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Saturday, September 24, 2016

When Tech Meets Luxury

~ 8th CEIBS Prestige Brands Forum

Shanghai, China. September 24, 2016 – The world of prestige brands is changing. Gone are the days when big name brands could rely on past success to generate a steady stream of new clients.  Today’s customers, who are as ever-evolving as the technology that plays an increasingly important role in how they interact with brands, demand more. Now it’s up to the brands to meet those needs.

“The change in luxury, not just here in China but globally, has definitely affected our strategy,” said Daegal Ritz, Senior Vice President for Marketing at BSH Home Appliances (China) Co., Ltd. He was speaking on the side lines of today’s 8th CEIBS Prestige Brands Forum. “[In terms of] digital, we see that China is pretty much in the lead. So for us, China is a hub to learn how to play on this field.” That seems sound strategy, as Chinese are the number one consumers of luxury, accounting for about 29% of global sales.

Like Ritz, Michaela Merk, Associate Professor of Luxury Marketing, Retail and Digital Management at University Paris Dauphine, agrees that digitisation is a major game changer. But prestige brands hoping to successfully adapt to – and even thrive from – this change, she said, need to remember that it all comes down to people. “Growing digitalisation drives, and needs, growing humanisation,” said the author of Luxury Sales Management, Winning over the Strategies of your Brand Ambassadors.  This means transforming sales teams, already in traditional bricks and mortar stores, into brand ambassadors. “The luxury customer wants to have an exceptional experience, with exceptional people, with an exceptional brand. It’s not [about] management through money, it’s management through emotions!” she explained.

The luxury experience is something that Ritz can relate to. It’s a large part of his company’s marketing strategy for its Gaggenau line which is described as not mere kitchen appliances but a culinary experience – one to be shared with friends. “What we are looking at is how to combine this luxury experience, in a connected world, in order to get interaction,” he said. In China, where he has lived for the past eight years, social media is an important part of their strategy. “We are creating accounts, for example on WeChat, in order to distribute this culinary experience that you are having while you are cooking with Gaggenau, with your friends. It’s also a way to see who else is having the Gaggenau experience – designers, artists, etc.,” Ritz added.

He isn’t the only one who thinks WeChat, despite being widely used by the masses, can be a powerful tool for prestige brands (which are typically all about exclusivity). “When you’re a brand, you look at your customers. Your customers are on WeChat; so you have to be there,” said CEIBS Adjunct Professor of Marketing, Michel Gutsatz. He pointed out that the multi-purpose app takes up 35% of the four hours per day the average Chinese person spends on his phone. Savvy prestige brands, Prof. Gutsatz said, can use the platform as a relationship builder, one that provides an opportunity for interaction at the personal level. “This is the essence of luxury, personalisation. It’s also about having a one-to-one conversation.  This is what you, as a customer, require today. So WeChat is a great, great instrument for luxury brands. But they still have to learn how to use it correctly.” 

Hosted at CEIBS’ Shanghai Campus, today’s event brought together thought leaders and high-level executives of renowned luxury brands to explore the wider implications of the changing luxury industry. They discussed how traditional luxury brands are coping with the change and whether there were opportunities for new luxury brands – some of them from countries, such as China, not typically associated with prestige products – to enter the market. They also looked at how the global market for luxury goods and services is being impacted by these major changes. Discussions revolved around the general theme, “Luxury: the Power of Experience”.

Charmaine N. Clarke