Digital strategy and the lap of luxury
Luxury brands are some of the most prominent retailers in the Middle East and North Africa, and yet their brand strategies and digital communications largely fail to cater to local audiences. How can luxury brands adapt their positioning to reach these neglected markets? Brittany Golob investigates
In a survey of 1,500 affluent Persian Gulf state nationals, 42% buy luxury gooods on a regular basis. The average monthly spend on beauty, fashion and gifts is $2,400. These statistics alone point to a phenomenon that brands cannot ignore – the Middle East is an important market for luxury.
Luxury brands themselves, however, are not apt to change. They’ve been around for decades, if not hundreds of years – for a reason, in most cases. “Luxury brands don’t think on fast time scales,” says Markus Kramer, partner at Brand Affairs AG, a consultancy that manages strategy and communications for luxury brands, in regards to social media development. In both adapting to the lifestyles and desires of the new class of consumers in the Middle East and in developing digital and social communications, change is not natural for luxury brands.
And yet, innovation has, and always will be the purview of the longstanding luxury brand. Thus, it’s only a matter of time before these companies apply a traditionally design-oriented approach to innovation to their brand communications.
One of the biggest challenges facing luxury brands in the Middle East is the need to be both global and local, according to Havas Middle East’s Luxhub 2014 Luxury Digital Outlook report. It surveyed 96 prominent luxury brands to understand their approach to digital communications in the region. It found that 90% of consumers research luxury products before purchase. The Chalhoub Group, whose aforementioned survey of 1,500 consumers, however, states that only 26% actually shop online. It asserts that consumers still prefer the in-store experience – usually a customisable, personal experience – for both decision making and cultural reasons.
Patrick Chalhoub, co-CEO of the Chalhoub Group – which consults on luxury brand communications and logistics in Gulf markets – says, “The experience is really to create this person-to-person relationship, to build this trust and to feel well about it.” He says shopping taps into the traditional structures of Middle Eastern social life and has thus formed an important part of modern culture. Luxury too, ties directly into tradition. The Chalhoub research says 83% of respondents say acceptance by peers is important, thus patronising established luxury brands are a logical choice for consumers. Additionally, gifting is a relevant driver of luxury consumption in the region.
For luxury brands themselves, the Middle East is no emerging market. The shopping malls of Dubai and Riyadh and Doha are full of western luxury retailers. However, the communications and the relationship between the brand and the consumer is different than that of brands and consumers in Europe or other markets.
Kramer says luxury brands in the Middle East should take a different approach to their marketing and communications, “It should be louder. It should be bolder. If you’re a big company, you can do this because you have the resources to deliver locally relevant messaging. If you’re small or smallish you may only have two people in your global marketing communications team. How are you going to deliver a locally-tailored relevant message? It sounds really easy; the channels are there, but to actually execute this is very difficult.”
One method is to use partnerships, he says. Hotels act as facilitators between brands and consumers as they can help inform patrons about brand availability in local shopping centres and allow for transportation or even for personal shopping experiences. On the digital side, partnerships with luxury and fashion bloggers or news outlets are only in their infancy. Yet, culturally, Middle Eastern consumers are more likely to purchase something based on recommendation – 79% say friends are their biggest influencers on luxury purchases.
This strategy is one that the World Gold Council is actively pursuing. The council’s LoveGold campaign is its youth-facing brand that seeks to change the perception of gold in the fashion world. Melissa McVeigh, head of corporate communications for the council, says, “With the march of social media, influence is moving away from traditional advertising. Users seek out peers and role models whose opinions and recommendations set the taste agenda and have a greater impact on purchasing and lifestyle choices. LoveGold features digital influencers from the worlds of fashion and jewellery, encourages users to share jewellery and experiences, publishes ‘shopping guides’ and carries out a host of activities that place gold at the heart of an aspirational lifestyle.” In the Middle East, it has sought out digital influencers and showcases local designers and styles to encourage engagement with gold and the LoveGold brand.
Other digitally-savvy luxury brands are beginning to adapt their online strategies to relate more to Middle Eastern audiences. Burberry, one of luxury’s gold standards in social media, has a well-followed @BurberryME account that focuses on experiences, not products. Its bespoke collection allows for customisation of products online, while still retaining the traditional Burberry look – an important balance.
“The most important contribution of luxury brands to today’s wider business world may be the notion of enhanced individualism. Value-creation models that gravitated around the one-of-a-kind, made-to-measure item, once the domain of luxury brands, is now a widespread expectation in any product or service category,” Manfredi Ricca, MD of Interbrand Milan and Rebecca Robins, director of Interbrand EMEA and Latin America, write. They say the digital brand experience can allow for brands to embrace customisation and personalisation.
Yet the Havas Luxhub research notes that of the 96 brands surveyed, only 27% have a dedicated online Middle East area. Additionally, only 8%, or about seven brands, have Arabic- language content on their websites. Only four brands have Arabic Facebook pages and just Burberry and Clarins have regionally-focused Twitter handles.
“It’s risky, if you’re a luxury brand, to jump into social media. It’s also risky not to be there.”
Kramer agrees, adding that the digital and physical experiences can complement each other. High-end consumers can be catered to on an individual basis when shopping or customising a product, but that process can be augmented with video, technology and other digital content to ensure the best overall brand experience.
Chalhoub says this adaptation does not need to be costly or difficult for brands seeking to access the Middle Eastern market. He says while the delivery of the message should be adapted, brands should retain a continuity of communications that does not alter the essence of the brand.
That risk has been one that has dissuaded luxury brands from embracing digital. “It’s risky, if you’re a luxury brand, to jump into social media,” Kramer says. “It’s also risky not to be there.”
The Luxhub research suggests that the reluctance of luxury brands to embrace local content for the Middle East may be out of fear of brand dilution and loss of control over content.
According to digital brand intelligence agency L2 hotels rank among the most digitally-savvy brands in the Middle East, yet Burberry and L’Occitane have also excelled in the region. Interbrand’s 2014 Best Global Brands Report has Burberry up four places year-on-year at 73.
Digital communications is not easy, particularly for companies still trying to determine who to target in the rapidly- shifting Middle Eastern market. The region is one of the busiest travel and tourism hubs in the world with 2.5% of the region’s GDP coming in from the $64bn spent on travel and tourism each year, according to the World Travel & Tourism Council. That is set to rise by 5.5% next year.
Mark Oaten, CEO of the International Fur Trade Federation (IFTF), which has had success in many parts of the world at changing perceptions about fur and puts a large focus on digital communications, says about the Middle East, “Essentially, you have large shopping malls and Russian tourists and other tourists and the way you’re using social media has less of an impact because it’s a different shopping experience.”
He says it’s been more of a challenge to communicate on social media in the region because consumers are both of a more traditional bent than their Western cohorts and because there is a constant flux in the consumer base. He says communicating directly to Russians would be easier – as they comprise a good portion of the fur consumers travelling through the Middle East – than it would to communicate on social only within the MENA region.
Thus far, the IFTF, still in its infancy in the Middle East, has benefitted from partnerships with hotels to draw tourists to fur retailers in shopping malls. He says, however, that the digital focus the organisation has in the rest of the world will likely extend to the Middle East once the target audience is determined. He says, “There is no inconsistency with luxury [using digital]. You have to be digital. We celebrate the craft and the heritage, my god of course we do, but we also celebrate the innovation and dynamism.”
The challenge, for most, remains to adapt the positioning of the brand to a Middle Eastern audience that cares more about customisation, recommendation and differentiation than it does the traditional luxury values of heritage and quality.
Chalhoub says, “Heritage could be used to build trust, but heritage by itself could be felt a very old fashioned part of it. If it is not the fact that, ‘I have been around for 200 years and my customers are loyal to me, I have built trust, I can build it with you.’ Heritage could be also of recognition. But heritage by itself is not enough. For a Middle Eastern customer, it is not what he is looking for. It’s only the way to portray something else.”
Havas’ Luxhub research says the lack of locally- focused websites and social media content is a result of brands perceiving reputational risks by allowing for their communications to diverge from the brand’s core language and audience, “The reality is that global luxury brands have yet to invest in optimising their website properties in order to more effectively engage the local consumer on a more personal and contextual level, and this could be for many reasons. First, and foremost, their perception of the market’s consumers’ habits and needs, followed by general unwillingness and apathy towards earned engagement via social channels because of loss of exclusivity in the digital world.”
Yet with 90% of consumers using social media regularly and 84% accessing brand websites, branded content and digital functionality should cater to local audiences in order to help the brand grow in those markets.
The Havas report says, “Brands must contextualise their global content and media, to make it relevant and engaging for the local regional consumer, to maintain a brand’s, a consumer’s and the media’s environment identities in this ever-growing mass world.