It is well known that luxury has been a hesitant acceptor of the digital medium, especially during the Web 2.0 era. The evolution of the internet can be broadly explained as the Web 1.0 during the 90s which was more of one sided, followed by Web 2.0 during the 2000s where SM or two-way engagement became the norm. But this was not so easily accepted by luxury brands except for some names like a Burberry which was the first to embrace Web 2.0 to make phygital stores with a whole lot of theatrics involved—large screens, RFID tags, smart mirrors, twitter-based CRM and the works.
During and after the pandemic, luxury brands have acknowledged the need for being digitally present. A whole lot of tech adaptation was necessitated. From just 10–15% of overall sales being online, it is expected that by 2025, at least 25% of global luxury sales will be online.
Besides, the lux consumer is increasingly getting younger. It is estimated that by 2025, nearly 50% of the overall luxury market will consist of Gen Y and Gen Z buyers.
Hence, resistance towards digital is on the decline. Just like during and after the pandemic, we met people and brands digitally via various apps, chatted or connected over a voice call, followed by a video call and the excitement built up towards a face-to-face meeting. Brands realise this to be the game changing attribute.
Luxury is eventually about a compelling and memorable experience. By enticing the customer online, the challenge remains to ensure a similar experience offline. Stores as the final destination are now more of a fulfillment centre where the brand story is enacted by the human connect.
More and more of the younger consumers today survive at the cross-section of gaming, e-commerce and social media. Hence, now that the Web is evolving towards Web 4.0 era, which is more immersive, experiential and decentralised, luxury is taking a lead.
The metaverse is raging ahead with almost all brands using the technological disruption caused by newer formats of AR, VR, MR, ensuring a huge amount of time is spent on the screen. All key brands like a Louis Vuitton, Adidas, Gucci are highly active on the metaverse and NFT space. In fact, the first ever Metaverse fashion week was conducted last March.
Additionally, until recently, major luxury brands across the globe had their sales plans crafted for the elite: the rich, the royal, and the renowned. However, with the online business catching on like wildfire across the world, the luxury business is no longer serving the upper class. The niche industry is getting “normal”, opening up to whosoever can afford.
As per a report by McKinsey, luxury sellers are choosing more consumer ambassadors to sell products/services. Also, going phygital has changed the shopping perceptions. Most buyers make purchases based on social media/online content and advertising. The collective marketing words, “the limited time offer” and the “exclusive collection” seem to be the keywords that stimulate immediacy factors, deciding the purchase options.