Key findings include:
- The affluent purchase path is showing definitive signs of shortening, with 88 percent of total purchases occurring within three clicks in 2010. This reflects a 17 percent increase in “short-term” conversions versus 2009.

- Affluent shoppers continued searching online for luxury products throughout the economic downturn, but are displaying significantly increased interest in luxury brands versus a year ago. Customers seeking luxury products more fervently was evidenced with an increase of 20 million search impressions for the brands studied. (Nov. 2009-April 2010 versus Nov. 2008-April 2009)

- Customers are spending more per transaction on luxury goods than a year ago. The most recent holiday season showed average order values growing about $20 per order, or six percent. (Nov.-Dec. 2008 over Nov.-Dec. 2009) And the total number of orders for the 2009 holiday season increased almost 25 percent, with revenue for luxury retailers’ sites increasing 32 percent during this timeframe.

The whitepaper also detailed key findings for specific luxury verticals, including fashion, multi-category and beauty, as well as providing luxury retailers with the “New Rules for Luxury Retailers” in the form of key strategies to employ in 2011 and 2012.

“During the economic downturn, many industry ‘experts’ declared that luxury shoppers would never again be willing to by fully priced luxury goods or that ‘luxury was dead.’ Well, we are happy to report that neither of those predictions proved accurate,” said Vic Drabicky, Director of International and Vertical Market Development for Range Online Media. “While the economic recovery is not even close to complete, this research signals that affluent and aspirational consumers are already shifting their behavior in favor of the luxury brands they’ve coveted during the downturn. They are seeking and purchasing more luxury goods, and in a shorter timeframe from first click to purchase than they were during the height of the economic downturn.”

The study analyzed data from 424 luxury retail brands marketed within the company’s client base. Included in the analysis were the metrics of impressions, clicks, click through rate, CPC, cost, revenue, orders, conversion rates and average order value for November 2008 through April 2010. The Luxe Groupe also examined key economic indicators, such as the Dow Jones Industrial Average, in conjunction with this luxury client data. The client names and data specific to individual brands were not released due to proprietary and contractual limitations.

Please download the entire whitepaper, and read our findings about economic indicators for the luxury retail marketplace.

This isn’t to say that luxury didn’t go through a bit of a rough time, just look at the financial statements for Saks, Neimans, LVMH, or many other luxury brands of the past year, but not one of those companies died nor did they go back and completely reinvent the wheel. Instead, luxury did exactly what every good brand does when times change: they adapted. They cut back on excess inventory, they refined their product offering to focus on items core to their brand and they continued to focus on the customer. Not every brand was as successful as others, but in just the past month, Hermes reported an 8.5% rise in sales year over year (09 v. 08), Burberry share prices have increased faster than any member of the 13-member Bloomberg European Fashion Index (up 29% in the past 6 months) and even Saks, who many thought was on its deathbed, trimmed its 4th quarter losses and is planning to “go on the offensive” in 2010.

I’m not saying that everything is fine and dandy – we still have a lot of progress we need to make before we fully pull out of this recession – but if I start to see the same analysts releasing “Nothing Can Stop Luxury Growth!” articles, I will be forced to treat them the same way I treat Glenn Beck (which something like a cross between completely ignoring him and a running a full out campaign against his entire existence).

In the world of online, luxury brands often get a reputation as late adopters. Here goes the stereotype: They were cautious to launch ecommerce websites. Then, they were cautious to market them and let everyone know the site exists. However, with every stereotype, there are exceptions.

What intrigues me most about luxury brands is how brands have longevity at such an elite status. Most brands have been around for several decades if not longer. They have evolved with changes in media and survived tough economic times. All of this tells me that they must be doing something right.

How these brands approach their brand equity and image is applicable on many levels….which brings me to my personal variation on Robert Fulghum’s All I Really Need to Know I Learned in Kindergarten:

All I Really Need to Know I Learned Marketing Luxury:

1. Be True to Yourself. Luxury marketers are the best at staying true to their brand. They are very cautious in their marketing strategy to ensure brand image.
2. Respect Your Friends. Luxury buyers are loyal. As brands are expanding into new channels, they are very conscientious of their customer base. They respect their friends (read: customers) by developing “insider” groups and lists to keep the most loyal “in the know.”
3. It’s About Who You Know. We’ve all heard this one before, and it’s no different with prestigious brands that revel when a celebrity name-drops their brand. They take the buzz and make it work for them in their marketing strategies.
4. “Don’t Be Evil” says Google. Luxury brands fight evil everyday by policing their brands to maintain their quality online through trademark infringements and gray marketers.
5. Enjoy Quality, Not Quantity. Marketing strategies for prestigious brands involve quality placements for quality products.
6. Balance Is Key. Luxury brands continue to implement strategy that includes a cross- channel, diverse media mix. They understand the need to reach consumers at all steps of the buying process.

Luxury retailers are hesitant to get involved in the social space because it is a platform for 2-way communication with consumers—the type of marketing luxury brands typically shy away from. Social media is a playground for spreading unfiltered and opinionated information by uneducated consumers across the web, and this lack of control is the top turn-off for luxury marketers. And really, can you blame them? Luxury retailers are hyper-protective of their brands, almost to the point of remaining distant from average consumers, towering over regular joes via lofty billboards and high-society events. You might think this is elitist, but elitism is part of why they’re luxury brands. However, a few high-end retailers are participating in social media and initiating a conversation with consumers using social media sites. For example, in May 2009 Louis Vuitton released a limited edition bag available exclusively to their Twitter followers. Hooray for incremental sales, but more importantly, this gave a new platform for Louis Vuitton to engage in the conversation with consumers.

Another reason luxury retailers are not participating in the social space is because of the myth that the luxury demographic does not spend time on social sites. A recent study by eMarketer says that affluent internet users will grow from 43.7MM in 2006 to 57.1MM in 2011, while in February, Facebook identified its fastest-growing segment as women over 55, up 175% since November 2008. Luxury customers are online and participating in social media, but there is another crucial demographic influencing and participating in social media: future luxury customers. 52% of Facebook users are between the ages of 18 – 25 years old, and they will determine the future of luxury brands within the next 30 years. Luxury retailers should be communicating with the next generation, those who aspire to luxury brands as soon as they can afford them, say when they’ve graduated college and landed there first real job. And when the money does come, consumers will purchase from the brands they have built a relationship with since their teens and early twenties.

Lastly, if luxury brands do not participate in social media it likely means there is an uncontrolled brand presence being directed through unofficial groups, posts and images. Luxury brands are supposed to have all the characteristics that mass market retailers do not: customer service, unrivaled quality and an exclusive price point. If luxury brands’ products, employees and reputations are solid shouldn’t it be trumpeted from Facebook’s News Feed?

This tells me that luxury retailers/brands should cater their major initiatives to ‘refinement of living, indulgence, enjoyments of comforts and pleasures’. As such, shouldn’t the online experience be as comforting and pleasurable as the product itself? Doesn’t it make sense that a buying a luxury brand’s product should be easier and more enjoyable than a buying a discount product from a mass retailer or discounter? So why is it so difficult to even find the luxury official website? Most of the time, I never see an ad where I frequent online and I rarely see search listings (paid or natural) when searching for products (or sometimes even the trademark name) in the search engines. And when I finally find the site, I still have to navigate through flash, wait for video to load, experience a confusing site search and endure a clunky process just to order something. That is not a luxurious experience; it’s a trip to the DMV.

Luxury retailers are highly protective of their brand. Why not treat their customers with similar diligence and care? If your luxury brand’s purchase process has more in common with a trip to municipal court than Monaco, you might want to try the following:

• If you’re going to have beautiful images through flash/video ads to remind me of the brand and show me the beautiful new products, have them where I spend time online. Better yet, make them clickable right to the product I want to buy, or at least interactive so I can hover /explore, then go to the site when I’m ready to purchase.
  • STRATEGY: Have a strong presence on major networks. Use re-targeting and behavioral targeting to reach your customers/potential customers. Creative test/use multiple messages to ensure your audience is getting the ad units they like best.

• You’re present in the engines, so be there like you mean it. When I’m looking for a product like yours, make it easy on me to find you. When I’m looking for you by searching for your brand name…be there. Every time.
  • STRATEGY: Have a strong presence, both from a brand and non-brand presence, both from a paid listing and natural/organic standpoint. Make the creative and meta-description clear by telling me who you are and why your brand is special.

• When I finally end up on your site, make it easy on me to purchase. Let me see the beautiful, large images of the products I am interested in, show me descriptive words to describe the product, and when I’m ready to buy, let me be able to do that quickly and painlessly. Better yet, thank me for doing so and make me want to come back again and again.
  • STRATEGY: Use large multiple images. Use descriptive and detailed copy. Remember me if I’ve registered with your site before so I don’t have to re-enter all my personal information. Test! Use conversion optimization tools to target and refine the most customer friendly purchase paths and website organization.

I think it’s very fair to say that most luxury retailers and luxury brands do a tremendous job of making beautiful and luxurious products. It’s the basis in which all their efforts are based. Catalogs and image ads are gorgeous and classy, and so is the typical in-store experience. So why is it that luxury retailers are usually the last to make the online experience as luxurious and comforting as possible? Why is it the mass discounters and retailers of the world are the ones that make the online shopping experience comfortable and convenient? Online works amazingly well for most advertisers, and it’s trackable. That’s no secret. Focus on making that entire online channel as luxurious and comforting as that handbag or skin cream your customer loves you for, and you’ll have me coming back again and again. Or at least on payday.

I’d like to point out that my foray into luxury retail was only made possible by ridiculous markdowns, and this got me thinking. I had turned into the type of consumer luxury marketers work to avoid: the ultra price-sensitive shopper who wanders and browses, never really associating with any particular brand. They’re sort of like Dory, the absent-minded fish from Finding Nemo, if Dory shopped for discounted Burberry handbags. Luxury retailers don’t really target these people, because while certain price-conscious shoppers want to purchase from designer labels, they don’t care about which one they’re buying—only that they are getting something fancy for 40% off.

Luxury brands might not be interested in bargain-hunters, but they are VERY interested in so-called Aspirationals, or those who aspire to luxury. Luxury retail is essentially a lifestyle choice, and just as regular people who want to be associated with rock music wear AC/DC shirts, people who desire association with luxury wear shirts from A/X. These people might only have a couple high-end items they wear over and over again (if you know what a $30k-a-year-millionaire is, we’re on the same page), but they are very brand conscious and spend what they can. You’d think that a luxury brand wouldn’t want this segment so much either, but it turns out that there are way more people who want to live a life of Prada than people who can actually afford to. These people still spend a lot of money, even if owning a pair of Versace jeans means they have to pick up an extra shift to pay the phone bill.

So what happens with Aspirationals’ spending habits when their income takes a hit, say for example, during a global recession? Curiously, none of the presentations I attended at Luxury Interactive really defined the luxury customer or the element of aspiration involved. I didn’t walk away with a solid sense of how we were going to work to address the chasm that now exists between the spending levels of yesterday and today. How do you measure the aspiration shift and better yet, how do you shift the crowd? If you can no longer aspire to buy a new coat and handbag once a quarter, maybe you’ll aspire to “timeless” luxury and buy a single higher-priced purse that will get you through the whole year. This is obviously the tip of the iceberg; there’s merchandising, inventories, margins and on and on and on to consider. As for me, I’m just ready to at least hear some honest talk around it. I’m ready to learn how to not run into me again.