Digitalization in the Luxury Fashion Industry

Strategic Branding for Millennial Consumers

Anna Cabigiosu

• Publisher: Palgrave Macmillan
• Year: 2020
• Print ISBN:
  9783030488093
• eBook ISBN:
  9783030488109
• Topic: Business
• Subtopic: Business General
• Index: Business

The luxury fashion industry is one of the best performing and fastest growing industries in today's business landscape, and is set to continue expanding over the next years. Exploring the effects of digitalization, this book aims to increase our understanding of the key drivers of internal growth and competitiveness in luxury fashion firms. With a focus on the development of new brand strategies brought about by digitalization, the author outlines the need for business models to be redesigned in order to make use of social media and satisfy Millennial consumers. Offering case studies on leading luxury fashion brands, this timely book evaluates new digital technologies and strategies including omnichannel marketing, 3D printing and smart textiles. A must-read for those researching digital marketing and branding, as well as luxury or fashion management, this book provides a much-needed and up-to-date analysis of a successful and digitally aware industry.

© The Author(s) 2020

A. CabigiosuDigitalization in the Luxury Fashion IndustryPalgrave Advances in Luxuryhttps://doi.org/10.1007/978-3-030-48810-9_1

Begin Abstract

1. Introduction

Anna Cabigiosu¹

(1)

Department of Management, Ca’ Foscari University, Venice, Italy

Anna Cabigiosu

Email: [email protected]

Keywords

Fashion luxuryMillennialsDigitalizationKeringGucci

End Abstract

1.1 Book Structure and Aim

The luxury fashion industry is one of the most rapidly growing and successfully performing industries, with leading firms experiencing double-digit growth. Against this background, this book analyzes and discusses the key competitive variables and resources driving the growth of luxury fashion firms.

In particular, this book aims at increasing our understanding of the key drivers of internal growth and the competitiveness of luxury brands in the fashion industry by focusing on how digitalization and new technologies are shaping this business. Furthermore, the book, by disentangling new opportunities and threats correlated with digitalization and new technologies, aims at identifying the common strategic patterns of the most successfully performing firms in the industry.

While the world “luxury” traditionally recalls the idea of heritage, quality and craftmanship, today, the new consumers of luxury, the Millennials, are changing and challenging the meaning of luxury. The complexity of the Millennials’ world influences the entire fashion supply chain. Millennials are ultra-connected digital natives who are used to obtaining everything immediately with a click. This is the hic et nunc generation, and luxury fashion firms today are competing on their ability to maintain a close relationship with Millennials. Furthermore, the acceleration of information and the multiplication of information processing capabilities has made it possible to create a fashion luxury industry aligned to market demand in terms of design, production and distribution strategies.

For luxury fashion companies, the web has long since exceeded the double-digit threshold in the volume of revenue, and most importantly, it is the component that sustains double-digit growth. The effects of an e-commerce world include the development of new possibilities of contact with customers, the implementation of new logistics systems, the exponential increase in transparency and, consequently, the efficiency of the market. There is no longer any possibility of price misalignment. Social media distribution channels are occupying an increasing amount of space: Instagram is leading the way, and a host of chats and other emerging applications multiply the number of fronts available. Millennials can interact with luxury firms contemporarily via physical retail, social networks and web platforms, which can be integrated, providing them with an omnichannel experience.

This complexity requires considerable adjustment efforts and investment by companies, especially the many small and medium-sized enterprises that lead the production of luxury goods. Furthermore, the proximity between brand and consumer has also increased visibility with respect to product origin, quality and sustainability.

In the last few years, the acceleration of the world as a whole, and the fashion industry in particular, toward sustainability has been impressive. The concept of sustainability seems to have invaded every corner of the supply chain in a very short time owing to the parallel social revolution, which makes the market’s judgment direct and immediate, and therefore transforms sustainable positioning into a competitive opportunity.

However, proximity to Millennials is not only digital and ethical in nature but also concerns garments that should ideally accompany consumers every day for the entire day: heels become sneakers, tops become t-shirts, pants become mom-jeans or cargo pants and so on. LMVH and Rihanna created the brand Fenty, which is the ex-novo construction of a megabrand built on Millennials’ needs. LMVH is the first luxury group in the world to include a new brand in its portfolio alongside names with inimitable heritage to specifically target Millennials. Other brands are reinventing their collections: the catwalks carry clear messages of ‘zeroing’ with respect to what had preceded them owing to courageous innovations such as genderless collections or even disruptive logo changes. Zeroing, therefore, for many brands seems a necessary change of pace to better cater to Millennials.

This book accompanies the reader in a journey that begins with the analysis of the constantly evolving demands of luxury fashion driven by the rise of Millennials, the main clients of luxury products. Furthermore, the book explores how luxury fashion firms are responding to Millennials’ novel needs by leveraging digital technologies that open new communication and sales channels. Finally, the book relies on the recent extraordinary growth of the Kering Group’s main Maisons, especially Gucci, to exemplify and understand how luxury firms’ business models are changing at the intersection of Millennials’ new needs and new available technologies.

The first part of the book (Chapters 2 and 3) offers an overview of the industry, its performance and the major changes both on the demand side and the supply side of the sector with particular attention to the role of Millennials.

After an introduction to the concept of luxury, the second chapter provides a definition of luxury and an elucidation of how it has changed until arriving at the concept of new luxury. Subsequently, this chapter offers an overview of the industry, its performance and its major regional trends and concludes with a description of the industry concentration process driven by merger and acquisitions.

The third chapter presents the Millennial generation, its main traits, consumer behavior and how it affects the luxury fashion industry. The chapter analyzes the links and mutual influences between luxury and the Millennials and explains why the attractiveness of this specific target is growing and how it is redirecting the strategic choices of luxury brands. In line with this analysis, the chapter also emphasizes the relevance of sustainable strategies, the role of social media, blogs and influencers in dialogue with Millennials and finally of artistic collaborations, capsules and co-branding to develop exclusive collections that meet these new clients’ needs.

In the second part (Chapters 4, 5 and 6), the book focuses on the understanding of actual opportunities offered by digitalization and technology to luxury fashion firms and describes how they lead to the development of the omnichannel and “see now buy now” strategies. Further, it explains how 3D printing and smart textiles are entering the fashion industry.

Chapter 4 describes the omnichannel business model and the requirements it entails at different levels of the value chain, including logistics, information and human resources management, and observes the penetration of the omnichannel strategy in Italy. It also discusses how omnichannel can be a viable strategy for small and medium-sized enterprises. Finally, the chapter discusses how online and physical stores are becoming increasingly integrated, generating new ‘phygital’ experiences.

Chapter 5 presents the “see now buy now” business model, its strategic and operative implications and how it fits the need of new consumers, the Millennials. Thereafter, by examining the experiences of and difficulties encountered by Burberry, Ralph Lauren and Tom Ford, which were among the first to adopt this model, the chapter discusses the relevance and potential of the “see now buy now”.

Chapter 6 deconstructs how additive manufacturing, 3D printing and smart textiles are entering the fashion industry and discusses their potentials and challenges. This chapter also discusses whether and how these innovations are compatible with luxury fashion traditionally dominated by craftsmanship, with a focus on luxury shoes production, and how small and medium-sized firms can also approach digital transformation.

In the third part (Chapters 7 and 8), the book relies on the examples of the Kering Group and Gucci to exemplify, analyze and discuss how the above-cited strategies and technologies are used in the most successfully performing business models today and how new clients and technologies interact with firms’ heritage to generate new business models.

Chapter 7 presents the examples of the Kering Group and Gucci. Gucci belongs to the Kering Group, which is also the pare...

Table of contents

• Cover
• Front Matter
• 1. Introduction
• Part I. The Luxury Fashion Industry
• Part II. Opportunities and Threats for the Luxury Fashion Industry
• Part III. The Business Model of the Most Growing Brand: Gucci and the Kering Group
• Back Matter