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In the digital age, what is the luxury sector’s future?

July 28, 2014 • Business

For Seth Godin, Yahoo’s marketing manager, tomorrow’s luxury sector will not be the same as the one evolving these last few years. Companies are and will be more so in the future, threatened by the digital revolution if the sector fails to adapt accordingly.

These words which we listened to with great interest during the Hackers on the Runway conference which took place on the 1st and 2nd of July 2014, strengthens Nicolas Colin’s (co-founder of the Family) previous analysis, about the luxury sector in the digital era.


A new definition of modern luxury by Seth Godin

The facts underlined by Seth Godin are clear: consumer behaviour is changing. Even though consumers think the same way as before, it nonetheless means that luxury brands must rethink their marketing strategies and their selling techniques. The author defines luxury as having three essential characteristics: sophistication, one superior to that of a normal every day item, a price, higher than it should be and, finally, it must be symbolic, meaning that buying such a product must send a message.

It is these three characteristics which are now questioned since people today do not have the same revenue as before, nor do they have the same needs and wants. For the author of 17 best-sellers, luxury brands must now focus their attention on distinguishing themselves from the rest. According to his “purple cow” theory, brands must no longer concentrate on conquering large markets but on becoming a precursor in the luxury market.

For the moment, prestigious brands unconsciously follow this theory. Developing a community (or “tribe”) and maintaining it is a priority for a majority of them. For Seth Godin, Nike is a perfect example of this thanks to its evolution into custom-made goods whose success is superior to that of LVMH and Prada, despite its products being less rare and expensive.




The necessity to rethink the luxury industry

Seth Godin explains this success by a well known social phenomenon: the affluent classes are not inspired by their fellow men by the young generation. This is why a long time question is once again at the forefront of everyone’s thoughts: “why pay more than the real price?

In an age where custom-made goods is increasingly available to all, finding the key factor which will attract more consumers has become complex. For the marketing manager, there exists only one solution: the clientele’s experience. It is firstly a brand’s image which is attractive to consumers. The image and the message of a product has become the key to the new luxury market in the digital age. But despite this, brands still continue to chase after the parts of the population with the highest revenues; favouring security.

If the rarity of a product used to be indispensable to a luxury product, it is no longer sufficient. Nowadays, it is the savoir-faire behind the good which makes the value of a luxury good. The best example of this is the growth of traditional Chinese luxury. Far from being based on the possession of a good, the message is about the techniques behind the fabrication and the transmission of success and values.

Hence, the unique criteria of rarity can no longer be the basis of a 50 million dollar industry. An object’s value is essential and distinguishes itself from the product’s price. Though the latter may be extremely high, the desire to buy a good of unique fabrication justifies it. From there, a new question arises for Seth Godin: “How to encourage this desire within consumers?


hackers on the runway seth godin


Contemporary luxury: a new perspective

The symbolic quality and the value of luxury products are important modern consumers. According to Seth Godin, “Consumers do not buy goods and services. They buy relations, stories and magic”.

From that moment, the luxury industry is no longer the same. Today, large luxury brand must sell a network rather than goods. The name of boutique is of no importance anymore, only the network within which it evolves, whilst the product itself is not bought for what it is but for its history.

This analysis goes hand in hand with the one previously done by Nicolas Colin who stated that the old luxury companies were going to struggle to catch up to the new comers of the luxury sector if they didn’t adapt to the current consumer habits. If it is taken into account, then the digital revolution will act as a lever to increase a company’s growth.

The e-shop and social media initiatives started by some large luxury brands shows that some have already started the transformation. “The revolution destroys perfection and render the impossible possible”, stated Seth Godin. Using the same logic, The Family’s co-founder thinks that future affluent luxury brands will bet on reviving brands rather than creating their empire.


Digital does not mean intangible. Client experience will be at the centre of luxury brands’ new marketing strategies.


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