The luxury industry has always been able to combine tradition and creativity. Prestigious brands rely on ancestral know-how, but they must also meet the ever-changing expectations of consumers. Once symbolized by refined physical stores and exclusive creations, luxury is now undergoing a transformation. Digitalization, financial technologies, sustainability, and personalization are shaping a new ecosystem, where innovation is becoming a condition for survival as much as a driver of growth.
A deeply digitalized customer experience
The digital revolution has spared no sector, and luxury is no exception. Houses that once defined themselves solely by their prestigious storefronts have invested heavily in the internet. Although digital was long perceived as unnatural for a luxury brand, Hermès and Louis Vuitton were the first to launch a showcase website. In e-commerce, Hermès was a pioneer in 2002, followed by Louis Vuitton in 2005. As a result, an exceptional bag, watch, or piece of jewelry can now be discovered in an online store, purchased from a smartphone, promoted on social media, and more.
Social media was the second step in their digital odyssey, with Burberry daring to open a Facebook account and a YouTube account in 2008. A year later, the British fashion house was the first to broadcast its fashion shows live, democratizing access to fashion. It was also the first to adopt the See Now, Buy Now strategy, breaking with the chronology of new collections’ availability in stores: customers could now buy the item of their choice at the end of the fashion show. The brand with the equestrian knight logo was one of the first, along with Lancôme, to use Twitter, mainly to manage their customer service. At that time, engagement was not yet on the agenda: the only thing that mattered was greater visibility.
It was during the following decade that the race for engagement took shape, boosted by the emergence of visual social media, such as Instagram, launched in 2010. It took another two to three years for Chanel, Louis Vuitton, Dior, and Gucci to be the first to open accounts on the platform. In 2015, Balmain, collaborating with fast fashion giant H&M, was the first luxury brand to benefit from a successful media campaign on Instagram. The major fashion houses were essentially seeking to humanize their brands, reveal what goes on behind the scenes, and create storytelling. At the end of the 2010s, Instagram became an e-commerce platform in its own right with the development of the shopping feature.
But digital technology is not limited to the act of purchasing. Customers can also take a virtual tour of a showroom or configure a custom product online. Since 2018 with Gucci, they can also try on clothes using augmented reality (virtual try-on technology). The data collected allows brands to refine personalization and strengthen their relationship with consumers. Rather than distorting the DNA of luxury, this evolution broadens its international reach while creating a new closeness with customers.
The rise of financial technologies
Luxury is also opening up to innovations from the financial sphere. Blockchain has been used since 2018 to certify the authenticity of products, a major challenge in the face of the scourge of counterfeiting. Each bag, watch, or piece of jewelry can now be accompanied by a forgery-proof digital certificate, thanks in particular to start-ups such as Arianee, which are paving the way for the digital product passport (DPP) that will be required by the European Union within two years. In 2021, LVMH joined forces with Prada and Cartier to set up its Aura Blockchain Consortium, which aims to certify the origin of raw materials.
Payment methods are also evolving. In 2021, Philippe Plein became the first fashion and luxury brand to accept payment in cryptocurrencies worldwide. He is followed by the brands Off-White, Balenciaga, Tag Heuer, Gucci, and Hublot, and more recently Le Printemps department store, all of which want to cater to an international, young, and connected clientele. Following the real-time bitcoin euro exchange rate is now second nature for these consumers who pay for their purchases with digital assets. These practices show that the luxury sector is no longer content to simply observe technological trends: it is integrating them into its operations in order to remain attractive to new audiences.
Towards more sustainable and responsible luxury
Luxury customers are no longer limited to prestige and rarity. They also want their purchases to be consistent with their values, particularly in terms of the environment. The demand for sustainability has become unavoidable: recycled or innovative materials, traceability of raw materials, production that respects people and the environment. The 2010s marked the awakening of sustainability among the major luxury brands, driven by the combined effect of the new consumer expectations of millennials and the initiatives of certain leading players. Following the death of its CEO Jean-Louis Dumas, Hermès opened the Petit h workshop in 2010, laying the foundations for upcycling: this recreation studio—or second-hand store in all but name—uses scraps and rejects from its factories to design beautiful objects. In 2013, Stella McCartney distinguished itself as the first 100% vegetarian and ethical luxury brand. For its part, Kering created the “Kering Environmental Profit & Loss”, an internal tool for measuring environmental impact. Burberry’s decision to stop burning its unsold items following a media scandal in 2018 acted as a catalyst. Two years later, LVMH launched the LIFE 360 program, which aims to reduce its carbon footprint by 50% by 2030.
This evolution is not just a marketing strategy. It has a profound influence on design and manufacturing methods. Major fashion houses now incorporate transparency into their communications, detailing their commitments and efforts to reduce their ecological footprint. This shift is particularly appealing to younger generations, including millennials and Gen Z, who are very sensitive to climate issues and consider responsible luxury to be modern luxury.
Personalization as the norm
A luxury product is no longer just a rare item: it must reflect the customer’s identity. Personalization is therefore taking center stage both online and in stores. Whether it’s choosing a color, adding initials, or creating a completely custom-made piece, luxury customers want an item that reflects who they are. This approach was notably driven by Burberry, which began using AI and machine learning in 2016 to personalize its customer experience online and in stores. In 2020, Saint Laurent teamed up with L’Oréal to create its own AI skin diagnostic tool.
Artificial intelligence and data analysis reinforce this dynamic. Brands can anticipate their customers’ tastes and offer them tailored creations, sometimes even before they express them. By integrating the customer into the creative process, brands are transforming the shopping experience into a more intimate and emotional relationship. Luxury thus becomes an extension of personal identity.
A sector in constant motion
The luxury industry has never stopped reinventing itself. This is the secret to its resilience. In the last thirty years alone, digitalization has brought it closer to its customers, financial technologies have opened it up to new uses, sustainability has made it more responsible, and personalization has transformed it into a unique experience. New generations, particularly sensitive to authenticity and transparency, are pushing brands to reinvent their codes, while globalization is constantly broadening the horizons and expectations of an increasingly diverse audience. While societal and technological changes are setting a fast pace, luxury retains what makes it essential: excellence and emotion.
The future of the sector will therefore be built on this blend of heritage and innovation, tradition and modernity. Luxury must continue to surprise, seduce, and evolve, without ever losing its soul.
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Featured photo: Unsplash
