Louis Vuitton digital transformation yet to drive revenue?

Luxury brand LVMH (Louis Vuitton) reported revenue of €46.8 billion (+10 percent) with operating margin of 21.4 percent and net profit of €6.4 billion (+18 percent) in 2018.
LVMH digital transformationLouis Vuitton informed that profitability within digital is higher. It’s slightly higher than it is with Brick and Mortar. Louis Vuitton expects this profitability will remain higher and the growth rate in digital is also higher than the gross rate in Brick and Mortar. But Louis Vuitton is yet to generate significant revenue from digital channels.

A report from Forrester forecasts that CMOs will spend $146 billion on search marketing, banner and outstream advertising, instream advertising and email marketing in the US by 2023.

Forrester said macro trends like the increased use of digital media encourage marketers to invest in digital marketing, but depending on experience and sophistication, they have differing priorities.

Louis Vuitton said Sephora’s smart mirrors enables customers try on makeup using augmented reality (AR). Moet Hennessy uses artificial intelligence (AI) to help customers create bespoke tasting experiences with their friends.

At Guerlain Parfumeur stores customers can explore fragrances and emotions, using a digital perfume organ to craft their own signature scent.
Louis Vuitton shop in FuzhouLouis Vuitton’s annual report for 2018 says it will utilize digital technology and innovation for the benefit of ideas and brands, creating value and enriching the customer experience for all business units.

All brands under the LVMH family are accelerating the implementation of their online sales platforms and stepping up their digital content initiatives. “Our brands are incorporating digital tools to enhance the customer experience and attract new consumers,” Louis Vuitton officials said during an analyst meet.

Ian Rogers, chief digital officer of LVMH will be guiding the digital transformation of Louis Vuitton and other brands from LVMH. The appointment indicates that Louis Vuitton started realizing the value of digital transformation.

A new research by Forrester recently indicated that less than a quarter of CMOs are directly responsible for leading their firm’s digital transformation strategy and 16 percent are leading its execution.

Forrester said this can be attributed to the CMO’s high turnover, which presents the challenge of delivering short-term customer satisfaction and long-term digital transformation. CMOs are also challenged with competing priorities and employee recruitment and retention, the report said.

Forrester’s global forecast of the luxury retail market reveals sales are booming: e-commerce drove 39 percent of luxury sales growth in 2017. E-commerce is expected to increase to 59 percent by 2023. Louis Vuitton is expanding its digital presence to tap the booming online demand.

Rajani Baburajan

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