The irreversible evolution of Luxury
Our New Reality: The era in which luxury is redefined forever
Lock down, the feeling of recurrent uncertainty regarding health and the social distancing measures, have served to push more people to buy online; including those who have always avoided to do son in the past. Within the luxury industry, a rather timid process began that sought to mainly redefine luxury in a more diverse and inclusive concept. In light of the current state of the world, that revolution or rather say evolution, is now simply non-negotiable.
Regardless of its business model and main sales channels, the luxury fashion retail industry faces the challenge of empowering identities, personalities and expressions.
New mantras have been born and are already consolidated, as a result of this “New Reality” after the COVID-19 pandemic. All of these are strategies and processes through which luxury has been redefined, so that in essence, is less flashy and mostly more inclusive. A revolution that is possible, only if it relies on offering an immaculate, personalized and direct shopping experience.
The New Reality brings us new challenges; but it also offers us new opportunities: as long as we do not lose sight of the fact that the reality of the luxury industry and more than ever, can be summarised as: “change is the only constant.”
At Cambrillón we believe this is a deep revolution and at many levels, which in this occasion has been analysed from various perspectives, hand in hand with experts in each of the key areas of this change: Investment, Digital Marketing, Product Design. All of them applied to the reality and needs of a luxury brand such as Cambrillón.
Investment in times of COVID-19
Investor, mentor, entrepreneur and professor at IESE, Mathieu Carenzo, explained what the current scenario is like in an industry that is dynamic, which embraces well changes; especially focusing on newly created companies or Startups. In his opinion, the current situation, in which the market and society are still fighting against Covid-19, has caused many investors to be reluctant to embark on operations, “despite the fact that we are not yet with a high degree of available liquidity ”. While interest rates remain low, the real estate sector remains stagnant, investment in startups remains attractive to investors, he considered.
This scenario has caused that investment rounds to decrease in number, but increase in volume. Currently, many investors are paying more attention to the resilience of a company in many aspects of its growth potential. As per valuations, the time they can continue to operate and function in a scenario like the current one is very important. Cash flow is determinant. For these reasons, he said, investors pay more attention to companies that are beginning to consolidate or have already done so, than to new projects.
However, as soon as the epidemic is over, or even earlier, the recovery will not be quick taking at least two or three years, once the losses in GDP are recovered. Startups can take advantage of this recovery early because of their agility and adaptability, he concluded.
Digital marketing in times of COVID-19
The CEO of Royal Comunicación Juanjo López, specialist in digital strategy with over 14 years of experience, pointed out that we are experiencing a very important technological improvement in terms of paid media campaigns. He warns that it is vital when choosing a media buying partner, to know how to decide between the discourse they offer and the true functionalities / tools that these companies can provide clients with. In the debate, he talks about 5 vital points when it comes to understanding this digital ecosystem in which he is a specialist.
Campaign automation is a must (Google, Facebook, other programmatic buying platforms). They continue to improve a lot in terms of functionalities so that campaign managers can automate and optimize everything in detail, thus obtaining better results.
Regarding the Attribution Models, he points out that it is very important to impute the value of the purchase based on the Customer Journey and the source of traffic the customer comes from. According to him he says, this is vital for decision making.
The visualization of data in real time is decisive, and for this there are a series of tools, but the most relevant is Google Data Studio. Juanjo talks about various connectors that require high technical skill to connect with non-Google providers.
Finally, he ends up pointing out the importance of using competitive intelligence and market analysis software to do contrast exercises to see what they do and make decisions based on that. He is talking about SEM Rush and Similar Web. After this review, Juanjo points out that digital Marketing budgets during most part of 202 have been very uneven and “strange”. The CEO of Royal Comunicación says that many physical business strategies during lockdown consisted on capturing leads and persuading them to have them captivated for the reopening. Throughout the summer 2020, there was a great drop when it came to investing in media purchases, to later make a strong investment in the months of September and October. He ends by pointing out that the advertising investment on specific dates such as Black Friday has been very large, but that, given the competition and large investments, the costs have been very large. His final reflection, as he pointed out in the debate is that there has been a strange and uneven behaviour, not allowing marketing agencies to establish or define a reliable strategy.
Luxury shoes industry in times of COVID-19
In his speech, Richard Dighero CEO of Cambrillón considered that the New Reality has changed the status quo of several industries, in different ways and in different depths. Obviously, the luxury fashion industry is no exception. “Apart from the current climate of uncertainty, both from a production and consumer point of view, luxury brands are dealing with a fundamental change in what luxury means.”
The consumer is now more aware of the importance of “generic” concepts, such as environmental responsibility; at the same time they have become more socially active, contributing directly to digital channels becoming increasingly relevant sources of inspiration and sales ”.
For the CEO of Cambrillón, the present and future of luxury in the fashion industry involves strengthening the customer-brand binomial. To do this, we have to redefine and promote concepts such as closeness, personal identity and sustainability. “We have to devise ways to redefine luxury, to make it less flashy and more inclusive; at the same time that we have to offer an immaculate, personalized and direct shopping experience ”, he emphasized.
After the last few years, and especially during lockdown and in general the COVID – 19 pandemic, “our client target has adapted to the new reality, rewriting the essence and the mechanisms of our industry.” The change in their consumption habits and daily “online” activities means that luxury brands have to adapt our traditional model to a new model that is capable of responding to their needs when it comes to buying, consuming and communicating.
Although the regular customer of luxury brands “values their privacy”, their changing lifestyle “makes them to want a personalized experience.” A challenge that luxury brands in the fashion industry face is to create a “one-size-fits-all” formula, but with the peculiarity that the essence of these solutions and experiences must be totally personalized, attending to the needs and new consumption habits of our client. “With regards to the client, it is crucial that brands like Cambrillón design and implement strategies through which we are able to create a much deeper and more significant commitment to our brand,” he estimated.
“It is no longer enough to wrap the client with our stories about belonging, craftsmanship and tradition. Now we have to make them participate in this reality, make them feel that the brand has and can contribute much more than just a luxury item. ” In his speech, he considered that “every luxury brand offers a service, a product or a mix between the two.” “It is our challenge, to create adaptable and dynamic services and experiences, to satisfy the changing needs of customers who buy luxury. The complicity between brand and customer has to be total. We have to design more intimate digital spaces that foster meaningful connections and, above all, that add value to the customer-brand binomial ”.
Thus, in the attempts to determine the affinity between customer and brand, “the personalization of experiences, individuality and attention to detail is essential: the SELF is becoming stronger in the digital age”. “The opportunity that is presented to us is to establish relationships that go far beyond the simple commercial exchange; transcending the personal and daily environment of our client ”, he concluded.
Shoe design and craftsmanship in times of COVID-19
Professor at the La Rioja ESDIR School of Design Noelia Olmos, who spoke about “New paradigms in footwear design”, highlighted how design “is generated in a natural, logical and rational way, as a process of update and modernization, based on a long tradition of quality leather craftsmanship ”, citing points of creation and craftsmanship in La Rioja Baja, such as Arnedo, Calahorra, Quel or Cervera.
In her presentation, Olmos underlined the importance of combining innovative education with updated knowledge, without losing sight of the most recent improvements and evolutions of a dynamic industry such as the footwear one. The relationships and interaction with design departments of large Spanish brands, such as Cambrillón, whose national and global markets demand the continuous evolution of professional profiles, new skills, and capacities aligned with the vision of the use, commercialization and projection of its design; all of them typical traits of today’s 21st century society.
“The first decisive paradigm, right now, is generated from the binomial of local and global production, which is opposed to that of the past decades based on relocation, opposed to the current tendency based on relocation and ‘roaming’ of production, while aiming to own the control of supply and production chains, but also determinant area such as marketing, something in which the most avant-garde and frontier innovative companies are setting an example, from the smallest to global giants like Apple ”, she explained.
This approach and scenario also supposes “the recovery and revitalization of the implicit knowledge of the artisan tradition, which arose from the regions themselves and their productive networks. Something towards which the EU is betting. They have recently approved a new legislation on the right to repairing. The consequences of such law go far beyond technological products, and which are not only going to change the paradigms of product conception, but also those of its commercialization throughout Europe, which is our most logical and natural expansion ”.
“All of this is in line with the fact that European high-quality product firms such as Chanel, Dior, Prada, Nina Ricci, Loewe, among many other large European firms, manufacture in Spain, and do so in long-established production centers in the footwear sector such as Alicante, Ubrique, Almansa, La Rioja, etc. ” Design, she stressed, must also be ‘an ongoing learning process focused on the feedback of our end user’.
She added that, nowadays, new digital technologies “are valuable communication and representation tools, –the online market in which the product is sold only relying on its digital representation of the brand and product, has grown exponentially–, and in the footwear cannot be oblivious to it if it wants to compete within another binomial that is an extrapolation of the previous one: that of local and global virtual marketing ”Footwear“ is not a product that only satisfies illusory but real needs ”. And the process of its design “must be possessed by the creativity of its own evolution. But, also as part of the generation of a physical product, a commodity and its value chain, and it has to do with the trends and movements of broader groups connected at the same moment in history, in our case through the media and networks ”.
The evolution of Luxury after COVID-19
The COVID-19 crisis, its socio-economic consequences at a global level, together with the climate of social instability resulting from the recent and ongoing anti-racist protests, have made existing social inequalities even more evident and, therefore, people feel significantly less comfortable projecting an image of status that is too conspicuous.
Luxury fashion faces a great and complex challenge that, like any change, offers many opportunities; and the first that comes before us is to establish stronger relationships that go far beyond simple commercial exchange; transcending the personal and daily environment of our client.
Without being fully aware of this, the customer who buys luxury on a regular basis, both in a physical store and in an online store, values and appreciates that the epicentre of the brand’s experience and its full awareness (now mandatory) is truly the epicentre OF the brand.
Much more than a revolution, the evolution of the luxury industry is a non-negotiable reality in which the only constant is change.