E N S I V E C A R E
U N I T S T O E A C H
H O S P I T A L I N
M I L A N
€ 2 0 M I L L I O N
T O P A R I S '
P U B L I C
H O S P I T A L S ,
A L O N G W I T H
H A N D
S A N I T I Z E R
A N D M A S K S
P R O D U C E D I N
I T S
F A C T O R I E S
€ 1 0 M I L L I O N
F O R T H E
C O N S T R U C T I O N
O F A H O S P I T A L
I N L O M B A R D Y
€ 2 M I L L I O N T O
I T A L I A N
H O S P I T A L S
$ 1 M I L L I O N T O
U S A N D U K
C H A R I T I E S &
W I L L A L S O
M A T C H A N Y
E M P L O Y E E
D O N A T I O N T O
T H E C A U S E
CASE STUDY
Nike’s customer
engagement
approach boosted
e-commerce sales
by 30%
Sources: Retail Dive; Marketing
Week; Fortune
E - C O M M E R C E : When offline sales began to slow,
Nike quickly moved resources to support its e-commerce
channel. The workout app Nike Training Club saw an
increase in sign-ups, which in turn, created a surge in
Nike’s e-commerce app
P R O M O T I O N S : The brand offered a 90-day free
trial to its workout apps → opportunity to increase the
number of paying subscribers when the crisis is over as
well as to promote its products
S O C I A L M E D I A : “At home” video workouts with
water bottles instead of weights posted on Douyin (TikTok)
gathered 346,000 followers and 2 million+ likes
C A U S E M A R K E T I N G : Nike donated $15 million
to help fight the pandemic
Nike’s digital sales in
China are booming,
despite the fact that
80% of the stores have
reopened
Digital
Consumer
Engagement
Continue to stay relevant to consumers by
addressing things that they care about
WHAT MIGHT
BE NEXT?
S TAY R E L E VA N T T O C O N S U M E R S
Understand consumer needs and emotions and foster a sense of community
through social media engagements
STRATEGIC
IMPL ICAT IONS
Opportunities for
the future
C O N T I N U E T O D E V E L O P R E L E VA N T C O N T E N T
Identify opportunities for content generation to share through social media (other
than COVID-19-related content)
B E S E E N A N D A C T I V E O N S O C I A L M E D I A
Ensure presence on relevant social media platforms across geographies
(e.g. Weibo, TikTok, Little Red Book, WeChat video, Youku, Snapchat)
E N H A N C E D I G I TA L E N G A G E M E N T
Ramp-up digital marketing and focus on customer activation, rather than brand
building. This would continue to attract consumers into stores when they reopen
F INAL
LEARNINGS
How luxury
brands can turn
crisis tactics into
strategic
opportunities
→ Use this time to experiment, digitize processes and
upgrade your systems and technology
→ This will enable brands to develop operational
efficiencies and provide personalized experiences to
customers when things bounce back to normal
→ Anticipate shifts in consumer sentiment and behavior
(e.g. people might continue to be more cautious in
social settings, even when the crisis is over)
→ Identify product development opportunities, especially
in the accessories space
→ Identify relevant technology to enable you to design
immersive shopping experiences across all digital
touchpoints
→ Identify relevant strategic partnerships to boost your
online presence and e-commerce sales
→ Maintain connections with consumers
→ Positive messaging and inspirational campaigns will
keep your customer community engaged
CONTINUE TO LEVERAGE
SOCIAL MEDIA
ENHANCE DIGITAL
CAPABILITY
FOCUS ON
BRAND IMAGE
EXPAND
PORTFOLIO
CREATE IMMERSIVE
DIGITAL EXPERIENCES
BE
ST
P
RA
CT
IC
E
→ Consumer perceptions of your brand are likely to be
re-defined during times of crisis, and they will stick in
the long term. It is important to reinforce your
messages now
Ready to Rise?
Reach out at:
Market and Competitive
MonitoringBrand
Tracking
Customer
SegmentationBuyer
Personas
Purchase
ProcessM&A
Support
Market Entry
Assessment
Customer
Experience
Concept
Development
Product Propensity
Analysis
GRAIL INSIGHTS’ SOLUTIONS
WHAT NEXT?
How will your brand
rise to leverage these
opportunities?
We’ve seen from past recessions that consumers like to reward themselves as
they emerge from periods of austerity. The key is to prepare for that moment.
Grail Insights is here to help now and in the months ahead, with flexible
solutions that work in the best and worst of times.