Marques for millennials

THE MOST COVETED ticket at London’s half-yearly fashion weeks is to Burberry’s Prorsum show, where the British trench coat-maker presents its upmarket ready-to-wear clothing. Christopher Bailey, the brand’s chief creative officer and CEO, likes to surprise his audience. At the birds-and-bees-themed unveiling of his women’s wear for spring and summer 2015, held in September in London’s Kensington Gardens, the sartorial novelty was an indigo wasp-waist denim jacket. The digital novelties included a highlights tape on YouTube that let viewers zoom in to focus on various aspects of the show, such as the music. Twitter used the occasion to launch in-tweet purchasing for luxury.

This is a big change from the traditional model of presenting fashion in which designs are conceived at the top, handed down to journalists and buyers at fashion-week set-pieces and pop up in the shops four or five months later. Technology has narrowed the distance between designers and consumers and sparked a conversation. YouTube, Instagram, WeChat and the like have “completely disrupted” the way fashion companies communicate, says Imran Amed, editor of The Business of Fashion, an online journal.

This is the first of three technology-induced changes that will profoundly affect luxury brands. The second is a shift from selling in physical stores to online. The third, for now only just visible in the distance, is a technology-related change in the way luxury goods are made.

The digital transition is running alongside a demographic one. By 2026 the main consumers of luxury will be millennials (or generation Y), people born in the 1980s and 90s, says Unity Marketing, an American market-research firm. Brands with pedigrees can use technology to win this age group over, as Burberry is trying to do. Newer ones can employ it to break through.

Burberry was among the first to spot millennial potential

A study by the Boston Consulting Group reckons that millennials “are geared to pleasure rather than to possessions”, making them less inclined to buy things. They are assertive, sceptical of authority and nonconformist, none of which bodes well for traditional luxury brands. On the other hand, photo-sharing social media like Instagram put a premium on appearance, argues Mr Denis of Jimmy Choo, which should be a good thing for companies like his. In the same vein, Eric Briones, a French consultant who has written a book about the millennials’ relationship with luxury, says they consume it “without remorse”.

But not uncritically. Brands must prove that their products are worth the price, not rely on mystique alone. Generation Y-ers tend to be unimpressed by logos but entranced by “codes”, subtler ways of conveying a brand’s identity. The red soles of Christian Louboutin’s shoes and the quilting on Chanel’s 2.55 handbags are the sort of signs that young consumers can make their own, says Mr Briones. Unhappy customers can sound off on websites such as styleforum.net. Some millennials also want luxury goods to be made in ways that damage neither workers nor the environment.

Burberry was among the first to spot millennial potential. In the early 2000s Britain’s ostentatiously vulgar “chavs” (a particular group of loutish lower-class youths) were sporting the brand’s distinctive tartan plaid as their unofficial uniform. It appeared on baseball caps, even dogs. Angela Ahrendts, an American who became the company’s chief executive in 2006 (and has recently left for Apple), made the digital courtship of millennials a centrepiece of her strategy for reviving the brand. Today Burberry is unabashedly digital. Two-thirds of its staff are under 30 and use social media to talk both to each other and to Burberry’s customers.

Burberry sees its website and its shops as complementary. It even struck a deal with Amazon to list beauty products on the online retailer’s site. In the six months to September 30th Burberry booked a year-on-year rise in revenue of 14%, largely thanks to buoyant digital sales. It recently assumed direct control of its cosmetics and fragrances business, hoping to “disrupt beauty through digital”.

Disruption is not something that comes naturally to most established luxury brands, but when they embrace it they sometimes do it well. Creative directors are increasingly targeting millennials. The mission of Louis Vuitton’s newly appointed creative director, Nicolas Ghesquière, is to “reboot the monogram”, making it less of a logo and more of a code, says Mr Briones.

Live-streaming of catwalk shows is now common practice, as is giving celebrity bloggers front-row seats alongside editors of the main fashion bibles. Brands feed their “communities” with streams of images on Instagram and Pinterest and Hollywood-quality videos on YouTube. Cartier’s L’Odyssée de Cartier, starring a bejewelled panther, has been seen 17.6m times.

But the conversation between luxury makers and their public can easily take an awkward turn. Stella McCartney, a designer who likes to display her social conscience, got into trouble when her company’s Instagram stream featured a photo of a painfully skinny model. On receiving complaints from fans, her company removed the photo and declared its enthusiasm for people of all colours, shapes and sizes.

Actually selling luxury online is more difficult than talking about it. Even brands that dabble in it doubt that any website can match the experience of shopping in a boutique. “To buy a luxury product you have to touch it,” says Mr Arnault. Many companies offer just a small range of their products for digital sale, and some none at all.

But e-commerce is making inroads. Net-A-Porter, a website that pioneered internet sales of upmarket fashion, has a customer base of 6m women and has persuaded some 650 brands to offer their wares on its platform. For now only about 8% of all luxury sales are online, but they are growing at a rate of 25-30% a year, says Claudia D’Arpizio of Bain’s Milan office. Much of this is at the expense of independent boutiques. If the share of digital sales goes much above 10%, investment in stores “will be rethought”, she says.

Goodbye to Bond Street?

The future is “direct to the consumer through the internet”, says Nathan Morse, who runs the business side of Hannah Martin, a London jeweller. It belongs to a new generation of luxury houses with no hang-ups about e-commerce (and not enough money to open a lot of stores). They may have short histories, but they have stories. Hannah Martin’s androgynous pieces are fashioned by hand in London.

It used to take 30 years to build a global brand, says Uché Okonkwo-Pézard of Luxe Corp. Thanks to the internet, “now you can become global in 18 months.” That has spawned new brands as well as business models. Bargain-hunters can turn to online outlets like The Outnet or flash-sales sites such as vente-privee and mei.com. People who want to hire can try Bag Borrow or Steal or LuxTNT, a Hong Kong startup. Second-hand luxury is available from stylesequel and InstantLuxe. Such services have been around for a long time, notes Stephanie Phair of The Outnet, but they have been “supercharged because of the internet”.

The final challenge is to decide how far to incorporate technology into the making of luxury, and perhaps into luxury itself. Iris van Herpen, a Dutch fashion designer, uses 3D printing to construct her garments. Ralph Lauren makes a handbag with a light and a smartphone charger. Suppose machines could stitch Birkin bags better than the craftsmen at Hermès or etch watch dials more finely than Vacheron Constantin’s guillocheurs? “The big gap between hand work and technology will become smaller and smaller,” predicts Ms van Herpen. Luxury can embrace innovation; what it must be wary of is obsolescence.