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How Blockchain could transform luxury brands

Monday, August 19th, 2019

High-end consumers are increasingly turning to ethically produced products and are willing to pay a premium for these goods. But the luxury industry has a chequered history with sustainability. Dr Navdeep Athwal believes that Blockchain could be the answer that brands are looking for.

Luxury brands have a controversial relationship with sustainability due to a lack of transparency in the supply chain and accusations of animal and worker exploitation. Yet some of the industry’s most significant markets – Millennials and Chinese consumers – are increasingly seeking products that are both sourced sustainably and produced ethically.

Dr Navdeep Athwal, in a paper co-authored with digital agency specialising in the luxury industry Verb Brands, argues that Blockchain, the technology behind Bitcoin, is the solution to providing traceability in the luxury sector.

Blockchain is focused on security and transparency. The technology promises data authenticity through the use of advanced encryption and data validation algorithms. Using this powerful technology could give rise to a new generation of luxury sustainability monitoring, traceability and reporting – the key for brands prioritising transparency.

Each step of a product’s journey from source to store could be logged thereby creating an electronic decentralised ledger. With open access to this information, customers could read about a product’s provenance and verify its green credentials. This technology is also attractive to major brands as it could help to solve the issue of counterfeiting, again by tracking each link in the supply chain.

International diamond retailer, De Beers, already use a similar system called ‘tracr’ to decrease the likelihood that their gems were sourced in conflict-zones.

Dr Athwal added:

“Blockchain might not be the first technology that comes to mind when considering sustainability, however I believe that this technology can improve the visibility of supply chains within the luxury industry, in turn driving forward sustainability”.

Dr Naveep Athwal

Traceability in the luxury supply chain is just one aspect of how embracing the digital revolution could change the industry.

The whitepaper highlights the need for brands to adapt to the ever-changing digital environment and continually evolve to meet customers’ emerging demands. Dubbing this phenomenon Digital Darwinism, the authors of the report spell out a warning to key players in the industry: adapt or perish.  

Further research conducted by Dr Athwal explores sustainable luxury and how Blockchain can be utilised in this context in more detail. Many luxury powerhouses, such as LVMH and Kering, employ sustainability as a key strategic priority and have the ability to implement large-scale change such as using Blockchain to promote transparency.

Dr Athwal commented:

“Luxury shoppers have long been engaging in eco-conscious mindful buying behaviours, and the development of CSR initiatives by luxury organisations like LVMH; owners of Louis Vuitton may well see the adoption for blockchain technology not just to eliminate the problem of counterfeiting, but also to create transparent environmentally friendly supply chains”.


Read the full whitepaper and discover more about Dr Athwal’s research below.
Digital Darwinism; The Evolution of Luxury Fashion 2019
(https://verbbrands.com/digital-darwinism-luxury-fashion/)
Sustainable Luxury Marketing: A Synthesis and Research Agenda (https://onlinelibrary.wiley.com/doi/full/10.1111/ijmr.12195)
The allure of luxury brands’ social media activities: a uses and gratifications perspective (https://www.emerald.com/insight/content/doi/10.1108/ITP-01-2018-0017/full/html)
 

Selling experiences – not rooms: Exploring the future of luxury travel through digital strategy

Wednesday, September 13th, 2017

Navdeep-WhitePaper-Luxury

Can a holiday make you a better parent, or more creative? Luxury hospitality consumers aren’t satisfied with a great view – they want a substantive change borne out of amazing experiences, suggests Dr Navdeep Athwal.

Luxury consumption has shifted away from goods and towards experiences, so how can the premium hospitality market capitalise on this? Navdeep’s white paper, co-authored with digital agency Verb Brands, argues that the key to growth is brands getting their digital and marketing strategies right.

Social media and luxury travel goes hand in hand – customers are generally tech-savvy and self-sufficient deeming the high street travel agent redundant. They favour mobile apps over web browsers so are likely to interact with a provider from a hand-held device at one point in the process, leading brands to address their digital and social media approaches in order to remain competitive.

A brand’s social media must showcase the aspirational experience while also demonstrating customer care and relationship management. User-generated, story-based content trumps traditional advertising so many brands employ online ‘influencers’ to contribute to visual platforms like Instagram. While they can be effective, Navdeep suggests brands introduce a comprehensive vetting process prior to appointment, as well as exploring people without an online presence who have “priceless Rolodexes” for accessing high-earning, hard-to-reach spenders.

An ‘Instagrammable’ destination has become a primary influencing factor for millennials choosing their holidays, and with 25-34 year olds spending much of their disposable income on travel, this paper highlights the importance of brands understanding how to deploy digital to best meet market requirements. Navdeep indicates that AI is the future of customer engagement – meanwhile Airbnb is adapting its sharing economy model to meet the expectations of luxury travellers. The landscape is changing, and quickly.

In this paper, Navdeep also identifies successful strategies for businesses based on offline consumer behaviour. Luxury consumers are pursuing experiences over possessions – “a better me” is the product and key themes are wellness, personalisation and dining.

One of the market’s primary challenges is building brand love and loyalty, though defining the latter is complex as it can be driven by behavioural (earning perks) or attitudinal (emotional) motivations. Navdeep suggests that arriving at a combination of both in a brand’s marketing strategy is ideal. She continues: “Globalisation necessitated a one-size-fits-all approach, but the changing luxury market demands a more personalised response. Brand authenticity is vital, as is a marketing and digital strategy shaped around accurately collected and analysed data.”

“Over the next ten years, growth in luxury travel is expected to exceed that of overall travel – brands must tap-in to consumers’ spiritual and emotional motives for spending their money on travel. Happily, we’re already starting to see premium brands such as major hotel chains react by refining their digital approach.”

Click here to read the full report (‘The Evolving Luxury Hospitality Market – what’s the key to its growth?’).