Over the past several years, technology has reshaped the way we live, communicate and behave. It is a huge change that began in the 80’s when the first personal computers were launched into the market, and brands like Apple, Microsoft of IBM were absolute unknown to the masses; not to mention, Google, Whatsapp or Tesla. At that time, luxury brands were also experiencing their own transcendental changes, as in 1987 emerged the company LVMH Moët Hennessy Louis Vuitton SE. This merger triggered an evolution in the definition of luxury, a new stage in the development of the luxury market itself and how luxury is distributed these days.
Back in 1983, the Wertheimer Family owners of Chanel, hired the iconic Karl Lagerfeld to rebuild the even more iconic brand created by the unforgettable Gabrielle Coco Chanel. Karl would give Chanel a brand new ‘look & feel’ and way to mix fashion and luxury, that even some of its fervent brand lovers, didn’t concur with.
At this point in time, the luxury industry moved at a much slower pace than it does now where it faces a race to market like never before. And the reason for that huge increase in speed is both the emerging mass-production-commercialized luxury, the amount of technology involved, the manufacturing process, and also where consumers are concerned, which, by then, there was as much technology for the user, as the product had, no more.
Where are We Now and Change in the Human Index
Now, approximately 30 years later, things have changed quite a bit in terms of technology and market share, and even the concept of luxury for the consumers has is greatly changed and taking shape.
The fact is that what has really changed, and what is constantly changing is the Human Index, that is, the amount of human hours involved from the ideation, designing and manufacturing process, to the customer service process, going through the sale process, of course. The full product’s life.
The Decrease of the Human Index and Its Relation to the Luxury Ratio and Meta-Luxury Index
This Human Index is decreasing at an unprecedented rate, while most luxury brands try hard to keep up with the Luxury Ratio. What many don’t know is that both indexes are interconnected and are proportional one to the other. The higher the Luxury Ratio, the higher the Meta-Luxury Index, the higher the Human Index has to be, and vice versa.
Design, Manufacturing and the Internet’s Effect
Regarding the designing process, it is understandable that what CAD software and computers have offered to the ideation and designing process has allowed a faster production process, but it has also reduced the Human Index.
On the manufacturing side, the mass-production of luxury goods dramatically reduces that Human Index, creating still, excellent products, but with little exclusivity and a shorter lifetime, that is what 80% of luxury goods market is actually composed of.
Over the last few years, since the Internet has invaded our work, homes and lives, the Human Index is even more reduced due to the emergence of email marketing, social networks and ecommerce for the commercial part of the business as there’s less people needed for mass online and offline marketing. And now, luxury brands rush to deliver additional technology in their offer to the luxury goods consumers, in the full spectrum of luxury, with the excuse that this is what consumers, i.e. the market, is asking for, when they’re not. The higher the profile of the luxury consumer, either HENRY, HNWI or UHNWI, the lesser the amount of technology he uses in their shopping of luxury or the amount of marketing that the user consumes.
And finally, at the after sales stage, when the customer, that client, has bought the product or service, the amount of technology that he needs to know how to use to fully take advantage of it, like a last generation mobile phone with the corporate’s, or the product’s own, mobile app and the official website, and follow to participate in social networks where the brand is present with barely any contact with the community manager, just to name a few of the basics. So if that client needs to ask a basic question about the functioning of the product or service, there is a button they have to find somewhere, a FAQ table or an online form, or at most, a phone number to the Customer Service with automated response to the most frequent questions.
Bringing Back the Human Index in Luxury
In my view, there are several things that the luxury industry is doing wrong about their approach to technology and the constant reduction of Human Index in their products and services.
- With the reasoning of offering a bespoke experience, brands try constantly to collect information about the client’s usage of their products, and most provide a poor overall bespoke experience for that same client whether it is online or offline
- The over-exposure to many different technologies, create over-confusion to the final customer as they are unprepared and unfamiliar with all of them. Very few are totally familiar with even just one technology
- Luxury brands hire professionals that are not only unprepared to the use of all that technology, but also have too little training hours to offer a good advice in any store of the world
- The constant change of technologies makes obsolete and non-viable any serious investment in such training, automating any response to the customers
- The huge cost of a global implementation of any technology, makes decision taking so slow that by the time they finally adopt it, it will be obsolete and will cost the brand millions with a little to none ROI or usage from the customer base
- The amount of digital devices that will be interconnected in the Internet of Things will be so huge that the amount of information collected by a specific brand about the usage of their last product launched, will be obsolete within hours, and millions will be invested on the analysis of all that data, without investing in establishing long lasting personal relationships between the employees and the customers, therefore increasing the Human Index
- The emerging classes of Millennials, Gen Y, Gen X, Gen Z, as well as the new emerging markets like China, combined with the increase in travel, require personnel adequately trained to attend luxury multilanguage, multicultural and technologically unprepared customers from all over the world and that is not what is commonly found in many luxury stores
The amount of investment made into reducing the Human Index in luxury is huge compared to what it is made to increase it.
What Luxury Consumers Really Want
While it is undeniable that technology is here to stay where communications is concerned, and does bring value, it is does not mean that it replaces the need for human interaction. What Luxury Brands must understand is what HNWI and the UHNWI demand when they buy a luxury product or service is a high Human Index in the overall experience, much before they know about the product, and long after they have bought it.
What will define which Luxury Brands thrive and survive and those that will not, is not how much technology they embed in the overall product experience, but how much they invest in their Human Index.