How to 'like' luxury

Bernard Peillon, chairman and CEO of Hennessy Cognac, looks forward to a weekly list showing the growing reach of the liquor in the virtual world. It includes Facebook fans and unique visitors (UVs) to Hennessy’s art promotion site, Hennessy Artistry. India, with 10,000 UVs, is currently second after Japan which has 16,000. India also has the fifth-largest number of Facebook fans (35,000) . “The old apprehensions are no longer relevant. We see the Internet as another platform for brand experience and it allows many more customers, current and potential, to learn about the brand,” says Peillon. “In many ways it is better than merely picking up a bottle. You get a full sense of history and why you are choosing to drink what you choose to drink.” He says the Hennessy iPad app, due year-end, will make the company even more “agile”.

At the heart of luxury’s promise has been its mindful eschewing of technology. Hermès, Gucci, or Louis Vuitton charge a fortune because their bags are pieced by hands, not machines. For centuries luxury has been advertised through word-of-mouth, or at best selective brand campaigns in print, rarely TV, while the actual buying happened inside carefully put together, gilded stores. But for all its devotion to tradition, today luxury confronts one of the most powerful inventions ever unleashed—the Internet.

The first response was to ignore it. The Internet was where everyday brands mingled and luxury would lose its exclusivity went the thinking. But this is being challenged. Michael Norsa, Salvatore Ferragamo’s CEO, says there needs to be a distinction between technology to inform and technology to sell. “The technology to inform will grow,” he says, adding that brands will adopt social media heavily to attract the attention of customers. “Social technology is technology on the move. Today the customer is not static, so we have to constantly talk to him from every platform.”

Ferragamo has more than 207,000 fans on Facebook. As far as selling goes, Norsa says the Internet accounts for about 1% of the company’s revenue at the moment, but is expected to double year on year in the next few years. “But we want to be very careful. We have to have full control on the platforms from where we sell and there cannot be rampant discount selling. We also have to be very careful about counterfeits.”

Luxury is facing another predicament, again in some ways brought on by technology—a changing user profile. Gucci chairman and CEO Patrizio di Marco explains it: “This is how our brand was used—the girl wears it, then she gets married and has a daughter, then the Gucci scarf gets passed from mother to daughter and then one day the mother brings the daughter to Gucci for a treat and so it goes. That will continue, but we discovered there was a new clientele, that boy who built a website and became a billionaire. There are a lot of people who are suddenly becoming rich and they want to buy, so how do we explain to them in their language who we are? The biggest challenge of the luxury CEO today is to be able to talk to different customers and still be consistent.”

This is especially true as brands move deeper into Asia and tap younger, newer customers. Raymond Weil president and CEO Olivier Bernheim, who does not have a Facebook account, and is still coming to terms with this new world, relies on his son. Elie Bernheim is the Raymond Weil director for digital and social media. On his watch, the company has garnered more than 100,000 likes, has a popular app, and more than 2,000 followers on Twitter.

“Luxury was never about anything hurried or frequent because the greatest luxury is time, but this is a new world; my son now tells me that you cannot post one or two things from time to time on social media. It has to be regular, all the time, every day, many times a day, ” says Olivier Bernheim.

Today Burberry and Louis Vuitton have more than 13 million and 9 million people, respectively, following them on Facebook. While most apps come free or cost around a dollar, Louis Vuitton has released a 100 Legendary Trunks app, which parades the company’s history and costs $18.99 (Rs 1,049.39). It also has videos released online and on-app, such as the one-and-a-half minute The Art of Packing, a visual guide on how to best pack your very expensive trunk with your very expensive things. Tip: Wrap shoes in felt bags and always straighten collars of jackets.

At Roberto Cavalli, CEO Gianluca Brozzetti has bigger plans. Cavalli is building a platform which will have backstage videos of its shows and carry tours of its major stores. Brozzetti promises this will be real time. “As soon as the stock is in the real store, it will be in the virtual store, a seamless interface.” The project will be completed in two years.

Some brands such as Burberry have a lead. The label has an integrated digital strategy to create a social enterprise in luxury: creating the artofthetrench.com, a website displaying Burberry’s history; a Runway to Reality concept which allows people to watch a show online and immediately buy the articles seen; and ‘tweeter shows’ that have images of models wearing Burberry moments before a fashion show. The company has collaborated with Salesforce.com and its Salesforce Chatter platform to build an intra-Burberry network that taps into what employees—who are allowed unlimited Facebook and Twitter access—are saying about their work.

Selling online began with Net-a-Porter, the first major site for ready-to-wear, and has expanded. In India, Styloot is a fashion search engine that works on the principle that customers don’t want just a particular item, but a whole look. It helps customers find that look, searching through clothes and accessories across brands, and point the user to the relevant retailers. Significantly, Styloot doesn’t discount, the core premise on which e-tailing is built.

The site’s business model also challenges the basic assumption of top-down fashion retail previously defined by brands. It puts consumers and not brands at the centre. “We faced initial resistance since brands [the site has tie-ups with Chanel, Prada, and Gucci] are very careful about the sites they associate with. Establishing relationships with a wide range of brands spread across Europe, the U.S., Asia, and Australia was a time-consuming and sometimes maddening process,” says Kartik Nandyal, CEO of Styloot.

Carlota Espinosa, founder of the multimillion-dollar, member-only shopping website HauteLook, recently acquired by Nordstorm, says the core ideas of luxury prevents it from being accessible. “Luxury is built around the idea of heritage, idea of exclusivity, restricted access, etc., but that also means that brands aren’t nimble enough to reach millions of new customers. For that, technology is invaluable.”