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Luxury and Discount Retailers Seize Digital Marketing Momentum
With no one-size-fits-all solution, companies strive to stand out to core customers.
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As a reliance on social media becomes increasingly pervasive among consumers of luxury and discount retail, both industries have had to accept that shoppers across the board now have one thing in common: a growing desire to connect more personally with their favorite brands. While luxury retailers have responded with a greater devotion to relationship building through digital marketing initiatives, those in the discount field have reacted to the change by leveraging their social and mobile campaigns to differentiate themselves in a growing competitive marketplace and finding ways to provide a luxury product or experience at an affordable price.

The recent economic downturn was a challenging time for luxury retail, and the industry has been slow to recover. "When shoppers tighten their purse strings, the luxury market is typically among the first to suffer, and this is largely because there is such a huge misconception about who the affluent are," Christopher Ramey, president of Affluent Insights and the Luxury Marketing Council of Florida, says. "When you think of someone who's wealthy, you might think of someone like Oprah or Donald Trump, but those individuals make up less than fifteen percent of affluent shoppers."

About 80 percent of shoppers who are considered affluent—making between $100,000 and $250,000 annually—are middle- and upper-middle-class individuals with traditional, frugal values. "They have't lost the lessons they were taught by their mothers and fathers," Ramey says. "These shoppers have entered a period of 'considered purchasing,' meaning they still hear their mom's voice every time they consider buying something 'over the top.'"

The younger generation, especially Millennials, are even more frugal than their older counterparts, likely because they haven't experienced periods of economic prosperity the way their parents have. "Their parents have seen highs and lows in the economy. The young consumer who has come of age during a downturn hasn't really experienced a distinct high yet. So they're much more likely to skimp and get by without things, and save money for something they consider more important," Dan Butler, vice president of retail operations at the National Retail Federation, says.

Although so-called "big spenders" tend to be older, they are still thoroughly connected, and are more social media– and mobile-savvy than ever, according to Ramey. "They're not simply online. They're very much online, and their presence is crucial for marketers. These shoppers know how to use the Web, social media, and mobile to their shopping advantage, and online marketing is now the most cost-effective way of reaching them," he says.

Royal = Loyal

Just a few years ago, British luxury clothing brand Burberry was on the decline, losing customers and revenue with outdated marketing strategies. Today, the company allocates nearly 60 percent of its marketing budget to digital marketing, garnering positive attention for its efforts.

"Burberry is currently considered perhaps the most digitally advanced brand," Ramey claims. "They do an extraordinary job of leveraging the Internet, and they excel in social and digital marketing. When it comes to competitors, there's almost no comparison."

Burberry stays current, constantly updating its various social media channels including Facebook, Twitter, Pinterest, and even Google+, which many fashion brands neglect, according to David Moth, a blogger for Econsultancy. But the brand rarely uses its numerous channels to tout sales or invite customers to buy something in stores or on its e-commerce page. Instead, Burberry focuses its efforts on nurturing customer relationships and building brand loyalty in a marketplace where some of its competitors continue to fruitlessly race each other to the checkout page with discounts and limited time offers.

On Facebook, Burberry has more than 15 million fans. The brand updates its page regularly, and some of its most popular updates accumulate more than 20,000 likes.

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