Luxury Brand Growth Driven By Virtual Reality, E-Commerce

A shift in consumer behavior has pushed a number of luxury brands to improve their online presence and adopt new technology, with companies eager to profit from e-commerce sales.

By 2022, e-commerce will account for 17% of total retail sales, according to a McKinsey report on retail and consumer goods. 

In July, Cemtrex Inc CETX announced it will be providing an augmented reality experience for seven luxury brands housed under the Richemont umbrella: Arcadium designed for Cartier, Jaeger-LeCoultre, Montblanc, Officine Panerai, Piaget, Vacheron Constantin and IWC Shaffhausen.

AR is one angle of attack for brands to increases sales to people short on time.

Online Influencers Lead The Way

Another trend involves luxury shoppers following a mixed online/offline journey and looking for fashion inspiration from social media influencers.

This means the luxury shopper journey has been completely transformed into a virtual experience for a new generation. Many luxury brands have been cultivating a digital presence in order to build brand loyalty.

McKinsey’s research suggests that currently available, at-scale technology could help automate more than 55% of tasks in a classic grocery store.

“This automation would reduce selling, general, and administrative (SG&A) costs; enhance customer and employee experience; and free up funds to fuel growth elsewhere. Furthermore, research from the McKinsey Global Institute has shown that the retail industry could reap global benefits from AI worth $400 billion to $800 billion — more than any other industry.”

The consumer embrace of digital media has made retail competition more intense, as savvy upstart brands can now quickly gain a foothold online, even bypassing traditional retail channels.

Luxury IPOs

The secondhand fashion platform RealReal recently began trading on Nasdaq.

RealReal identified a niche in the market in which shoppers were eager to buy and sell used clothing and accessories from high-end brands such as Louis Vuitton.

The luxury goods market is projected to grow from an estimated $294 billion in 2018 to between $362 billion and $412 billion in 2025, according to RealReal's estimates. 

Price Action

LVMH Moet Hennessy Louis Vuitton SA LVMUY shares were down 0.94% at the close Friday, while Kering S A/ADR PPRUY shares were down 0.2%. 

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