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Study: Digital transformation in the luxury sector

Study: Digital transformation in the luxury sector

The Luxury Institute unveiled on April 27, 2021 a detailed report concerning the digital transformation that has been shaking up the luxury sector for several years.


The Luxury Institute has unveiled a study on the various mutations linked to the digital transformation that the luxury sector is experiencing. The report is organized, first, by conducting a survey of its Global Luxury Expert Network (GLEN). The information provided by this survey is then complemented by research from reliable and impartial sources


In its report, the Luxury Institute attempted to define digital transformation, concluding that “digital transformation, first and foremost, is about brand imagination and creativity, creating far greater emotional and economic value for customers and associates through enhanced communications, interactions, experiences, and journeys.”


According to the Luxury Institute, the digital transformation of luxury brands cannot happen without a change in organizational structure. Indeed, it’s important for luxury brands to organize around customers, or customer segments, beyond products or distribution channels to drive effective digital transformation.


Only truly customer-centric brands that view their employees and customers as human beings, not pieces on a chessboard, will succeed. Empathetic and emotionally intelligent communication skills are needed,” the Luxury Institute details in its report.


The Luxury Institute also examines the success factors for digital transformation, and according to GLEN members and secondary research behind the report, one of the main obstacles to digital transformation for luxury brands is the perceived overly “technological” focus of the “technocrats” who are entrusted with digital transformation projects.


The fact that the same solutions are offered to all brands destroys the creativity and uniqueness of the brands’ DNA, especially in the high-end and luxury product and service categories,” the report points out.


GLEN members also fault luxury brands for the makeup of their technical teams, which tend to lack empathy and view customers as subjects rather than as humans. This results in blurring ethical lines and losing customer trust, such as with data collections. “This lack of empathy skews and damages the design of customer experiences and journeys,” they add.


Understanding the direction of customer needs and wants and thinking for yourself rather than blindly copying one-size-fits-all digital transformation solutions is critical to brand longevity,” the report continues.


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Finally, GLEN‘s experts highlight the most common mistakes luxury brands make in digital transformation and point out that the industry tends to think of digital transformation as a way to replace or surpass the human. Yet technology should not be used as a replacement for human relationships, at the risk of losing the very essence of the luxury sector.


The valuable creation of desire, curation of products and services, and the joyful emotional intelligence of luxury brand ambassadors must always prevail,” the experts say in the study. “The rich human connective tissue that defines the luxury industry must never be torn apart, or the industry becomes another soulless commodity category defined by price.


Regarding brands, Sephora, Gucci, Amazon, Nike and Tesla were cited by respondents as luxury leaders in digital transformation, differentiating themselves from their competitors. More established brands such as Hermes, Chanel and Rolls-Royce were also mentioned as emerging in the digital transformation space. As an industry, GLEN members rated the luxury sector as a whole as “poor“, with a majority rating between 5 and 6, on a scale of 1 to 10.




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