Expert view: How luxury brands should engage customers in the post-pandemic era
To entice consumers to spend with them, Gianfranco Casati, Accenture’s chief executive officer in growth markets, says luxury brands may want to double down on championing sustainable values and harness new forms of technology.
To adapt to the new normal of working from home, some people buy ergonomic chairs, while others set up extra computer screens. Gianfranco Casati, chief executive office of Accenture in growth markets, “made an investment” in a large backdrop depicting Singapore’s stunning Marina Bay skyline which he sits in front of during video calls.
“This gives my colleagues the perception that I am sitting on my terrace overlooking Marina Bay, which is not actually the case,” he said with a chuckle. This glitzy backdrop, which separates his desk from the rest of his home, is not just a conversation starter for online meetings; it has allowed Casati to keep his business running efficiently during these challenging times.
“I did this to ensure I have work and personal space to keep the balance because we’re doing this for months,” said the Singapore-based Casati, who has management oversight for all industries and services of Accenture’s business in the Asia-Pacific, Africa, the Middle East and Latin America, which accounted for US$8.5 billion (S$11.8 billion) in revenues for the fiscal year 2019.
Similarly, smart pivots – whether on a small scale like what he has done or on larger industry-wide scales – across all fields will be essential for businesses hoping to stay afloat in these times. This is especially important for luxury companies that pride themselves on offering customers an experience that is a cut above the norm, he added.
Casati shared his insights on how the luxury industry should be transforming their businesses.
HOW HAVE LUXURY SPENDING PATTERNS BEEN IMPACTED BY THE PANDEMIC?
We did a specific deep-dive in Singapore as we see Singapore as quite a proxy of consumer behaviours when it comes to the way consumers regard luxury goods in this situation. We have seen an increase of luxury goods purchases online in a way which has been actually quite material but these haven't been able to offset the loss of sales in the traditional channels.
Also traditionally, there used to be a direct correlation between luxury goods and travel because a substantial part of sales is associated with tourists who spend when they have leisure time. That is a big driver of sales in big malls in Hong Kong, China, Japan and Singapore. This has completely decoupled. It is something that luxury brands have to reflect on going forward.
READ> Why were consumers in Asia buying luxury handbags during the lockdown?
SHOULD THE INDUSTRY BE PLACING HOPE ON THE CONCEPT OF “REVENGE SPENDING”?
When living in a difficult situation, some people may wish to pamper themselves such as by ordering food from premium restaurants or by gifting somebody something they would normally not consider. It is a way of reacting to the “misery” of the [circumstances].
So yes, there may be some revenge spending. But in my opinion, we should not overplay that because it is not going to be an enduring element and companies need to think of something else to sustain spending.
“There may be some revenge spending. But… we should not overplay that because it is not going to be an enduring element and companies need to think of something else to sustain spending.”
READ> Revenge spending? Hermes store in China hauls in S$3.8m a day after reopening
AS SAFE DISTANCING RULES GRADUALLY RELAX, WILL THIS BE A DRAW FOR PEOPLE TO HEAD OUT MORE OFTEN?
Forty per cent of consumers we surveyed after the easing of circuit breaker rules say they are still uncomfortable to go back to the traditional retail experience.
We believe it will take time to return to normal, so omni-channel experiences will be vital to luxury brands, because they will have to complement the physical and digital in order to continue to fulfil their customers’ expectations.
HOW CAN LUXURY INDUSTRIES BETTER CATER TO CUSTOMERS IN THE DIGITAL SPACE?
Customer engagement is going to be crucial to many sectors in the luxury space and combining the offline and online customer experience will be of fundamental importance.
For example, the wellness industry could have face-to-face sessions followed by virtual sessions to continue their level of engagement with customers in an extended fashion. Through this evolution of dialogue and relationship, companies can provide the luxury experience that customers are looking for.
“Customer engagement is going to be crucial to many sectors in the luxury space and combining the offline and online customer experience will be of fundamental importance.”
ARE THERE ANY FORMS OF CUTTING-EDGE TECHNOLOGY THAT CONSUMERS CAN LOOK FORWARD TO?
Virtual reality is something that will become part of the broader set of tools that companies will have to invest in to build relationships with their clients.
For example, in the sector of furniture and furniture design, augmented or virtual reality could give you an idea of what your room or apartment would look like with a new item.
Or you might be able to “try” on apparel in different styles and colours without leaving your room and in the space of minutes instead of hours. These developments would drive incremental sales, so it is likely that this technology may evolve more rapidly.
“Virtual reality is something that will become part of the broader set of tools that companies will have to invest in to build relationships with their clients.”
WHAT ELSE WILL LUXURY BRANDS WANT TO FOCUS ON TO STAY RELEVANT?
It is not necessarily just digital investments but also investments that create a sense of purpose and identity to establish themselves as responsible businesses.
Consumers are becoming more sensitive to values such as being environmentally friendly and socially responsible, especially after the pandemic. So how brands will evolve in this space and how fast they can do it would determine how much success they will enjoy in the near future.
Another aspect that luxury brands may want to do is to increase the visibility of their iconic products. For example a Chanel or Hermes handbag are iconic products but they are iconic typically to only a limited number of consumers. So telling the story of these products and making these stories available to a wider range of people can help to create a better awareness of the brands.
“Consumers are becoming more sensitive to values such as being environmentally friendly and socially responsible, especially after the pandemic.”