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July 7th 2015
Digital inside: Get wired to deliver the ultimate luxury experience
Marco Catena Nathalie Remy
With the
McKinsey & Company | 2
Focused on core luxury consumers
Broad geographical scope: 8 countries
Multiple consumer journeys: 4 categories, 3 pricepoints
McKinsey – Altagamma Digital Luxury Experience
2015 edition: A unique
perspective on the
omnichannel global luxury
consumer
McKinsey & Company | 3
Selected insights for luxury players
The paradox of digital luxury
experience
Touchpoints proliferation is
manageable
Digital is a must for luxury
growth
Get wired to deliver the ultimate luxury experience
McKinsey & Company | 4
Selected insights for luxury players
The paradox of digital luxury
experience
Touchpoints proliferation is
manageable
Get wired to deliver the ultimate luxury experience
Digital is a must for luxury
growth
McKinsey & Company | 5
Mobile boom is disrupting luxury shoppers behaviors
luxury consumers mobile equipped
95%
Vs. on average 60%
luxury consumers owning multiple devices
75%
Vs. on average 33%
McKinsey & Company | 6
Luxury consumers are also truly social
Social media usage
User generated content
MONTHLY
WEEKLY
DAILY
80%
50%
25%
65%
40%
15%
McKinsey & Company | 7
1 Excluding professional usage
Generation Y 18-35 years old
Baby boomers >65 years old
Number of mobile devices personally used
Weekly time spent on the Internet1
3.2 3.9
15.4 hours 14.7 hours
This is not just a Millennials story
Social media usage
97% 71%
McKinsey & Company | 9
Selected insights for luxury players
The paradox of digital luxury
experience
Touchpoints proliferation is
manageable
Get wired to deliver the ultimate luxury experience
Digital is a must for luxury
growth
McKinsey & Company | 10
Online keeps outperforming the total luxury goods market, reaching €14 bn in 2014
149
4
153
2009
169
5
173
2010
6
186
192
2011
7
204
212
2012
9
209
218
2013
14
210
224
2014
+7% p.a.
+27% p.a.
Offl
ine
Onl
ine
6% of the 2014 global luxury market
McKinsey & Company | 11
+45%
+27%
Monobrand (e.g. fendi.com)
Department stores (e.g. saks.com)
Full price (e.g. net-a-porter.com)
Off price (e.g. yoox.com)
Event (e.g. vente-privee.com) 20%
19%
25%
14%
22%
20%
15%
18%
16%
28%
2011 2014
€ 6bn € 14bn 100%=
2011-14 CAGR
This growth is primarily fueled by luxury brands own websites and department stores
McKinsey & Company | 12
Most luxury markets are around 6% of online sales
Mainland China
6%
USA
6%
UK
11%
Brazil
2%
Italy
5%
Japan
7%
South Korea
6%
France
6%
McKinsey & Company | 13
There are significant differences across…
3.6
7.5
8.5
Absolute
Aspirational
Affordable
Ready to wear
Beauty
7.2
7.2
Accessories 6.4
Watches and Jewelries
4.1
Pricepoints And Categories
McKinsey & Company | 14
RAMP-UP
SCALE-UP
PLATEAU
5%
25%
20%
15%
10%
N-4 N N+5 N+7 0%
Online trajectories follow a clear S-curve
Tipping point
McKinsey & Company | 15
With this acceleration, the online luxury share could reach 18% by 2025
Offline
Online
2020F 2009 2014 2% 6%
12% 18%
2025F
€70bn in 2025
McKinsey & Company | 16
~3/4 of luxury sales are digitally influenced
Pure offline sales Online sales
Offline sales influenced by online experience
26 6
68
McKinsey & Company | 17
Selected insights for luxury players
The paradox of digital luxury
experience
Get wired to deliver the ultimate luxury experience
Touchpoints proliferation is
manageable
Digital is a must for luxury
growth
McKinsey & Company | 18
Introducing the consumer decision journey
Mon
o-br
and
on
line
shop
Outdoor
billboard
Magazines
TV/Cinema ad
Sponsoring
Wor
d of
mou
th Online video
Social media
Online banner
City store 21 touchpoints analyzed – half of them digital
Measuring both reach and impact
McKinsey & Company | 19
3
2
Brands considered in journey
76%
24%
Brand actually
purchased
INITIAL CONSIDER-ATION
ACTIVE EVALUA- TION
Initial Consideration is of paramount importance in luxury
Auto
68%
32%
PC
42%
58%
>>
McKinsey & Company | 20
Luxury decision journeys are long and complex
7
6
5
5
4
4
4
6
5
4
3
3
3
3
5
4
4
2 6
7
7
8
8
9
11
13
9
McKinsey & Company | 21
Luxury brands must be everywhere, yet powerful and consistent
80%
66%
50%
43%
36%
19%
Con
sum
ers
expo
sure
City store
Fashion/luxury magazine
Word of mouth
Online community/blog
Social media
Online video service
McKinsey & Company | 22
5 touchpoints are must win battles
City store 1 Word of mouth
Search
Sales person
Brand website
2 3
4 5
McKinsey & Company | 23
Granularity prevails to navigate the proliferation of touchpoints Top 5
Top 10
McKinsey & Company | 24
Granularity prevails to navigate the proliferation of touchpoints
Ready-to-wear – Italy
Watches&Jewelry – China
Beauty – Japan
Select your local bets
McKinsey & Company | 25
3 priorities for luxury brands
Innovate to lead in Customer Experience
Leverage your assets
Define digital luxury experience standards
Revisit your consumer engagement strategy
Set your strategy across all touchpoints
Maintain consistency anytime, everywhere
Ensure distinctiveness in 5 must win battles
Perfectly execute the new “standards”
Integrate seamlessly across touchpoints
McKinsey & Company | 26
How to make it happen?
Proactively address the typical roadblocks of digital acceleration
Bring digital inside your operating model and adapt your organization if needed
Design the digital acceleration approach that will fit with your culture
McKinsey & Company | 28
Innovate to define the “standards” of digital luxury experience
Multi-channel consumer services Interactive fitting rooms
Digitally-enabled sales force Reactive delivery modes
McKinsey & Company | 29
Create distinctiveness by integrating seamlessly across touchpoints
Wei Na surf on her iPad in the VIP
section of her favorite luxury brand to look after the last models of the
season in full preview
VIP website Sales assistant
Two days after a sales assistant
calls her…
… and she pre-book the grey lezard version of
the brand’s iconic bag
Displays
When travelling to Hong-Kong, Wei Na takes picture of the
dresses she prefers in the brand displays
Profil
Name: Wei Na Age: 32 ans
Hangzhou, Chine Net wealth: 5Mn
euro
Wei Na publishes the pictures she just took on Wechat and receive an email invitation from the brand for
a private fitting sessions
Wechat/Email
Wei Na goes to the VIP salon of the boutique to try the dresses
VIP Salon In-store service
A professional photographer takes her in picture in the VIP
salon : she immediatly posts the photos on Wechat
Brand app
Wei Na has chosen a blue-print dress from the 2015 Cruise show and has collected her grey-lezard bag : she pays her purchases with
her Iphone on the brand app
Brand app Brand app Sales assistant
Wei Na photos receive 1 200 likes. A few friends ask her : « And why
not the red dress look 28 from SS2015?! »
The brand App help her find the
best addresses to go to that are also recommended
by the brand community
Wei Na goes in holidays in Cannes. Wei Na is invited
to a very hype party in Cannes but she has not
the righ dress for this particular
event. She posts a message on the brand App
Her sales assistant from Hangzhou calls her : « We have arranged
everything with the Cannes boutique
that will lend you a dress for the
event »: the red dress look 28 from
SS2015