How luxury brands can create hedonistic experiences, virtually

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The coronavirus pandemic has changed the landscape of the world and introduced us to lockdowns, disrupting supply chains and new rules of consumption across the globe. Some reports estimate a total loss of $9 trillion due to the pandemic. The luxury industry is among the sectors worst hit by Covid-19. According to a recent article by Bain and Company, the global luxury market will shrink by 15 to 35 percent in 2020. Luxury brands such as Burberry have shut down more than one-third of their physical stores; Kering, the owner of Gucci, has closed half of its stores in China, when the outbreak intensified in February 2020. Will the challenges for luxury brands be over as lockdowns soften and social distancing norms are relaxed? The short answer is no.

Luxury brands thrive on hedonistic experience, and over the years, our interactions with brand managers reveal that in-store experience are a significant part of value proposition. However, due to lockdowns and social distancing, consumers are unlikely to return to physical stores soon. According to McKinsey, consumers are expected to shop less frequently in physical stores for all items except groceries.

We lay down five strategies for luxury brands to create hedonistic experiences in a world of social distancing. These strategies are based on research carried out by scholars across the globe in luxury marketing, as well as our interactions with several luxury marketers over the past few years.

Simulate sensory experiences, build narratives One critical component of any hedonistic consumption, including luxury, is emotional arousal. While all senses are capable of creating such arousals, sometimes sensory experiences can be replaced by narratives. Phrases like “soft as silk” or “smooth as butter” are essential to arouse consumer emotions and may replace the need for touching a product. Not only touch; the effect of smell can also be simulated. Perfume brands often express their product by attributing the fragrance to an already known smells such as the “Aroma of sandalwood” or the “Scent of a Red Rose”, all of which may facilitate emotional arousal.

Similarly, research shows that even touching a product in a tablet or a smartphone can create the sensory experience of touch. Perception of tactile evaluations is enough to create a sense of ownership and product evaluation. These interactions necessitate the creation of web-based applications that are touch-based. Most luxury brands, however, have shied away from engaging customers in the digital environment. Going forward, this, however, may not be an option. Thus, creating arousals aided by digital means is the way forward.

If you cannot be there physically, be there virtually
Brands can deploy virtual showrooms too. One such example is Lenskart—it allows consumers to try various models of spectacles and sunglasses by placing it on their 3D scanned face. Similarly, a luxury condom brand, Unique Pull has set up an interactive video where the brand showcases its 'Pull Strip' feature. This helps ensure the quality and uniqueness of a brand. By deploying virtual showrooms, brands may able to compensate for a lack of physical experience. It is also feasible to create personalised solutions, which most luxury customers will appreciate.

Use Augmented Reality
Luxury branding is all about exclusivity. Augmented reality (AR) fits well with the luxury marketing narrative. AR devices such as Microsoft HoloLens create at-home experiences in collaboration with luxury brands. Remy Martin has launched a global mixed reality experience using Microsoft HoloLens, revealing the origin and processes involved in making the Cognac. By the use of this technology, the customer feels more connected to the brand.

Go Old School via Catalogues
According to research conducted with a US-based luxury watches and jewellery e-commerce retailer, customers who received physical catalogues and emails had a higher response rate as compared to those who received emails. Physical catalogues mailed to existing customers will continue their engagement with the brand. With restrictions like social distancing and heightened awareness of personal hygiene in place, the catalogues may serve as an effective marketing tool.

What you do Off-the-Ball is also Important
A common saying in football is what you do off the ball is as vital as what you do when you have the ball. Similarly, luxury brands must embrace that customers need to be engaged even when they are not purchasing. One way is by introducing unique and viral challenges. Challenging customers to own limited-edition products by identifying them based on past purchases is a sure way.

Apart from creating hedonistic experiences, two important principles also aid luxury brands to not lose connection with their customers. First, highlighting the social activities that the brand engages during the pandemic may help achieve high status in the minds of customers. Kering donated $1 million to Hubei Red Cross Foundation and Dolce & Gabbana funded a research project to study the immune system responses to the virus, for example. Second, in a situation with huge economic loss, brands should not attempt to increase prices to make up their losses. They should slowly move to keep their customer base. This is a long term, slow-paced strategy, but with potential to make up for losses over time.

One thing that evolution has taught us is that any species needs to adapt to survive. For luxury brands, adaptation is inevitable. Thankfully, we already have the tools and techniques that we can use to create new experiences for luxury consumers during the times of a pandemic.

About authors: Laxminarayana Yashaswy Akella is Doctoral Student, Marketing and Sourav Bikash Borah is Assistant Professor, Marketing at IIM Ahmedabad. Amalesh Sharma is Assistant Professor, Marketing at Mays Business School, Texas A&M University

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The thoughts and opinions shared here are of the author.