Last week, e-commerce entrepreneur and Net-A-Porter founder Natalie Massenet was honoured as a Dame Commander of the Order of the British Empire. It is against this backdrop that we investigate how technology has transformed the luxury landscape forever.
There is little question that the luxury industry has become more fragmented since the technology boom. Some long-standing brands have fully embraced it whilst others refuse to have anything to do with it. But a third category of new brands, agencies or service-based companies, were born with technology in their DNA.
Luxury Society contributors have been observing and sharing the many ways in which technology has challenged the luxury industry. In this article, we take some of the most important digital trends mentioned and observe how they are being used by some of the top players in the fashion-tech community.
“ A third category of new brands, agencies or service-based companies, were born with technology in their DNA ”
In a series of three articles, Luxury Society contributor Shubho Chatterjee pointed out the main challenges that luxury players must tackle to be ahead of the game. He stressed the need for technology efficiency in the structure, the operations and the talents recruited in the luxury sector. Among the key challenges, he mentioned the use of 3D imaging and printing technologies.
Paris-based start-up Gemmyo is an online jewellery store that founder Pauline Laigneau and her husband started after realising how tedious it was to find an engagement ring they both loved within their budget. Gemmyo aims to make the process of buying an engagement ring easier, more personal and cheaper by offering a variety of band styles, metals and gemstones to choose from.
The customer is able to visualise the ring in 3D imaging, by itself and worn on a model’s finger. He/she can then choose to pay for the ring by increments or in whole and delivery is free. The timeframe to deliver within Europe is only two to three weeks long thanks to 3D printing that is used to make the mould in which the final piece is cast.
“ Because all pieces are made to order, Gemmyo doesn’t need to maintain any stock, keeping production costs low ”
Because all pieces are made to order, Gemmyo doesn’t need to maintain any stock, keeping production costs low. While most of their sales take place online, Gemmyo recently opened a showroom in Paris, where guests are welcome to try on jewellery, seek advice and place an order.
Another challenge that Chatterjee mentioned in that article is the need to build true customer intelligence systems. Systems that are able to understand the behavior and shopping patterns of the customer: from browsing on their mobile device to sharing on social media and eventually making the purchase on a desktop computer.
This is exactly what Lyst is trying to perfect by building a different kind of fashion e-commerce marketplace. Unlike major players such as Net-a-Porter and Farfetch, Lyst acts as a discovery platform that neither buys nor holds any inventory.
“Without the operational limitations of physical product and inventory risk, we are able to bring together a much larger offering than that of a traditional store,” explains Chondita Dayton, General Manager, SVP Americas at Lyst.
Their focus is on understanding customer behavior and personalising the shopping experience. CEO and co-founder Chris Morton describes Lyst as a data company rather than a fashion company, as more than half of employees are data scientists who manage millions of data points.
By using the data they collect to recommend customers exactly what they are looking for and when they are looking for it, Lyst is helping them make buying decisions faster, more efficiently within an entertaining user experience.
“ Without physical product to assist in storytelling, we must be extremely creative in building our brand identity ”
Demonstrating its wealth of customer data via a collaboration with Holition, in 2014 Lyst created a projection that visualised the vast amount of data Lyst receives daily, in real-time.
As per the video, it documented around 250,000 items of clothing and accessories on the screen at any one time. Prices were shown, as were brands, combined designed to enable the viewer to understand and spot popular trends.
“However, without physical product to assist in storytelling, we must be extremely creative and resourceful in building our brand identity." says Dayton. Lyst addressed that during New York Fashion Week, by partnering with Uber to deliver hundreds of gift bags filled with partnering brand items in four neighborhoods across the city.
Another key challenge affecting the luxury industry is keeping up with millennials’ values and aspirations. Uber and Airbnb have clearly succeeded in doing so, by making sharing and renting stylish. Luxury Society contributor Katie Baron mentioned, quoting Havas Worldwide, that “58% of global, early adopter ‘prosumers’ would now prefer to borrow or rent products than own them”
Rent the Runway was able to capitalize on this trend and become the fashion pioneer of the sharing economy. Launched in 2009 by two Harvard MBA graduates, the company started renting designer dresses for a fraction of their retail price. They provided young women who did not want to wear the same dress twice, exactly what they needed.
With social media dominating the fashion industry, trends are constantly changing and shoppers keep wanting more. To respond to this increasing demand, Rent the Runway recently launched their “Unlimited” subscription-based service, allowing customers to rent three items at once (accessories and ready-to-wear included) for $139/month. Co-founder Jennifer Hyman claims that selections average a retail value of $1,500, showing that young women may want to experiment luxury items before purchasing them.
Millennials take pride in participating in the sharing economy. “This closet on rotation,” as Hyman likes to call it, is more important to them than ownership. As Marcie Merriman, executive director of growth strategy and retail innovation at Ernst & Young, explained in a recent BoF article, “they’re buying experiences and the product they get through it is kind of a bonus.”
Just like Gemmyo, Rent the Runway has also decided to open a brick and mortar space several years after launching their company and now counts four stores in the United States. Similarly to Gemmyo, the primary purpose of their stores is not to sell directly but to help customers get a styling session and discover what brands fit them well to ensure their online orders will fit them as expected.
These three luxury players have successfully used technology in their structure and operations and hired talent with the appropriate knowledge. Gemmyo has used 3D printing in their operations, to lower costs associated with manufacturing and inventory, while Lyst recruits data scientists to better understand their consumer and offer them a personalised and effortless shopping experience.
“ These three luxury players have successfully used technology in their structure ”
Finally, the whole structure of Rent the Runway responds to a new way of consuming luxury goods by renting rather than owning. Although technology has changed and improved the way retailers conduct business, more traditional solutions are still explored but with slightly different objectives in mind.
While sales are mostly handled online, technology driven start-ups still seek to break out of the digital space to tell their story, may it be through special gifting promotions or by building brick and mortar showrooms to interact with their consumers and increase their exposure.
Additional editing by Daniela Aroche, Editorial Director of Luxury Society
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