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Internet and Luxury: Why Luxury Brands Need to Revisit the Potentialities of the Web

21st April 2015 | Jean-Noël Kapferer

JN Kapferer Details the Relationship Between Luxury Brands and the Internet, Arguing That Luxury Brands Need to Re-Fragment the Web for Their Own Profit

Kapferer on Luxury (9780749474362)This excerpt is from Kapferer on Luxury: How Luxury Brands Can Grow Yet Remain Rare

The internet creates a paradigm shift as big as the introduction of printing in the 15th century. The relationship between luxury brands and the internet is marked by a double myopia: luxury brands may be too conservative but the internet advocates may also be short-sighted when urging the luxury industry to conform to the generalized norms and movements of the web and social networks. On the web, luxury ceases to be evident. Also the internet has not been created for luxury niche companies, but for large-scale brands and operations. The purpose of this chapter is not to summarize the discussion on luxury growth challenges on the internet but rather to explore in depth some new facets of the issue and to present recent advances.

Since the emergence of the worldwide web, the luxury sector's relationship with it has been rather cautious and, some might even say, conservative or fearful. High speed and fast expansion are the main characteristics of the internet: everything changes so fast. To keep abreast of all the changes taking place, everyone needs to be a geek, a digital expert.  Thus, a culture shock arose for the luxury industry, which tends to think long term, typically does not act under the pressure of time, and is mostly concerned with the sustainability of brand reputation and the dream of ownership, a key factor in its pricing power. Even more, the risks are not the same for brands that market handbags at US $1,000 and those that start at €5,000.

Fundamentally, the internet breaks the barriers of time and space, two essential pillars of the luxury creation of value: luxury needs time to be produced, accessed, purchased and delivered. For example, a customer cannot just enter a Ferrari store and leave with a brand-new car. Buying a Ferrari, or even a Hermès Kelly bag for that matter, is associated with an extended selling ceremony that may take a year in the first case and months in the second. With regard to the negotiation of space, the internet challenges stores in all industrial and service sectors. But luxury brands tend to view themselves as religions and, as such, their cults need temples without which there is no religious initiation or ritual (Dion and Arnould, 2011). Luxury also connotes a mythical space, a land of origin, which is often the country in which products are made. As such they are endowed with both a unique local know-how (Swiss watches, for example) and the magic spirit of the holy place of origin (eg Paris).

Another facet of the chasm between the internet culture and luxury is the fundamental antimony between the key values of the net - especially since web 2.0 (open space, transparency, collaboration, horizontality, proximity, no control) - and the essence of luxury (relative inaccessibility, distance, control), without which luxury cannot achieve its ontological function of elevation and its sociological function of social stratification. This is why the net has given birth to new actors in the luxury sector, mostly new distributors (eg Net-a-Porter.com, Vente-Privée.com), whose core function is to open the doors to increase the accessibility to luxury brands, due to the new business models allowed by online commerce. However, to be able to continue distributing luxury goods in the future, brands must first remain highly desirable. In essence, the whole luxury sector will continue to thrive if it can continue to build and sustain luxury brands that make people dream, not so much among the people of 'yesterday' but among the people of 'today' and 'tomorrow' - baby boomers and Generations X and Y (Briones and Casper, 2014). 

Indeed, new generations are another facet of the culture shock between the internet and the luxury industry. The growth of the latter since the 1980s has been moulded by the demands of the baby boomers of the world, especially Westerners. In terms of the industry's future, in Asia the parameters are quite different: 80 per cent of new luxury consumers are mostly younger than 40 years of age. Furthermore, they seem to be more connected than their Western counterparts: a visit to Seoul or any capital or provincial city in China proves this immediately. This certainly does not mean that luxury brands should  target all social networks there, but in these countries and for this new sophisticated target market, technology means edge and relevance in today's vocabulary, not to mention the creation of value through online services. However, the extent of engagement in e-commerce activities remains an issue for luxury brands that want to prevent being negated on the altar of modernity. 

Kapferer goes on to explain how luxury brands need to re-fragment the web for their own profit. Learn more by reading Kapferer on Luxury.

Save 20% when you order Kapferer on Luxury with discount code MKTKLB

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