Original Article

Sustaining the luxury brand on the Internet
Received (in revised form): 19th January 2009

Uché Okonkwo
is recognised worldwide as one of the pioneer luxury business strategists. A true luxury industry veteran and expert, she has closely collaborated with renowned luxury companies including LVMH, Richemont, Louis Vuitton, Gucci, Christian Dior, Burberry, Piaget, Tiffany’s, Rémy Martin, Oscar de La Renta, Coty Prestige and Fabergé as well as selective retailers Galeries Lafayette, Barneys New York, Selfridges and Bergedorf Goodman. She is the Founder and Executive Director of Luxe Corp, the pioneer Luxury Strategy & Management consultancy company based at Paris’ famed Place Vendôme, with a worldwide clientele. She is also the founding head of The Luxury Centre at ESC Rennes School of Business, the first research centre established by a business school dedicated to luxury management research. She is also the author of the 2007 bestseller, Luxury Fashion Branding (Palgrave Macmillan), the first business text to provide a strategic and analytical perspective of the luxury business and a reference in the field that has sparked subsequent academic and management interest and publications. Her next book Luxury Online (2009), will be the first text on luxury in the context of the Internet, e-Business and new technologies. Uché has conducted seminars on luxury management at several business schools including Harvard and ESSEC Paris and sits on the board of several luxury entities including the Global Luxury Forum. She is also a fellow of the American Luxury Marketing Council. She has an MBA from Brunel Business School at Brunel University, London and is finalizing a PhD from Ecole Superieur de Commerce, Rennes, France.

Correspondence: Uché Okonkwo E-mail: author@luxuryfashion branding.com

ABSTRACT Luxury is neither a product, an object, a service nor is it a concept or a lifestyle. It is an identity, a philosophy and a culture. As a business sector and management discipline, these characteristics signify the presence of challenges in the integration of luxury branding within the Internet and digital environment and the requirement of intricate strategies to overcome them. Recent publications have raised the issues of the compatibility of luxury and the Internet, the suitability of luxury goods in the virtual environment and strategic approaches to maximising a luxury brand’s presence online. Others have indicated that the Internet is a ‘dilemma’ that luxury requires to overcome through avoiding e-Commerce, whereas other literature have suggested that the Internet is purely a channel of communications for luxury brands. The question of the state of luxury in the digital context, however, remains largely unexplored, particularly with regards to the particularities of luxury management, which have posed a challenge in adopting digital technologies in the sector over the past two decades. Until recently, the luxury industry showed low commitment towards integrating advanced Internet technologies and its accompanying interactive and digital tools in the sector’s marketing and overall business strategies. They also seemed to be pushed to be present and conduct business on the Internet as a result of evolving consumer needs and expectations. Notable international brands such as Versace and Prada did not have corporate websites until 2005 and 2007, respectively. The economic as well as consumer societies have also expressed bewilderment at the slowness of the luxury industry in establishing an online presence in comparison to other sectors. These parties have been right to question this crucial issue particularly since the Internet has become an indispensable channel of modern

© 2009 Palgrave Macmillan 1350-23IX

Brand Management

Vol. 16, 5/6, 302–310

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recognised. particularly in the dimension of branding within the digital context. Internet.1. what has not changed is the fundamental need of man to show his distinction. nobles and aristocrats used ostentatious consumption to stamp their superiority and maintain their distance from the lesser privileged.1 Although this structure has more or less disappeared from our current society. apprehension and anxiety from the top (the luxury brand). However. it would likely lead to resistance. Therefore. the consumer still looks up to the luxury brand in many ways although the relationship is currently evolving beyond the existing ‘top-down’ model.9 Luxury’s original function and raîson d’être is also significantly different from those of other product or service sectors. surprise and disappointment from the bottom (the luxury client). This paper examines the core and scope of luxury as a business disciple. this may be explained through the examination of the very core of luxury. This form of indirect stratification. doi:10.1–7 It is a culture and a philosophy that requires understanding before the adoption of business practices because its intricacies and output are essentially different from other types of goods such as daily consumer goods. goals and means. sensory goods. remains a part of today’s reality and the practice of distinction remains prevalent in all cultures. 302–310 303 . which meets the innate desire of human beings to ascertain their position in the society. 5/6. In societies such as the Roman empire. and confusion.8. This function is rooted in the social classes of the past civilisations and societies when royals. branding. avant-gardism and creativity. Therefore. It investigates the true nature of luxury as a current management science and identifies its key drivers and their scope of integration within the Internet environment. 302–310. Journal of Brand Management (2009) 16. it may not be apparent why luxury brands and digital technology have been perceived as incompatible since the advent of the Internet and digital communications technology. webmosphere INTRODUCTION Luxury has been built on the foundation of certain principles that can neither be ignored nor compromised.2009. as with every case of reverse human behaviour.1057/bm. This has been the situation of luxury in the Internet virtual environment in the last decade and explains why several brands were slow in establishing a © 2009 Palgrave Macmillan 1350-23IX Brand Management Vol. Luxury Online. e-Business. the core role of luxury has stayed basically unchanged although this role can currently be created and controlled by each individual according to his/her dreams.Sustaining the luxury brand on the Internet business. class distinction was such an integral part of the society that the colours of the shoes of each social class were decreed by the ruling class. LUXURY AND THE INTERNET If the unique relationship that luxury has with its clients were to be placed in the context of the Internet where the consumer is in total control and expects to be looked up to. As an industry that is known for innovation. to be admired. appreciated and respected through differentiating himself in most cases with his possessions. This new order however means that luxury remains in a superior position as it acts as a pointer for defining the new codes of social distinction. 16.2 Keywords: luxury. This paper has been adapted from a section of the forthcoming book. irrespective of economic situation.

availability and accessibility irrespective of time and location. less powerful sales as it is easy to say no to a computer. The second indication is the lack of physical contact with the goods and their sellers. which has been the initial reaction of luxury to the advent of the Internet. fast and convenient. the Internet was also a victim of misconceptions. Luxury itself has always had innate characteristics that are intricate to its very being and comprise of elements that speak more to passion than reason. emotional appeal and an enhanced image in brand presentation. These 304 © 2009 Palgrave Macmillan 1350-23IX Brand Management Vol. craftsmanship and precision in creation and production. a pull marketing approach where customers are drawn to information and purchases.12 and this means that the human senses of visuals. which has consequences for business management. More so. which is in direct disparity with the niche consumer base that luxury goods have always targeted. 5/6. The reality is that luxury can be successfully positioned online1 and as a result several luxury brands have currently adopted e-Retail and have identified this channel as one of their fastest growing distribution channels. Luxury goods are regarded as sensory in nature. A disparity and gap between existing literature and current business practice has therefore been raised and remains unexplored.14 The natural reaction to any possibility of interrupting this approach and thought process would be ‘apprehension and resistance’. and this oftentimes requires a rather narrow approach. exclusivity and limit in access and high quality and premium pricing. 302–310 . a low switching cost as it takes only one click to switch between websites. Another contradiction that luxury brands face online is the task of increasing sales and the risk of overexposure while maintaining a fragile perception of limited supply. rather than a push medium where customers are driven by advertising. which include mass access and mass appeal. a lack of physical contact with the goods and human contact with the sellers. The characteristics of the Internet and e-Retail are a global reach. a universal appeal and uniform information. These above factors imply that luxury goods are unsuitable to be placed and retailed on the Internet according to exiting research. more product variety and access to viewing them.Okonkwo web presence and why brands like Chanel and Hermès continue to resist integrated e-Commerce leaving their consumers at the mercy of fake luxury goods traders who are currently rampant online. In addition to these luxury characteristics that initially led luxury away from the Internet.15 On the surface. hence another reason for the initial resistance to the Internet. touch and feel are considered imperative in selling luxury goods.11–13 These characteristics indicate that the Internet as a medium of communications and retail is available to a mass consumer base. 16. smell. the noncorporate structure in which luxury has been operating over the previous centuries until the late nineties acted as a catalyst for the narrow view of the business activities linked to luxury e-Business. which resulted in its unattractiveness to the luxury sector. all for a specific clientele.1 These include originality and creativity in product and retail conceptualisation. the abovementioned characteristics of luxury do not seem to be compatible with the main features of the Internet.10 These factors are inherently peculiar to the Internet whose central features appear to be the opposite of luxury’s core elements. The application of all these elements often requires an unwavering dedication to perfection that sometimes defies logic. A major existing paradox however lies in creating and retaining the ‘desire’ and ‘exclusivity’ attributes of luxury brands on the mass and classless Internet world and at the same time maintaining and enhancing the equity of the brand.

For example. FMCGs and publishing although these sectors do not necessarily have the culture.0. the development of e-Boutiques and its e-Merchandising and e-Customer Relationship Management (e-CRM) tools and other multiple issues. or that online advertising overexposes a brand’s image and damages its equity. 5/6. Fortunately. However. In recent years and particularly in the last 3 years. the industry at large draws its references from sectors like telecommunications. 16. Amazon. styles. such as blogs and social networks. driven by the Internet revolution.1 An additional source of the initial resistance is from the reality that luxury thrives on progressive evolution in business and creation rather than dramatic changes. approaches to Web 2. Giorgio Armani’s reconstruction of its Milan flagship store in the virtual world. Louis Vuitton’s launch of the Soundwalk. luxury first requires an understanding of the scope and extent of the digital world. For example. the measurement of online advert effectiveness. modern business applications have made it possible to develop. The strategies. In order to create an online luxury experience. 302–310 305 . automobiles.com in e-Merchandizing and e-retail models and rely on others like My Space and Face Book for online community models. luxury brands draw their references from independent retailers like Net-A-Porter.com. luxury on the Internet has not come of age. Issue 0011). the first digital product by a luxury company introduces a new chapter to the extension of luxury product categories beyond physical products to virtual products. and this article explores the challenges that luxury companies are facing in adopting advanced internet and e-Business practices. Cartier’s creation of Internet downloadable music and films and RitzCarlton’s launch of Internet-based short movie series shot in its different hotel locations are all testimonies to the luxury indus- try’s increased efforts towards adopting new digital technology (Club e-Luxe Quarterly. values and mechanics of luxury.com and Apple. the choice of websites for advert placements. Second Life. the luxury sector has shown signs of commitment towards advancement in e-Business and regaining its position as a truly innovative industry. the type of advertisements to display. these challenges will be overcome through a reorientation as a result of the recognition of the power and influence of the Internet on the industry. or yet again that luxury clients are not inclined to making online purchases.Sustaining the luxury brand on the Internet presumptions range from the long-held consensus that the Internet is a channel for the retail of price discounted products. brands and categories.16 However. The cyberspace is a world of © 2009 Palgrave Macmillan 1350-23IX Brand Management Vol. systems and applications to optimise luxury’s positioning online have been explored in the forthcoming book from which this paper has been adapted.2 The luxury industry still lacks standard feasible procedures in e-Business areas practices ranging from the choice of digital marketing techniques for products. platforms. In fact. adapt and apply e-Business strategies that will enable luxury to thrive on the Internet without compromising its innate qualities. This explains the visible struggle that the industry has been undergoing in its attempt to strike the right balance between satisfying the requirements of luxury in a changing market context and consumer orientation. damaged goods and counterfeits. online luxury is still very much in its infancy and as a result. The disparity between all these references could explain the general consensus that the digital world does not necessarily have added value for luxury brands beyond their websites. This power is currently influencing behavioural change in the online consumer society as they drive their own online experiences particularly in the current context of the economic slowdown.

more than 171 billion e-mails are sent daily. flexible payment systems such as credit cards and special in-house customer accounts have substantially contributed to the diffusion of luxury products and have led to increased luxury goods purchases. Several established luxury companies currently do not have Internet departments and those 306 © 2009 Palgrave Macmillan 1350-23IX Brand Management Vol. which are not immediately apparent. The question of selling luxury goods online should no longer be raised as the rapid rate of Internet penetration and e-Retail in different global markets emphasises the existence of an online consumer base. The Internet serves as an ample breeding ground for the evolution of luxury. The principal challenge and main drawback that luxury companies face in their move towards adopting Internet strategies is that of corporate orientation. have led to an unprecedented thirst for information and acquisition of luxury by increasingly informed wealthy clients. PDAs. as their identification requires a strategic and systematic approach as well as profound understanding. 302–310 . However. more than 180 million websites exist in the cyberspace and more than 112. thanks to the Internet whose platforms now go beyond the computer to include Smart Phones. MP3 Players and other peripheral devices. With Internet penetration rates increasing annually and the functions of the Internet expanding beyond information exchanges to include services and communities. in addition to the closure of the information gap.17 The average consumer is now only a click away from being connected to thousands of people throughout the world sharing the same passions. 18–20 In addition to these. the arrival of the Internet has created an imperative need for a change of corporate orientation from rigidity to reception of the undisputed transformation brought about by digital technology. a new social order has been born online. Before understanding these opportunities. both in the creative aspect as well as in communications and business. tastes. 16. it is important to evaluate the main challenges of luxury online. This means incorporating a core Strategic Business Unit with a focal point on the Internet and dispensing the multiple functions of the department to suitably qualified personnel who would in turn liaise with annex departments.Okonkwo hyper-interconnectivity. The struggle that the luxury industry has been undergoing is less in changing existing corporate strategies and more in acknowledging that operating on the web platform requires a new way of thinking and re-thinking existing practices across all business aspects.8 million blogs exist in multiple languages. values. ideas and lifestyles.21–23 These. the intricate features of managing a luxury business means that luxury companies are structured and accustomed to functioning in a manner that is unaccustomed to radical change.18–20 and several of them are exposed to luxury online. 5/6.17 This change of orientation also means recognising the important place of the Internet and new technologies in the overall corporate strategy and allocating the appropriate place for this channel in corporate planning. The luxury industry faces both multiple challenges and opportunities on the Internet. the continuous growth in standards of living and increasing consumer product knowledge has given rise to access to luxury goods and services by more consumers. Also.24 This signifies that the Internet is not only a powerful tool that influences millions worldwide but that it is also currently being driven by users who now have the clout to control marketing communications and messages from companies and to influence the way fellow consumers interpret them – something that several luxury brands are still struggling to accept. As already mentioned. Currently.

302–310 307 . However. 16. The e-Business unit should ensure that the extensive functions linked to these activities are integrated in a department designed to function as a complement to the marketing. it has evolved beyond the communications function. Although these represent essential design elements of website creation. videos. e-Branding. techniques and creativity. music and more recently.Sustaining the luxury brand on the Internet that do have assigned personnel with solely technical competence to this department although managing a luxury e-Business function requires competence in business. Others are trying to overcome the widespread practice of internal competition between departments for sales revenue and clients. e-Marketing and e-CRM. television and newspapers. client networks or congregation. product images. Luxury brands currently need to understand how to ‘converse with’ their publics because the Internet has evolved beyond being a channel of information and retail to becoming a real ‘world’ that includes the social web where consumers also congregate. customisation and product development. Although the Internet was introduced with the principal role of communications. a luxury brand is required to first separate advertising from communications because advertisements are one-way and the Internet now requires interactive communications where the receiver is engaged in a 360° conversation with the brand through one click of the mouse. and they cannot exist in isolation without an integrated © 2009 Palgrave Macmillan 1350-23IX Brand Management Vol.25 The current pattern that luxury website creation has been following places an emphasis on strong visuals through flash animations. marketing. The Internet is not a single or dual channel that serves one or two business purposes but it is a multidimensional channel that serves multiple purposes including communications. retailing. e-Commerce.5. The second fundamental challenge facing luxury companies in their approach to e-Business is the unfounded consensus that the Internet is simply a channel of communications through websites and advertisements or of distribution through e-Commerce. branding. Therefore. Thus. The third challenge facing luxury’s e-Business integration in the virtual environment is related to effectively representing the brand essence online through its own website. customer services. they are insufficient in brand image projection. downloads. Majority of both established and emerging luxury companies are still struggling to understand the scope of the Internet and how to allot a place for it within the internal organisation.com. connect and communicate among themselves in an independent way that excludes both the luxury brands’ direct participation and the influence of online magazines. several brands end up approaching the Internet as another advertising medium that is evaluated the same way as other media like magazines. design. supply chain and operations. branding and communications business units and executed by skilled and capable managers. understanding how to approach e-Communications both through the brand’s own website and other appropriate websites goes far beyond advertisements. consumer analysis. The reality is that technicians may be skilled in ensuring that a website functions properly and may also monitor web traffic but they are in most cases ill-equipped to make strategic decisions linked to e-Communications. in order to effectively communicate online. 5/6. There have been several articles and debates on how to effectively translate the brand characteristics and core identity of a luxury brand onto its website. This was proved to Cartier in 2008 when the brand decided to launch an online community on MySpace. as well as managing logistics. Digital technology enables the assembling of these multiple aspects for the optimisation of efficiency and performance.

product category. value systems and interests of luxury clients worldwide. The fifth area of challenge for luxury companies as they navigate their way in the virtual world is linked to the luxury consumers. majority of luxury companies were reluctant to adopt the Internet until it became apparent that the wealthy segment of the consumer population had embraced the Internet and was using it not only beyond information search but also for shopping. converging. influencing thousands. For a long time. Fourth. Luxury brands currently require to be appropriately positioned in the cyberspace beyond their own website as the control of the brands’ image online is currently shared with online consumers. the webmosphere is enhanced at the expense of content. client segment.Com. competition. design and aesthetics as well as creating a luxurious webmosphere (web + atmosphere). The sixth challenge facing luxury online is related to e-Retail. behaviours. understanding how their online attitudes are reflected in their offline relationships with the brands (qualitative). 5/6. the luxury sector is facing the challenge of understanding that the cyberspace includes an entire universe comprising a virtual world that exists beyond a company’s website.27 They go as far as validating or rejecting luxury brands for several reasons. debates and events linked to luxury brands. 302–310 . the question of making access to the website open or restricted has been raised. geographical market. which is directly connected to revenues and one of the measures of the success and growth of a luxury brand. If not. communities. on websites like A Small World and Luxe-Mag. In addition.26. applying an integrated strategy that will ensure the appropriate positioning of a luxury brand in the cyberspace has become imperative. logistics and so on. whereas on other websites like Dolce & Gabbana. Luxury website design includes having a balanced approach towards other web design dimensions like usability and functionality. content and relevance. attitudes. then there is the additional question of whether the choice of the appropriate products should be based on price. Wealthy clients currently congregate and participate in online exchanges through discussions. who are apparently the reason why several luxury brands were forced to go online in the first place. Several luxury brands however mistakenly believed that wealthy consumers would stay the same after a decade of being exposed to the Internet. demand. The second fundamental question of ‘how to sell’ is linked to the development of the e-Boutique and in designing the selling space beyond strong aesthetic elements but also to feature an enhanced 308 © 2009 Palgrave Macmillan 1350-23IX Brand Management Vol. the content is more developed than the usability and webmosphere. This is why on some websites like Van Cleef & Arpels. networks and 2D and 3D platforms. Although the development of a website remains essential. Two fundamental questions linked to luxury e-Retail are ‘What to sell?’ and ‘How to sell?’ The former is related to understanding whether all the product range in each category should be displayed in the e-Boutique or not. and managing the distribution and logistics systems from different storage locations. There is also the issue of catering to different geographical markets and possibly different languages. 16. The cyberspace includes not only the world of websites but also that of forums.Okonkwo website design approach. The vastness of the cyberspace and the prolific way that luxury clients use the Internet have also resulted in an additional challenge of segmenting and profiling them online (quantitative). if not millions of clients and potential clients. This behaviour change is reflected in the way they interact with luxury brands both online and offline and their evolving expectations. The reality is that the Internet has changed the orientation. blogs. and in the process. sharing and influencing others.

indicators. The evolution towards the social media and the blogosphere has put the phrase ‘The consumer is king’ permanently in marketing vocabulary. Understanding how to re-create the store design and atmosphere online and presenting the products in such a way that the clients are immersed in the brand universe and forget that they are staring at a screen is a definite challenge. This is applicable to both luxury companies selling products and those selling services online. and this will be even more prevalent in the near future as the social web goes into full bloom. even minutes. 16. attitudes and behaviour evolve. vlogs. Only a few luxury brands have been able to achieve this online. techniques and applications that strive to enhance the brand value and equity while creating exceptional online experiences. The Internet remains a key source of value for the positioning of luxury brands on a © 2009 Palgrave Macmillan 1350-23IX Brand Management Vol.0. condemning the brand) and generating discussions about the brand while influencing millions around the world in a matter of hours and in some cases. This encompasses the phenomenal changes taking place in all manners of use-to-user communities such as blogs. 5/6. virtual worlds and other 2D and 3D platforms that congregate consumers. Cartier’s website for its Love collection and Christian Lacroix’s dedicated website for his collection for La Redoute. Although the Internet has been in constant evolution and that online behaviour has been in constant transformation. the core purpose of the Internet. 302–310 309 . The crucial questions linked to the challenges luxury brands are facing online are: — How has the Internet evolved to this point where the consumer has taken the lead in online brand perceptions and relationships? — What are the real challenges and opportunities that this evolution has brought to the luxury sphere? — How is this remarkable online economic revolution going to re-define luxury management practices? — What impact would it have on the perception that future consumers will have of luxury? — And what can be done about all of these? Their answers and solutions may be attained through a strategic integration of specific tools. spreading this endorsement (or worse still. social networks.Sustaining the luxury brand on the Internet webmosphere and optimised e-Merchandising and e-CRM tools that would lead to a memorable experience. which has remained unchanged although the luxury sector itself has undergone several transforming evolutions over the last two centuries. strategies and general guidelines that will enable the advancement of luxury e-Business lie in understanding the core of luxury and how to approach the Internet and digital technology in the current competitive market context and challenging economic climate. The same applies to the core of luxury. which is to converse. In this world. mlogs. remains unchanged even as the technology. notably Viktor & Rolf’s website. chat groups. plogs. the consumer is in total control of not just receiving and interpreting messages from luxury companies but also of deciding their legitimacy. But the challenge for luxury companies remains how to approach the social web and engage luxury clients in a strong dialogue at this critical early stage before the clients settle into the inevitable life pattern on their chosen online social communities. The final challenge that luxury brands need to overcome to ascertain appropriate online positioning is their approaches to the Social Web also known as Web 2. endorsing them (or not). This phenomenon also shows that the Internet is rapidly becoming the most important and critical marketing medium. The pointers.

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