Digitalisation and disruption

How is Guerlain responding to a world where the consumer is in control,
where e-commerce growth is outpacing that of the wider retail market,
and where story-telling content trumps advertising? Chief Digital Officer
Jean-Denis Mariani addresses some fundamental questions facing the luxury goods
industry and discusses Guerlain’s digital priorities.

“Luxury was traditionally focused on the brand and product, but now everyone understands that the business has to be focused on the customer. That is perhaps the biggest revolution.”

Guerlain Chief Digital Officer Jean-Denis Mariani sums up one of the biggest changes in thinking about consumer engagement that digital disruption has wrought. And he speaks with the benefit of multi-channel experience. He was previously Chief Digital Officer in L’Oréal’s Professional Beauty Division, but also spent time as Digital & E-commerce CEO at gifting company Smartbox Group and was COO at gaming firm Betclic Everest, having also spent a period early in his career at online ‘pure player’ Expedia.

For brands, the consumer world has changed in ways that many companies are only coming to understand now, says Mariani.

“First, thanks to digital, the full power is in the hands of the consumer. They don’t necessarily believe what the brand says, they believe what their peers, other consumers, say. So we have to manage this behavioural change and find our place in the journey. This is a good thing: it means every company has to be consumer-centric to survive. That in turn means understanding the consumer, knowing their position and knowing what builds advocacy.

“Second, brands are now all about experiences. Experience is the new differentiator. We’ve seen Uber, Airbnb and others who own no assets and are selling only experiences. Everyone is doing similar things now, using social media, working with influencers and so on. At Guerlain we have our own retail too, so that means the chance to create a real omnichannel experience.

“Beyond that, it’s about a new journey. It’s not about online to offline (O2O), it’s O+O now. We have to deliver a different experience, through our own retail and through our own e-commerce platform, which we are upgrading and reforming. It’s a strong priority for us with two main goals. One is to increase online sales. The second is to drive traffic to our boutiques, which means thinking about innovative services.”

Digital engagement is about “testing and learning” says Jean-Denis Mariani

The boutiques offer a stunning entry point to the world of Guerlain, and the brand has an ambitious plan to bring at least some services from the stores into the online arena.

Mariani says: “The value proposition, the personalisation through the bottles in the Guerlain Perfumer stores is just amazing; we are working on a digital version of that for next year. It’s important in perfume mainly. Makeup could be fully online already, while skincare is about loyalty so once a product is efficient and works, we build loyalty and it can be sold online too.

“But perfume is more complex and is more of an omnichannel journey. People like to smell it to test, but the online channel could still be an amazing way to find gifts. If I want to find a fragrance for my wife Guerlain.com can become a gifting destination. It’s about integrating online and offline and an omnichannel journey; the transaction can take place anywhere.”

The other major factor driving change is mobile. “Mobile is eating the world,” he says. “Mobile is over-performing versus desktop in terms of engagement. The next step over the coming two years is to drive the conversion from traffic to sales. It means that when you create a new service, you have to be mobile first, which is quite a step for this industry.”

It is against the backdrop of those macro trends that the Guerlain strategy has been worked out. E-commerce, engagement and embracing disruption are vital elements.

E-commerce, which is driving the growth of retail everywhere, is the focus of heavy brand investment today. “In 2021 more than 70% of all sales will be online retail sales,” says Mariani. “To take advantage we have to invest. But online is also driven by content that inspires the consumer, not just with a brochure and prices. It’s not transactional any more.

“Story-telling content is also much more powerful than advertising. The consumer receives so much advertising each day, and the battle is to capture the fleeting attention of the consumer on the web. It’s about snacking content and relevant content for those you are talking to.”

Here, data is a significant factor, though leveraging it in the right ways is not easy.

“Digital provides the ability to multiply your touchpoints,” he notes. “We collect data from you in the shop or online, and that presents big opportunities and becomes a differentiator. It means we can offer personalised services to the consumer, knowing what they like and what they expect. It’s about collection, but on top of that you need to know your tribes, your audience, their culture, how they search, how they shop. You need to know in detail every part of the conversion path. Which actor in online and which actors in other channels help you to engage and convert customers? Once you know that it’s about finding the right creative message to target them.”

“We see the consumers are going online so let’s not try to push them into the store for every transaction”

And even within digitalised channels, you have to embrace, or drive, further disruption, says Mariani.

“Digital has created new platforms and services. Artificial Intelligence for example can help you find the right perfume, and it means that luxury brands have had to embrace this technology to create new services. Do that or else you’ll be disrupted. This is all new for luxury. Yesterday disruption came from the product; tomorrow it will come from the service.”

All of these dynamics are transforming Guerlain’s business, yet one element remains core: to remain close to the consumer.

“We have spent a lot of time and resources trying to understand the consumer, their behaviour and expectations. We integrate consumers into the design of new products. We work a lot on experiences and can use our 190 years of history to do that, but we’re working on disruption too. In luxury goods you usually only launch a product when it’s perfect; in digital it’s about testing and learning.”

Leaning on these themes and looking forward, the brand has some digital priorities.

As noted above, and as highlighted by CEO Laurent Boillot, developing the potential of e-commerce is critical.

“This means several things,” says Mariani. “There is direct e-commerce to the consumer; we also work with pure players, especially in Asia Pacific, and have other business with our retail partners. We are on track here; by 2021 we’d like total online sales to be over 15% of the overall mix. In some countries we are already there, such as China or the UK. When you see the weight of digital as a growth contributor, the figures could be amazing.

“In the first semester of 2018 we have seen more and more growth coming from digital. It means we have to spend the same amount of time and money on e-merchandising as on merchandising in the stores. That’s good though. This kind of KPI helps me tell the story internally say to a country General Manager.

“We see the consumers are going online so let’s not try to push them into the store for every transaction. Do it only if you have a very specific, differentiated service that adds value and means they need to go in-store. Fish where the fish are; the consumers are online already.

“It’s also a question of being organised. We have had to restructure so that we have the right digital resources in each country and are able to manage that growth.”

For Guerlain, “share of engagement” is more important than simply extending digital reach

The second priority is to develop Guerlain as a “love brand”. That means building advocacy among consumers, being relevant, making the brand personal to the consumer and using influencer marketing and content.

Mariani says: “Here the huge change for us was to not only be switched on for the main launches but to be always on. It’s a new way of communicating, and it means being present all year round with content planning. We need to increase the volume of content, and we have to improve this so that our partners can pick content up and use it. It’s a huge shift.”

Third, he says, technology is key. “We are revamping all our digital capabilities. It means that sometimes, rather than accelerating, I prefer to stop and make sure I have all the right services to provide sustainable transformation. On the use of data we have a long way to go; you can collect data, but you have to put it somewhere, use it somehow. This is a three-year programme so will take time.”

The next factor is to connect to the consumer through targeted marketing. “It’s no longer about mass marketing, it’s about personalising the interaction through strong data. You match the creative media mix to the channel and consumer. You can be more precise and you don’t spend on mass marketing that has a poor return on investment. Here the first move and the challenge is to move media from offline to online. It is happening but we need to improve this in France and accelerate it everywhere. In fragrance for example we need a relevant mix of online and offline still. But in makeup you could place 100% of your media online, and for skincare it’s a mix.”

Jean-Denis Mariani: “It’s no longer about mass marketing, it’s about personalising the interaction through strong data”

The other big focus is “share of engagement” rather than simply social reach. Here, the volume of interaction with the brand – likes, comments and so on – are more important than a wide reach. “Both are key but share of engagement is what matters,” says Mariani.

So where does travel retail fit into this world of transformation driven by digital, and does this present opportunities?

“In travel retail there are two challenges,” says Mariani. “One is to identify the consumer. I want to be able to recognise whether you have come from the UK or China or elsewhere when you buy in a boutique in France. We have to share our databases widely to recognise a traveller from place to place, and that is work that continues.

“But you can develop services for the global shopper. We are working on a specific application for the Chinese consumer so that in the travel channel when they come to France we can recognise them, and even arrange an event for them, in the Champs Elysées boutique or elsewhere.”

With all of this comes a further imperative: leading digital acceleration within the company.

“This is a key task,” says Mariani. “It means defining the strategy, sharing it with people, structuring it in each country, recruiting digital talent and maybe most importantly, up-skilling the non-digital people.

“It’s about getting all staff involved so that everyone understands what influencer marketing is, how you improve content and so on. Yes, you need to hire the right talent and develop the right IT capabilities, but you have to create the conditions whereby everybody buys into the journey. That’s what we are doing today.”

THE MOODIE DAVITT REPORT OCTOBER 2018