Source: chanel.com
Knowledge@Wharton staff
Through a special arrangement, presented here for discussion is a summary of a current article published with permission from Knowledge@Wharton, the online research and business analysis journal of the Wharton School of the University of Pennsylvania.
How does a luxury brand retain its extravagant feel while catering to the growing horde of consumers who love to shop online?
“Luxury is about scarcity, exclusivity. The internet is about mass and reducing those boundaries, and so it’s a real conflict,” said Barbara Kahn, a Wharton marketing professor and director of the school’s Jay H. Baker Retailing Center. “But of course, if people are shopping online, luxury is going to have to go in that direction.”
Research shows that only 10 percent of luxury sales happen online. Yet purveyors of posh are exploring how to harness the power of online channels in a way that augments their image, their customer service and, ultimately, their profits.
Luxury brands have a story to share, a legacy to maintain and an experience for the customer. That’s why many of them often don’t sell their products online or offer only a curated number of items for online purchase. Instead, they use their websites as a digital extension of the customer experience.
“If you do a good job online, you can actually use that channel to enhance the brand, and then you can have the luxury in-store experience going on in the physical store,” Ms. Kahn explains.
An attractive, engaging website and a well-fed social media account can add dimension that draws more potential customers to a brand. Chanel’s website, for example, features video clips from its runway shows, celebrities and legendary designer Karl Lagerfeld. More online customers mean more data can be collected, which can help hone a marketing strategy.
One downside for luxury brands trying to sell opulence online is price transparency. Posting different prices for the same item in different countries can lead to comparison shopping. Standardizing prices or selling specific items in certain countries can help but some luxury brands find posting prices is not part of the luxury experience.
“When you think about luxury pricing, you’re supposed to think about it like art,” Ms. Kahn said.