Luxury is turning to technology to offer new product categories

Luxury is about craftsmanship, quality and heritage. It’s about personality, identity and status. But more than anything, the luxury market is about creating the future and showing us all what’s to come. It leads, rather than follows.

The luxury market’s slow adoption of technology might seem surprising. Over the past years, we’ve seen the two industries beginning to merge, with tech companies trying out high fashion and luxury brands trying out high tech. The integration of technology offers a new experiential layer to the product offerings, however it’s essential that the luxury market uses the same design philosophy and meticulous attention to detail in its approach.

The luxury purchasing experience has traditionally taken place in brick and mortar stores, where customers are embedded within bespoke interiors in the company of boutique staff that understand core tenets of the brand. COVID-19 has removed the tactile experience that is part of the romance of purchasing a luxury product. Where customers aren’t able to try on items or appreciate the finish, materials and craftsmanship, technology has a big part to play in building relationships and finding innovative ways to connect customers to products.

Can a smart watch really be a luxury item?

Luxury smartwatches comprise a small but growing market. While the functionality can appear very similar to cheaper models using the same core technology, the price tag can be vastly different. Cheaper smartwatches retail around $200 are typically packed with features. The bigger ticket items retail in the region of $1,000 to $5,000+, with a focus on high-end design, tailored applications and premium materials.

They will not replace the traditional watch category, nor should they be considered competitors. They offer a completely different experience to a traditional watch. Technology enables multiple face configurations that can adapt and change to suit consumer lifestyle and activity, a suite of health and connected apps that provide real-time health and body metrics, from logging workout data to tracking sleep.

Luxury smartwatch prices are typically lower when compared to their analogue siblings. Principally this is because smartwatches have a shorter shelf-life, dictated by technology. Customers are aware of this: it echoes how they purchase and upgrade phones. Interestingly, the $1,000 price point for a new phone model is pretty standard. When smartwatches stray into the territory of the established, analogue watch market, it creates competition within their own product lines. It’s also a hard sell for a product with a short shelf-life. This was evident in Apple’s $10,000 18-karat gold smartwatch which struggled to find buyers. Apple’s collaboration with Hermès, with the stainless steel back, premium leather strap and custom face, is a much better fit for a market that has a number of luxury brands selling smartwatches at around the $1,000 to $2,000 price range.

Friko Starc, founder of advertising and marketing agency Chacco, says: “Luxury is both eternal and ephemeral: Created 1921, No.5 is still Chanel’s best selling fragrance, but sprinkles of disruption can help design stay relevant.  Luxury smartwatches have the opportunity to leverage the eternal qualities of craftsmanship of their brands with the ephemeral nature of technology.”

Luxury smart wearables sit at the intersection of people who appreciate beautiful and well-crafted items, but also want to track their fitness and overall health metrics. A smartwatch offers them a device that can seamlessly morph into different modes, designed with the same principles and attention to detail you’d expect from a luxury product. The materials are premium, with hand-finished casings and custom leather straps. The relentless pursuit of perfection and quality which luxury brands bring to the smartwatch market will help them to differentiate from mass market products, even if sharing the same core technology. Zaim Kamal, creative director at Montblanc, explains: “We are creating a new kind of emotionality of luxury. We’re creating new links, connections that are secondary to the obvious. This is the beauty of it. Now is an amazing time to connect and to be aware and to seek a balance between the tactile, the digital, and the unknown.” His colleague Felix Obschonka, Director of New Technologies at Montblanc said: "Merging technology with the notion of luxury might on the surface seem difficult, but essentially luxury is for me about beauty, craftsmanship and tactility. For smartwatches, this opens a new segment by combining these luxury values with technology. That's why at Montblanc we infuse our knowledge in Swiss watchmaking into the world of smartwatches, to make a beautiful device for your wrist, without any compromise. ” Ultimately, luxury consumers need to feel a level of individuality or they will opt for a device around the $400-600 range.

The approach to the watch faces and how the technology is housed create points of differentiation. Personalisation is an effective way of creating a truly individual piece; something that comes from the world of luxury but is seen in trainers as well as watches. Louis Vuitton’s Tambour Horizon is a larger-than-life offering that approaches the space with a ‘more is more’ attitude, carrying a selection of colourful quirky watch faces that extend to the embellished casing with printed glass. Tag Heuer have taken a more traditional approach with their Connected smartwatch, with a more traditional look for the digital faces that resemble analogue movements. Montblanc’s Summit Lite, the newest edition to the lineup, pushes the active features and more exploratory faces. The smartwatch displays metrics from across apps, tracking sleep, calories and body energy.

With the wrist watch market expected to reach $72 billion and the smart wearable market projected to hit 648.40 million units by 2025, the window of opportunity is growing—and this expansion will bring with it a new type of buyer.

Is Gen Z set to shake up luxury?

Gen Z will soon make up the majority of luxury goods consumers. They, along with younger millennials, have been immersed in technology their entire lives as the first truly digitally native generation, and expect this to filter through to their luxury products. For them, longevity isn’t the same cornerstone of luxury as we’ve seen with previous generations, perhaps because they are such a product of technology upgrade culture themselves. Authenticity is important to this generation, who crave experiences and memories over material goods. They have a strong focus on personal branding and a reduced attachment to always buying the same brand.

This generation is searching for meaning, and they have all the resources to help them do so. It demands a commitment from brands to sustainability and an active role in ensuring the future of the planet. To stay relevant, luxury brands need to create meaningful value in people’s lives.

Priscilla Dijrackor, founder of sustainable fashion brand FAUBOURG says: “Gen Z understands and is alarmed by climate change. They want a world with more equality and less exploitation of women, children, and people of colour. They want to be empowered to help save the planet and care for others. Given the choice between two products at a similar price point, most will choose the more responsible option. Many  are vegan or vegetarian, rent instead of buy,take public transport instead of drive, shop second-hand or vintage because it's fun but more importantly because it's a more accessible way to be conscious. They go out of their way to act responsibly. When it comes to what they buy, essentially, they want brands that align with their values.”

Younger luxury buyers seek personal relevance, pushing brands to contextualise their heritage in today’s world. We see this in cross-brand collaborations and the influence of designers like Virgil Abloh, and his Off-White label. Luxury is having to adapt to reach an audience plugged in to real-time social channels, driven by tastemakers and seeded by influencers. Brands need to exist in real-time digital spaces to be relevant in order to make connections with new customers.  

Just as progressive luxury brands are taking steps to be where their audiences are listening and creating digital-first platform collaborations across social channels, they also need to turn to technology when creating their pieces to keep up with the future market.

Luxury isn’t going anywhere, but our understanding of what elevates a piece from the mainstream will evolve over time. While previous generations cared about best materials and craftsmanship,  the younger peer-driven generation is looking for personalisation and elevation through action, values and a point-of-view on the world around.

How can luxury brands create meaningful value using tech?

Luxury brands will need to turn to technology to keep up with the market.  Here are five key tips to create meaningful value:

Modular/upgradable design: Luxury buyers may spend less on a smartwatch than on a traditional timepiece but replace it every one to two years, purchase different watch bands, apps and exclusive faces. The high-end consumer will also expect something new and unique, such as limited finishes and collaborations with other brands.

Individuality and exclusivity: Luxury consumers want to feel like they own something unique. The customisation of an accessory using technology can provide the level of exclusivity that helps the buyer reflect - or enhance - their own personality. Unlike a static material, technology can transform a surface to an expressive space that feels uniquely personal. Brands, like artists, can limit the supply of updates making them more unique and sought after. Brands can also partner with designers to release exclusive drops, so the technology is more of a canvas than a static object.

Connectivity: The in-store shopping experience should feel more connected and personalised. Brand loyal buyers should be recognised on entering the store. Their shopping experience needs to be personalised and effortless, from showing items that resonate with the buyer based on previous purchase to simply knowing their size - all powered by (opt in) data.  

Brands need to live in real-time digital channels - Customers shop from both traditional and non-traditional e-commerce platforms, from instagram, WeChat to shoppable (t-commerce) through connected TV - “social retail”. It’s important for brands to be seen where their customers are consuming content. Luxury brands like Burberry are already experimenting with technology in China to build stronger ties with digital-first consumers.

Read more: Find out more about Beyond’s work with Montblanc on their Summit Lite smartwatch.