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For luxury brands selling to consumers with annual salaries of $300,000 or more, knowing about social-media pinup boards and price-comparison tendencies is going to be mandatory, a new study suggests.
Brands that want to appeal to haute-couture shoppers should think about mobile strategy and consider that their clients may be cheaping out on sites like Amazon and Groupon. That’s the word from L2, a think tank based out of New York University’s Stern School of Business, which Wednesday released five trends expected to impact its “Prestige 100 brands”—think Chanel and Diane von Furstenberg—in 2012.
Here are the five predictions from L2:
1. Mobile and iPad commerce will triple in 2012. It’s been more than a year since that pivotal quarter in 2010 when global shipments of smartphones and tablets exceeded that of personal computers. Consumers now spend 94 minutes a day on mobile apps versus 72 minutes surfing online, L2 data shows. Fourteen percent of searches for prestige brands occur on a smartphone, and, what’s more, people are not just browsing but buying on mobile devices: Purchase rates are two to three times higher for those shopping on an iPad versus a PC.
2. Facebook’s ROI is going to pop. Chanel and Dior boast pages of more than 5 million fans on Facebook, but brands are trying to figure out how to get their return on investment. Tory Burch, L’Occitane, and Diane von Furstenberg are among those that have turned to selling on Facebook, or F-commerce. Currently, F-commerce is a fraction of what is seen on other digital channels, but it's definitely drawing eyeballs. In 2010, 1.9 percent of Burberry traffic was generated from Facebook, but by 2011, it was 29 percent. Burberry fans are 10 times more likely to visit the Burberry site, suggesting that they are not just fans but purchasers.
3. Get to know Tumblr, Instagram, and Pinterest. Several emerging platforms offer visual opportunities that fit hand in glove with most prestige brands' digital marketing strategies, says L2. Tumblr, the blogging platform, boasts more than 13 billion page views per month and a retention rate of 85 percent, versus 45 percent for Twitter. And even though it’s restricted to Apple iOS-run devices, the Instagram photo app reached 100 million uploaded photos in June 2011, just eight months after launch. Flickr took more than two years to reach the same milestone. Pinterest—another one to watch—which lets users pin up images of their favorite products in various categories, is “social media’s latest darling” and is already being used by brands such as Oscar de La Renta and retailer Bergdorf Goodman.
4. Think mobile for e-commerce in China. China will be prestige brands' biggest opportunity within five years. But rather than investing in storefronts in major cities like Shanghai and Beijing, luxury brands would do better to go mobile to pursue a luxury-loving Chinese consumers in tier-two and tier-three Chinese cities such as Wuhan or Harbin, where 75 percent of the wealth creation is expected to take place, L2 says.
5. Watch out for Amazon. The percentage of luxury shoppers with household incomes of $300,000 or more who shop online jumped from 64 percent in 2010 to 92 percent in 2011. Their luxury faves may surprise: Zappos, Overstock, Groupon, and eBay are among them, with No. 1 being Amazon. L2 finds that the e-commerce giant is growing at five times the rate of overall retail and three times the rate of online retail in the United States, and that it commands 37 percent of all mobile commerce transactions. What’s more, the L2 data show that consumers browsing on Sephora, for instance, are then going over to Amazon, presumably to compare prices, even though it doesn’t carry prestige beauty products.
Teresa Novellino writes for Portfolio.com
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