Dive Brief:
- Gucci, Louis Vuitton, Michael Kors, Ralph Lauren, Jimmy Choo, Kate Spade, Hugo Boss, Burberry, Fendi and Prada, respectively, made the top 10 rankings of a new Gartner L2 report measuring the digital performance of luxury fashion brands. The "Digital IQ Index: Fashion Global 2018" report, whose findings were made available in a news release, analyzed 77 luxury fashion brands across website and e-commerce channels, digital marketing, social media and mobile in the U.S., U.K., France and Germany. Brands were rated as Genius, Gifted, Average, Challenged or Feeble. Gucci and Louis Vuitton both received the Genius label.
- The report found that luxury fashion brands in the U.S. fall behind other retail verticals in omnichannel fulfillment, with 29% of brands in the index having click and collect functions compared to 71% of regular department stores. According to Gartner L2, this suggests that consumers have less of an incentive to purchase directly from luxury fashion brands online. Brands in the category are also not translating their customer service features to European sites. Less than half of the brands analyzed in Europe list customer service in local time zones, with just 36% doing so in Germany.
- Instagram continues to be a focus for fashion brands that invest in social commerce. Adoption of Instagram shopping features leaped from 12% to 42% year-over-year. Additionally, 21% of companies have a Facebook Shop tab on their pages, but many aren't including a variety of products.
Dive Insight:
The Gartner L2 report provides a window into consumer preferences when it comes to luxury fashion labels and how brands are adopting more digital and social media tools to meet shoppers' evolving needs. A comparatively sluggish implementation of omnichannel functionalities on luxury fashion brand's websites suggests these companies might be thinking more about the mobile and in-store retail experience, since people are potentially hesitant to buy pricey products without trying them on in-person first.
However, the explosive growth of commerce conducted via apps like Instagram also shows that social media channels, where tactics like influencer marketing are popular, are creating resonance with consumers. Instagram has quickly built out its social commerce functionalities in recent months to accommodate this trend, which could poise luxury labels for future growth in the space. In September, the Facebook-owned image sharing app debuted two new shopping features that let users more easily buy products that brands and influencers share. The company is also rumored to be working on a standalone app for m-commerce.
Gartner L2's report reinforces other recent industry research about the opportunities for retail marketers on Instagram. Seventy percent of surveyed consumers reported making a fashion, beauty or style-related purchase after seeing something on the app in a 2017 study by Dana Rebecca Designs. Many of Instagram's most active users also come from the coveted millennial and Gen Z segments — tech-savvy audiences that luxury fashion brands are striving to target through their digital and social investments.
Millennials, in particular, feel positive about their future earnings and are more likely to purchase luxury products over older generations, according to a report in Bloomberg. Consumers age 18 to 35 contributed 85% to the luxury market growth last year and will represent 45% of all high-end spending by 2025, according to an analysis by UBS Group AG of consumers in China, Europe and the U.S. cited in the Bloomberg report.
"Despite lower spending power, millennials are more likely to purchase luxury goods than any other age cohort," Christina Yang, research associate at Gartner L2, said in a statement included in the press release. "They have significantly different ideas about luxury than prior generations, and brands must be increasingly reliant on values-based marketing both in the U.S. and abroad, in order to target and reach these consumers"
