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Friday, June 18, 2010

FT Business of Luxury Summit: Boucheron Leads the Way Online as Most Luxury Companies Lag

At the podium Vanessa Friedman, FT Fashion Editor. From left: Luca Solca, senior analyst luxury goods and general retail of Sanford C. Bernstein, Fabio d’Angelantonio,. executive vice president and luxury retail and chief marketing officer of Luxottica Group, William Powers, author of Hamlet’s Blackberry; Reggie Bradford, chief executive officer of Vitrue, and Jean-Christophe Bédos, president and CEO of Boucheron.

The Internet was the main topic of conversation during the FT Business of Luxury Summit. It was refreshing to see that the luxury industry was finally waking up to online marketing and e-commerce opportunities. However, the questions raised at the two-day conference show that the industry as a whole is still behind the times when it comes to understanding and using the medium.

The frustration over the questions being raised during the summit at the Beverly Hills Hotel was summed up by a marketing director from Paris who said the following during the black tie gala outside Paramount Studios: “They are asking the questions that were answered two years ago,” he said. “They keep asking whether luxury companies should get on the Internet. That question has been answered. The question they should be asking is how we should do it.”

Indeed, panel after panel, often led by editors of the Financial Times (which hosts the annual event), focused on whether companies, whose main selling point is their exclusivity, should be online promoting and selling their products to the mass market online. The answer, by and large, is yes. That promoting and selling their products and services online doesn’t delude the exclusivity of the brand or cannibalize sales. That if done correctly, this medium can increase awareness, aspiration and sales for a company’s product the same way that advertising and event marketing has done for years. Not that it will work for every company that wants to attract and service wealthy clientele, but for the vast majority, a sophisticated online strategy will be a benefit to the brand.

It’s refreshing to know that a luxury jeweler is one of those taking a leadership position online. Jean-Christophe Bédos, president and CEO of Boucheron, talked about the venerable Paris-based company’s decision to start selling products online in September 2007, before many others and how they use social media sites, such as Facebook, as a marketing tool.

“We realized through surveys that the majority of our clients are affluent people who were buying online already,” he told the audience of luxury professionals. “The studies are still showing that the highest spenders online are the most affluent people. At the same time our objective and our decision was if these people are online we have to meet them where they like to be. They like to come to our stores. They like to have a retail experience. But increasingly affluent people also want to meet wherever they decide. And the internet is one of those places where they like to be. So consequently we like to be there. There were no real metrics behind it. No real sales pitches. We built our site like a service to our clients. And we decided on a learning approach because we are learning as we go.”

So if you go to the Boucheron Web site (which like many luxury Web sites is a bit flash heavy, thus, a little slow for an online medium), you will be able to buy a $10,000 watch, a $9,800 diamond and platinum pendant or a $4,800 diamond and gold ring. And if you go to the company’s official Facebook page you will find the latest product releases and stories written about the company. There are also two Facebook sites that appear to have been started by fans of the company.

Bédos stresses the importance of being on social network sites in order to become part of the online conversation. He says on the Web you do lose control of at least some of your message. However, if you are not part of the discussion about your company, then you have no control over your message online.

This might be old hat for most industries but for many traditional luxury brands it is a sea change in how they do business. Bédos recognizes this but he says it’s more important to a luxury brand’s future to embrace the change rather than fight it.

“At the end of the day, who people trust is very important and I believe that in recent years, increasingly, people trust their friends and their family rather than institutions, rather than media, rather than politicians, rather than brands. So how can brands address people without being mistrusted? I think the issue for me is to see where the people go, where consumers go in order to meet those who they trust and Facebook is a very good example. When something is recommended by a friend it has more value than by the brand that sits in its ivory tower and doesn’t talk to people. By tradition, especially luxury brands, tends to talk at people. There is a very huge shift at the way luxury brands have to market themselves and have to try to meet people because the consumers of today, they don’t want to just be taught. They want to share. They want to give their opinion. And they want to tell us, the brand, what they think about us. Therefore, the Web is definitely a marketing vehicle that will trigger viral marketing. It’s very efficient from that point of view and the question for me is not whether we should be marketing on the Web or not—whether we like it or not. I know the hard luxury goods industry is extremely cautious about the Web. They fear it might destroy their brand image. They fear it might destroy the control they have on their distribution network. But you have to accept today that to a certain extent that you lose a little bit of control.”

Vanessa Friedman, FT Fashion Editor who moderated the panel discussion, asked whether it is a good business or marketing strategy to be reactive to the Web, in the sense that you have to be on it just because everyone else is or because someone will take that space even if it isn’t the right thing to do for a company. 

“Sometimes you have to be reactive. Sometimes you have to be proactive if you’re a brand manager,” Bédos said. “One of those preconceived ideas I think is that we consider the Web as being a mass market vehicle. We should question this. It’s not more mass market than the street is mass market. Yet, specialty brands have directly operated stores on streets. The web to me … is like a street. You have the best. You have the worst. You have dirty streets. You have clean streets. You have affluent streets. You have down market streets. And when as much as a street could be, you can find everything. The question is not whether you should be on the street or not. The question is not whether you should be on the Web or not. The question is how you want to be there and how you want to be perceived there. This is still under your control. If you decide not to be there, you are totally losing what can be said about you and therefore I think you’re not facing your responsibilities as a brand manager to monitor what is being said about you on this space.”

In addition to Bédos and Friedman, participants for the panel titled, “Do 600,000 Facebook Friends Equal one Sale,” were Reggie Bradford, chief executive officer of Vitrue, a social media management company; Fabio d’Angelantonio. executive vice president and luxury retail and chief marketing officer of Luxottica Group, a luxury eyewear company, Luca Solca, senior analyst luxury goods and general retail of Sanford C. Bernstein, a wealth management company; and William Powers, author of Hamlet’s Blackberry.

The FT Business of Luxury Summit was held June 14 and 15 at the Beverly Hills Hotel in Beverly Hills, Calif.