The finer things: Luxury products
Sales of luxury products are soaring and consumers are increasingly happy to splash their cash online as brands begin to master premium web retailing
Any consumer of news media these days would think the whole world is descending into chaos. The markets are behaving like spoiled teenagers with chronic mood swings; Eurozone countries are playing musical chairs with their Prime Ministers and I’m a Celebrity… is back on our screens.
However, there is one sector that is quietly and confidently resisting this downward spiral - the luxury goods market, and, in particular, fine watches and jewellery.
In November, luxury goods group Richemont posted its results for the six months to September 30, showing sales had increased by 29% to €4.21bn (£3.53bn) and that operating profit had increased to €1.08bn (£934m) compared with the same period the previous year.
The jewellery houses owned by the group experienced a sales increase of 34% over the six months, with Cartier and Van Cleef & Arpelsperforming particularly well, while its specialist watchmaking sector had sales growth of 30%. When you consider that Richemont owns brands such as Jaeger-LeCoultre, Vacheron Constantin and Richard Mille, it’s obvious that this growth isn’t being driven by volume sales.
Richemont was not an exception to the rule. Luxury group LVMH, which owns brands such as Tag Heuer and De Beers, saw its watch and jewellery sector grow each quarter for the first nine months of 2011, showing organic growth of 26%. Burberry also reported a net profit of £117m for its six months ending September 30, and revenue of £830m.
“There will always be a market for luxury jewellery in any economic climate,” explains Jersey Pearl director of wholesale business Mike Taylor. “However, it is puzzling that, in the midst of a recession, the luxury goods market has experienced significant growth.”
The other important signifier is the amount of luxury brands that have recently launched pieces with seriously hefty price tags, as well as bespoke elements that are geared towards making the wealthy part with their pay cheques.
Swiss watchmaker IWC Schaffhausen has just brought out its most complicated timepiece to date. The watch, called the Portuguese Sidérale Scafusia, has taken 10 years to develop and features a celestial chart on its case back that can be customised to the owner’s specifications, as well as a tourbillon, sidereal time display and solar time. The watch has a price tag of CHF750,000 (it will retail in the UK at £530,000) and will only be custom-made.
Richemont’s stablemate Piaget recently flew international press out to Seville in Spain to unveil its latest watch and jewellery collections - its latest edition to the Altiplano collection, the Altiplano Skeleton, and its Limelight Garden Party jewellery range - none of which would give you change out of £30,000.
However, it is not just high-end brands that are taking advantage of people’s desire to upscale. Mid-market brand Jersey Pearl unveiled its Fiore Della Notte collection (pictured left) in September. A collaboration with jewellery designer Anna Loucah, the collection’s prices start at £1,100.
“Quality fine jewellery is a tangible asset. We identified this and realised there was space in our product range for a cohesive fine
jewellery collection,” explains Taylor.
This is something Emily Armenta, the designer behind brand Armenta, which has just launched in the UK, agrees with. However, she thinks that, although consumers are spending more, they are also being more discerning about where they spend it.
“There is always a luxury customer out there who desires something unique, something highly desirable that no one else has,” she says. “I think the shift has gone back to wanting something truly of the best quality and workmanship.”
Andrew Morton, managing director of Advalorem, which distributes Italian fine jewellery brand Vendorafa, has also found that consumers are looking for something slightly different from their luxury purchases.
“’The luxury market is still there, although the consumption of luxury goods has altered slightly over the past few years. Today, more and more consumers are looking for value in craftsmanship and design when purchasing jewellery,” explains Morton.
“We believe there has been a move towards timeless luxury. Purchases are more considered and, while trends and fashions play a hugely important role in our industry, consumers are also looking far beyond that.”
The other shift that has occurred recently is that consumers aren’t just shopping for high-end items in stores. They are also spending online.
A certain level of pomp and ceremony that helps the purchaser feel confident in the true worth of the expensive item they are buying has traditionally been part and parcel of the special experience of splashing out on watches and jewellery worth £2,000 and above in stores.
Similarly, in the notoriously luxurious settings of the likes of Bond Street in London, Triangle d’Or in Paris and Fifth Avenue in New York, consumers are surrounded by wealth and glamour. The very buildings ooze luxury and those buying watches and jewellery are greeted in exclusive settings, perhaps lavished with champagne and certainly given the undivided attention of sales personnel.
Spending serious money on a non-essential item has traditionally had its value reinforced by an entire luxury shopping experience, so in a time when even those with significant amounts of money to burn are not immune to the pros of buying on the internet, can a website recreate a luxury experience?
The need for prestige brands to create a website that reflects their profile in bricks-and-mortar stores is increasingly important and can be done. “Luxury online is about the same things as in-store: service, experience, exclusivity,” says Lynne Murray, brand director at augmented reality technology company Holition.
“To guarantee a luxury feel online, brands must ensure that they enable consumers to access all the information they would expect to find online, and additionally create an element that makes best use of the medium - mobile, tablet, desktop - in an engaging way.”
Traditionally, the folly of high-end jewellery brands, and particularly watch brands, has been to remain loyal to an early belief - founded at the dawn of websites - that Flash technology was the way to create the glamour they sought. Flash started life as an animation tool and has been developed since its mid-1990s origins with new features, and now comes as standard with all major web browsers.
Although the Flash animations can be compressed to reduce the file size, and therefore make the content download more speedy, large animations can still take a while to load in a browser, hence the all too familiar ‘Loading…’ sign.
Flash sites do allow some fancy animation - once the content has loaded - and that led to the opinion that it delivered an expensive look associated with luxury brands. However, technological advances have made Flash less attractive, as it can come at the cost of speed and ease of navigation, which is a sacrifice that can be ill afforded in an age when online shopping is an increasingly vibrant and competitive selling channel.
As more and more people make their purchases online, including high-end watches and jewellery, it is important for premium brands to acknowledge that creating luxury online isn’t just about the smoke and mirrors of a Flash site.
John Ayton, owner and chairman of jewellery brand Annoushka, and chairman of watchmaker Bremont and board member at Walpole, says: “The luxury shopping experience is as much about usability and added value as it is about great imagery and an aspirational feel, neither should be ignored. In the past, luxury companies have heavily compromised the user’s experience in trying to make their websites match their brand communication in other channels.”
On the plus side, a recent study by digital innovation think tank L2 found that luxury brands are moving away from difficult, time-consuming websites. However, the feedback on the 35 featured watch and jewellery brands’ online presence was not all good.
L2’s Digital IQ Index: Watches and Jewelry study, which rated watch and jewellery brands’ websites and their overall online presence, featured numerous luxury brands. The digital competence of the companies was rated across four dimensions: site, digital marketing, social media and mobile.
Tiffany & Co, Swarovski and Jaeger-LeCoultre topped the rankings. Tiffany’s digital efforts were rated as ‘genius’, and Swarovski was labelled ‘gifted’ and praised for its huge Facebook community. In third place, Jaeger-LeCoultre was classed as ‘average’.
Other brands’ digital performance was not so popular. A report on the study warned that many of the sites were “running out of time online”.
Nearly two thirds of the brands were classified as ‘challenged’ or ‘feeble’. The research revealed that less than half the brands link to a store locator from their product page, and just one third display product prices.
While brands may still be struggling to reconcile luxury with functional, they are starting to recognise that they cannot afford to ignore cyber interaction. The
L2 report revealed that all but three of the 35 brands in the research now have a presence on Facebook, with communities averaging more than 200,000 fans. Mobile site adoption is also on brands’ radar, up from just 7% in 2010 to 39% in 2011.
Ayton agrees that companies need to embrace the opportunities proffered by social networking. Although the prestige of luxury brands often relies on their heritage, it is essential that those behind the businesses do not complacently rely on this history and the past but embrace the future and the possibilities allowed by modern technology, such as alternative forms of communication. A brand that fails to do so runs the risk of being left behind by its potential customers. Ayton cites Pomellato, a Milan-based jewellery company, as an example of this. “Pomellato does not have an official Facebook site but fans of the brand have set up a page that has more than 20,000 fans, in a totally free and unregulated manner with no engagement from the brand,” he says.
“Also, too often social networking is passed to the youngest and most junior person in the office because no one else understands it.”
While the Facebook environment does not necessarily allow for the luxury that high-end brands aspire to, there are ways for them to deliver a premium shopping experience on their websites.
Murray explains that the key to presenting the luxury shopping experience online is carefully considering the digital elements used. For instance, Holition’s augmented reality technology, which has been used by a number of high-end watch and jewellery brands including De Beers, Garrard, Tissot and Boucheron, is a way to create something different and special online and to form a bond with customers.
The technology allows consumers to virtually see themselves wearing a product in real time, either on a screen in a shop, or using a webcam at home. “The consumer is able to better understand the luxury product in their own home, in their own time, before meeting a sales associate in store, where they are more educated as a consumer, knowing what suits them and feeling comfortable with the product,” explains Murray.
For an example of a luxury brand that has gone a long way to recreate the luxury shopping experience online, IWC Schaffhausen’s website is worth a visit. Not only is the imagery stunning and the layout clean and smart, reflecting the brand’s products, but it offers added value via its news and blog content.
“The IWC website is often heralded as a champion of contemporary design for luxury, which borrows many elements from a blog-style interface, making it more personal,” says Murray. “IWC additionally makes use of indirect reference to the product through ‘hero’ editorial-style content supporting the values of the brand.”
Creating a luxury feel through additional features is also something that Elizabeth Galton, owner of designer jewellery and accessories etailer EG Studio, advocates. She says that content online should reflect a knowledge of the brand customer and urges that products are supplemented by style notes, expert advice, brand stories, video features and excellent customer service.
Although tools and gimmicks can make a website stand out as something special, the challenge for both prestige and mass-market brands online is to provide an accurate reflection of the company and to use it as a platform for communicating their expertise. “Ultimately, I don’t think it matters whether you are luxury or mass market, consumers still buy based on expertise and user experience at any level of the market,” says Galton.
“Whether Pandora or Cartier, brands should be striving for excellence in conveying their unique brand proposition - particularly for luxury goods, which are not a necessity and therefore this is what validates the sale - and their expertise.”
When it comes to exchanging serious sums of money, many shoppers expect their purchase to be unique to them, so luxury for many means bespoke. Creating bespoke jewellery with a client is a special, personal process when carried out in-store, but can it be delivered with the same level of attention in an online format?
Rocked London is a relatively new online jewellery business that specialises in bespoke offerings. Acting on behalf of private clients, co-founders Catherine Barr and Zoë Hinckley source pieces of luxury jewellery from a diverse range of independent designers’ collections, as well as dealing with bespoke requests, and, in the equivalent of a posh online dating service, match-make customers with the appropriate designer depending on their requirements.
Although a customer’s journey often begins with its trendy looking website, the rest of the experience is managed via meetings, email and telephone calls, establishing exactly what the customer is looking for before a designer is commissioned to make the piece. “Without a doubt you can create a luxury experience online, as long as you embrace the possibilities of the medium properly,” says Barr. “It won’t always be the same as the luxury experience in store - and nor should it necessarily be - but that’s not to say it won’t be a luxury experience.”
The Rocked London team understands the limitations in creating a bespoke luxury experience online and makes the web work for its business. “Rocked doesn’t hold stock that can be purchased online, which is why we don’t have any transactional capabilities on our website - if we did we’d naturally embrace the digital space as another platform for sales,” explains Barr. “Instead, we use the digital space to inspire clients and get them considering the creative possibilities of jewellery, ultimately helping to shape their brief to us.
“Once we have that brief then it’s our job to recommend - and draft in - the right independent design talent to take the brief and translate it into extraordinary, bespoke jewellery.”
Although luxury brands and services are increasingly accepting the need to create an online presence beyond stylish images, Jonathan Hedges, product manager of watches and jewellery at research company GfK, says that for the full high-end jewellery and watch buying experience, traditional boutiques are still proving popular. “For very high-end luxury brands, the increased opening of boutique stores seems to be the preferred new entry to market, where they can offer the full service experience in store that a luxury consumer looks for,” explains Hedges.
However, to remain competitive and make the most of increased customer confidence online, luxury brands would be wise to explore the possibilities of web sales and may even be surprised by how they can use the space to reflect and enhance the prestige of their brand. “In my view, it is all down to execution, and where luxury brands get it wrong is being too timid on the web and not engaging with the possibilities,” says Ayton.
And, if recent results are anything to go by, the luxury market is certainly a sector where the possibilities are endless