Digital Luxury Experience 2013
Keeping up with changing customers
The authors would like to thank Altagamma Foundation, and in particular Mr Andrea Illy, Altagamma President, Armando Branchini, Altagamma Executive Director, for their valuable contribution to the research. Altagamma Foundation, which convenes the leading Italian luxury goods companies, supports the yearly Digital Luxury Observatory in conjunction with McKinsey & Company. Special thanks also to all Digital Luxury Experience Advisory Board members for their participation in the research and significant contributions to the knowledge shared here. The authors are also grateful to Anna Sanfilippo, Gaetano Vallefuoco at ...view middle of the document...
Millions of these shoppers now insist on interacting with brands digitally—using their computers, tablets and “phones”—before they decide what to buy, where to buy it or how much they’re willing to pay. Our research shows that shopping behaviors are changing almost as fast as technology. In 2013, digital interactions directly generated more than 13 percent of offline luxury sales and influenced another 28 percent of sales. Pure online sales doubled to four percent of the total market, growing twice as fast as the luxury market overall. If current growth rates continue for five years, annual online luxury sales could reach 20 billion euros. And since five years is an eternity in the digital universe, that number could be higher. The opportunities—and the risks—are huge. Brands that reach luxury shoppers with the right experiences and information at the right moment will win a larger share of growth and outperform competitors. Brands that don’t keep pace with their customers’ digital behavior and preferences will fall behind. And companies that provide frustrating or substandard online experiences may tarnish their brands and destroy value. Our new research shows, however, that maximizing digital impact is not as simple as building a better website or sending more messages into the Twittersphere. Companies that make digital investments wisely, based on their unique brand archetypes and categories, will see measurably better results and create more value. Knowing exactly what to measure and how to respond to rapidly changing shopping behaviors will help marketing teams deliver on the digital promise for years to come. Meanwhile, digital knowledge-sharing and data mining will help deliver impact within companies. The findings, insights and recommendations in this report are based on the ongoing work of the Altagamma-McKinsey Online Observatory. This year’s research encompassed more than 300 luxury brands in 12 categories, 700 websites, 13 million online comments, 300 questionnaires and 3,000 interviews in six countries. In all, the Observatory tracks about 70 indicators that illuminate how digital strategies and tactics affect brand perceptions and sales. The Observatory’s advisory board, which included leaders from some of the world’s most powerful luxury brands, help shape and guide the research to make sure it’s relevant, useful and timely.
Exhibit 1
Online sales are still below 10 EUR billion in 2013 but are expected to double in 5 years
Personal luxury goods online market, EUR billion Percent of total luxury market
18-22
7.5
9.0
2012 4%
2013E 4%
2018E 6-7%
Exhibit 2
Almost 20% of total sales are directly influenced by digital 2013, EUR billion
~60 Percent of total luxury market 97
28 9 Pure online sales
37
Offline sales Digital generated by impact on online sales experience 13% 17%
Offline sales Total digital influenced by impact online experience 27% 44%
4%
...
