Technological disruptions are almost everywhere or at least we should believe so. We hear almost every day about new startups and innovations, which are going to disrupt industries. Über, Airbnb, Spotify, Google, Apple and many others have affected several markets. Therefore, many established brands are trying to disrupt themselves before they are going to be disrupted - or they believe that they are going to be disrupted by rival brands. "Stay paranoid" is a popular phrase nowadays.
Luxury Brands Love Innovations
LVMH's VivaTech is a great event, which brings luxury actors together to thrive in innovations. LVMH's Chief Digital Officer Ian Rogers said that innovation is in the group's DNA, hence, luxury brands are used to innovate, and adapt to change. The current innovation culture is extremely active and every field is under observation and questioning. LVMH emphasized that humans are at the centre point of digital transformations, which is an extremely important strategy because every single innovation should add value between sellers and buyers.
The Global Fragrance Market Is Growing
Some people said at LVMH's VivaTech that the perfume sector should be disrupted by technological innovations. This phrase activated my thinking because I have personally thought this question for quite many times. The fragrance industry is going strong. In 2012, the global market size was 60 billion USD. In 2017, it was almost 70 billion dollars and the market size is estimated to grow to 92 billion dollars by 2024, according to Statista. Hence, the market is not declining, therefore, this is not the reason to disrupt it.
Digital Marketing Is Already Increasing Brand Awareness And Sales
The fragrance industry can grow much faster and here comes the market potential for innovations. Social media, such as Facebook and Instagram have helped luxury brands to reach towards potential buyers. High profile brand ambassadors are also sharing brand messages, and there are also micro-influencers, from official partners to brand lovers. Blogs and vlogs (YouTube) are also powerful marketing tools when it comes to sharing the love. High-end magazines, such as GQ, Robb Report, How To Spend It and many other lifestyles media channels are covering perfumes. Hence, there is lots of information online to assist buyers with their customer journeys. Buyers can effortlessly shop online or they can visit brick and mortars when the time is right.
The Online Sales Environment Is Quite Tricky For Perfume Sellers
Gathering online information can help buyers with their customer journeys but not fully because there is one important part missing. The actual scent of the perfume and how does the scent behave on your skin. Hence, it is quite easy to buy clothes, accessories, shoes and many others online because buyers know their sizes and unfit products can be returned by mail. But buyers cannot return opened perfumes just because they did not like the scents. Therefore, they should order small testers instead but this model requires double orders - first the tester and secondly the actual product. This is the main challenge with the online selling of perfumes if there is such a challenge after all.
The YouTube Of Perfumes Could Suggest New Fragrances And Perhaps Even Create Signature Perfumes By Using AI?
However, there is a digital business model, which could add value to perfume lovers. The solution is digital personalization and customer profiling. Perfume lovers usually have a large collection of different scents but there are no personal databases of these collections. A buyer should be able to create an online profile, which has a full list of perfumes, previous and current ones of the individual. Then the online service analyses the individual's profile by using AI to recommend other, similar fragrances, which would fit the taste of the buyer or the service could even create personalized artisan perfumes. However, personalized artisan perfumes are very difficult to create, and artificial intelligence is not reliable with this one. This sort of digital service would help the buyer to discover new and exciting fragrances and perhaps receive their signature perfumes. Then the buyer can purchase new fragrances with a single click or the buyer will be redirected to the brand's official website, or the service will show nearest shops. The service would be YouTube or Netflix of the perfume industry.
Luxury Shoppers Want The Whole Customer Experience And There Is A Desire For Artisan Creations
Online shopping in the luxury industry is growing but it is still under ten per cent of the whole industry, hence, a very slow growth pace. However, it is important to emphasize that luxury buyers behave differently. They, of course, browse online and digital plays an important role in the buyer's buying process. However, traditional buyers want to experience the whole customer experience, and this means going into shops. For perfume lovers, shops are like little paradises because buyers can browse perfumes easily and effortlessly, and they can have discussions with salespersons. Savviest buyers want to create their artisan perfumes in collaboration with perfume ateliers. These are magical and emotional trips to discover something entirely new.
Digital Services Enhance Industry Growth But They Are Long Way Disrupting It
But this is also a great example of the luxury industry where digital is embracing the growth of the whole industry and not just disrupting existing business models. Is it possible to disrupt the perfume industry by digital services? It is extremely challenging to disrupt the entire industry by digital services but it is possible to boost sales, increase brand awareness, improve brand loyalty, offer personalized customer service, and perhaps signature perfumes.
Published in Luxury Sales Academy.