Transcription
[Music] Hello and welcome to this episode of Creative Impact. In today's episode, we'll delve into the importance of crafting a customer experience, or CX, that is not only successful but is one that clearly resonates with the brand strategy.
Customer experience is at the heart of luxury brand strategies. It's crucial for luxury brands because it forms the foundation of how these brands are perceived and valued by customers. Unlike conventional brands, luxury brands rely heavily on the exclusivity, emotional connection, and uniqueness of not just a product, but an experience that resonates with the brand strategy, craftsmanship, and prestige.
Creativity plays a pivotal role in shaping this customer experience, helping to translate brand values into personalized, memorable interactions. In a luxury context, creativity extends beyond design and product development to include innovative customer touch points, such as immersive retail environments, exclusive digital experiences, and personalized store storytelling. And this can position luxury brands to stand out in an increasingly competitive market.
Joining me today is Kristoff Kais, CEO and founder of CXG. Kristoff, welcome. Thank you for joining me in the studio.
Thank you so much. Now, I'm very, very happy to be here with you today. So, we're going to address today, uh, customer experience and its role in the luxury world, and the role of creativity in that. Please, first of all, tell us a little bit about yourself and your experience and journey.
My journey, uh, actually started in the US, uh, in New York, precisely, where, uh, I finished school at the time, and I was working in a, a completely different field. I was working in finance. And, uh, one of my friends was a fashion designer, and one day she called me up. I was helping her on weekends, and one day she called me up and said, "Look, um, I want to expand the brand. I want to, uh, to develop in Europe, and I'd like you to join me." And I did. I did. That was my first encounter with, again, an area I had no knowledge about, which was, she was, um, at the beginning, she was a jewelry designer and, uh, ventured into into fashion afterwards. But it was a fascinating journey that lasted, uh, between 1994 and 2004. So it took, uh, took me, um, uh, places because we, we went from New York to Paris, and then from Paris to Shanghai. And it got me to learn about fashion, about retail. But it was a premium brand, I would say. It was not a luxury brand. But, yeah, I've learned so much during that time.
It's very interesting that you say it wasn't a pre, it wasn't a luxury brand. And a lot of people are not able to differentiate between premium, luxury, and say, ultra-luxury. So, in your own words, how would you define the word luxury?
For me, luxury, um, is time. Okay? Time to actually make a piece, make a product. Time, which is also related to the heritage of this product. Which is why not all, because you have some new brands who today, that today are luxury brands. I'm thinking about Richard Mille, which is a brand that 50 years ago didn't exist, and which today has established itself as one of the major luxury brands. But if you look at most luxury brands, they have a heritage, a history to share. Um, time also to somehow choose the product and to buy the product. To me, a real luxury product is not something you buy on impulse. It's something you, at the beginning, think about, uh, eventually will dream about, um, maybe become a bit obsessed about, and, uh, and eventually you will buy. And, again, it's something that you're going to keep for a long time, and perhaps pass on to the next generation. When it comes to, you know, jewelry and watches, I think it's beautiful when you have those kind of products, jewelry or watches, that are passed from son to, from father to son, and, and so on. And with jewelry as well, it's, it's absolutely beautiful. And that's exactly the tagline of Patek Philippe. It is. You're right. Which is, yes. Thank you for defining that. That's beautifully put.
So, if somebody wants to start a luxury brand, and this is just, um, a question that I thought of while you were speaking now, because usually, especially in the region, people want a brand name that's very well known, that has heritage, but also associated with, say, a region or a specific country that's well known for manufacturing the specific type of of product, like Switzerland, for example, for watches. But if somebody locally wants to start a luxury brand, how would you advise them to go about it from the beginning?
Okay. I'm going to take an example from, um, France, where, um, you have a, a company called Luc Impact. It was started by the gentleman who was the CEO of Harry Winston and Bulgari. His name is Frederick Donnar. And basically, what Frederick and his team have done is that they've been looking and identifying some really, really old brand names. Even though the brand had kind of disappeared, but there was a history. And they did a lot of research, and they identified some brands that came from 200 years ago, and they decided to bring back this brand to life. And when you do that, you don't start from scratch. You start, first of all, with, as I said before, the heritage. It's here. You have the history. And storytelling in luxury is extremely important. I'm sure we will talk about that later. Um, and while doing that, you are able to bring back a beautiful story to life, but with the contemporary codes. So, I'm not familiar, but I'm sure there are probably some heritage brands that might have existed locally that might not exist today, but it existed at some point. So, it might be interesting to, to look and to find one of those and try to bring it to life, because it talks to people, you know.
So, I was reading about, uh, France and the government, which is trying to protect the luxury brands in France. And they formed a special chapter for this. And then reading deeper, deeper into this, apparently there were about 300 luxury brands in the past, and 200 of them disappeared. So, there's so much room for somebody to go and look up one of these brands and try to bring it back, um, into life.
Um, so, you know, coming back to your own journey, um, can we go back all the way to your studies and, you know, your early days?
Okay. All right. Yes. I, I, I was, so I was born in, in France, um, in a family where my mother is from the North of France. And, uh, it's, it's a family of entrepreneurs. So, all my uncles, most of them had their own business. And, and if you look at my father's side of friends, they were mostly working in public service or, you know, having, having other kinds of jobs, but they were not entrepreneurs. And I lived between those two. I was always fascinated by the people who actually create their own business. And I always wanted to do that. That's something I had in mind. My mother wanted me to be a journalist because I was very curious, and she kept on telling me, "You should go to Sciences Po," which is the school where a lot of journalists actually go. And, and I kept telling her, "Mom, you know, I want to have my own business. I want to be able to to make money, to create something, to develop something by myself." And that's what I ended up doing.
Oh, nice. Yeah. So, okay, let's go into creativity and the creative process. So, your organization, so you're the CEO and founder of a company that purely looks after and advises luxury brands on customer experience. And at the heart of that, that, would you agree that creativity is very important?
I believe creativity is essential when it comes to luxury brands. Even though, uh, some brands are exceptions, and there is one that comes to mind, um, in terms of, I would say, aesthetic creativity. Some brands, and I remember a conversation I had with, um, a top executive at Rolex, and he was explaining to me that any change in the aesthetic of a Rolex is actually driven by some technical constraints. Right? So, some brands are actually really, really strong in terms of product quality and product technical features. And that's typically the case of Rolex. And in that case, and it's a beautiful luxury brand, obviously, we all agree, we agree on that. But the creativity is not at the heart of what they do. However, innovation is. I think there is an interesting line between innovation on one hand and creativity on the other. I think I would tend to associate creativity more to fashion, you know, accessories, um, when it comes to, and also jewelry, of course. But when it comes to watches, you're going to turn towards innovation. Even though you also have some luxury watch brands that are very creative. When, again, coming back to Richard Mille or Hublot, there's a lot of of creativity in the design and in what they do.
So, difference between innovation and creativity. Okay. So, would you say something like video game design is innovation or creativity?
I think it's a bit of both in that case. Yes, absolutely.
Yeah, it's a very interesting fine line between the two. And would you say that you use more of, um, a lot of innovation too, in what you do?
We do, um, but again, the work we, we have at CXG, we're really focusing at helping brands deliver a good customer experience. And what does it mean? There is one, I would say, one function which is critical to do that. It's a sales advisor. Today, we all know that most of the customers, before going to a brand or to a store, will spend quite a bit of time online. So, there's a big part of the, say, brand knowledge or product knowledge that customers acquire online. Eventually, they will go to the store. I would say 10 years ago, everybody talked about the retail apocalypse, right? Yeah. Because, um, people assumed that online would completely replace retail, physical retail. Well, retail apocalypse didn't happen. Retail is actually doing very well. Even though we have a bit of a slowdown, but there are other reasons behind it. But retail is doing well. Again, in retail, you're going to be meeting a sales advisor. And the role of this sales advisor, among many things, is storytelling. And that's where creativity and customer experience meet each other. Because you could have, as a client, you could be in front of a beautiful piece, but if you don't have somebody to tell you the story of the piece, to explain you the story of the piece, you're going to be missing all these creativity parts. Yeah. Right. And you won't understand it. So, I think it's a, that's really where CX, as we call it, customer experience, meets creativity. Yes.
So, also knowledge. Coming to the staff, you mentioned the, the, the employees or the staff who are telling the story. So, not only do they have to be knowledgeable and well-trained. Um, I read in your literature and things that you've published online, the importance you place in your organization on employee satisfaction. Also, why do you emphasize that to us?
It's absolutely critical because good employee experience drives good customer experience. And it's quite logical. If you have people who are not happy on the job, who are working under difficult conditions, you can't really expect them to deliver a good customer experience. You know, they're going to be probably unhappy, they're not going to be in a good mood, and they're not going to be willing to go the extra mile to actually delight a customer. And good customer experience happens when you have people, people who surprise and delight you, right? And that cannot happen with somebody who's unhappy. So, the fundamental thing is really to, for brands to take care of their employees, to take care, especially those frontline people, sales advisors, who are doing a very difficult job. You know, I've, I've been on the shop floor myself when we opened, when I, in my previous experience, when we opened our store in New York, it was in, um, in 2002, so nine months after the September 11th attacks. Situation in New York was such that we couldn't find enough people to staff the store. And I ended up myself being on the shop floor for a whole week.
Oh, wow.
It was tough. It was tough. I was not expecting it to be that tough. You know, standing all day long, having very short breaks for lunch. As a French, I like to take long breaks for lunch. Yes. And having to work until probably 8:00, 9:00 p.m. at night, having to deal with sometimes difficult customers. All that is, you know, taking on you. It's, it's really a tough job. And brands, a lot of brands are have acknowledged it. Some didn't, but many are really acknowledging this fact. And they start to understand that, yeah, it's important to spend so much marketing dollars, but at the end of the day, who is going to be somehow the make it or break it point? The sales advisor. Yes.
Yes. Well, that's, I'm so glad to hear this because obviously, as an academic, we read about, ideally, this should be the situation. But when you enter a lot of, and around the world, not limited to one country, you enter a store, and there's a huge lack. You can really see how tired and worn out this person is, and how unwilling they are to entertain your questions. And, you know, in, in one of the papers I was reading, this was termed as emotional labor. So, emotional labor because, because even though they, you know, like you experience this, all this hardship, being on your feet, and listening to the same track of music over and over, and, you know, just being so tired, uh, on top of rude customers and so on, or difficult customers, you still have to smile and look professional and behave professionally. So, I think it's, you know, I'm, I'm really happy to read, uh, on your website how much you emphasize this, um, and how it reflects quickly onto eventually the customer service and the customer experience as well, and forming friendships with the customer, you know, and relations, building a rapport, if you like.
Absolutely. Absolutely. And you're touching on a very, very important point, which is, as a brand, what do you want your sales advisor to focus on? Do you want them to be focusing short-term on the transaction, which means selling? So, I want to sell you this bag today. Or are you going to be focusing on building a relationship? And I might not be selling you this bag today, but you will come back, right? And, and to me, and it's coming back, we're coming back to time. Time management. How do you actually value your customer over a period of time? Yeah. If you're only focusing on short-term sales, eventually your brand is going to dry out because this is not what people want, right? And you're not going to build. We are in a moment when we see that brands that are still performing are brands that have built over time a very strong customer base. If you take a brand like Hermès, they just published their numbers for Q3. They are still going at plus 14%, when most brands in the industry are actually either in low single digits or even in negative territory. Why is that? Simply because, and there are many reasons, the brand is very desirable, of course, but also because they have a customer base that are followers, and people are not pushing, people are building relationships. Yes.
It's a fine balance of being helpful and not being too pushy. And that takes me to, so many questions about how you design your customer experience. Like, what are the pillars that you follow or the priorities when you're designing this?
We start with the emotion. And let me, let me explain a bit what I mean here. We ask brands, and that's the first thing we do. We ask brands a very simple question, but as always, simple questions that can be quite difficult to answer. And this question is, "How do you want your customers to feel?" And you would be surprised that many brands either don't know, or you have as many answers as people you speak to. Okay? And it's difficult. It's difficult because as soon as you touch emotions, putting words in front of emotions is sometimes challenging. So, what we do to get them to guide them towards the emotion, what we call the emotional intention they want to have, is that we're going to use images. Yes. Okay? And by identifying images and creating this connection between the image and the brand, we end up finding out what is their emotional intention. That's the first step of our journey. And we do that with large brands, and we do that at HQ level with the C-suite. Now, what's interesting is that from that, you need to move to a second stage, which is the emotional signature. And in essence, it means, "How do you make it happen?" What are you going to be doing to make this emotion come through, come to life? Right? And that raises a number of questions because it's very cultural. You don't do it the same way in Japan as you would do it in the US, in Brazil, or in Dubai, right? So, there is a matter of making sure that this emotional signature, even though the emotional intention is the same, you need to make sure that the emotional signature is going to be localized. Okay? So, that's how we help brands basically redefine what we call their experiential signature.
Right. So, I'm hearing culture. So, first of all, elements of culture and being just really conscious of that. I'm hearing from signature, something very customized to that brand, almost like a fingerprint for that brand, and that cannot be replicated. But how is that possible to design a signature emotion purely for this brand?
Okay. I'll give you one example to illustrate. We worked for, um, on one occasion, with a, a beautiful watch brand. Swiss watch brand. They came up in Geneva with an intention which was, "Pampering clients." So, "We want our clients to feel pampered." Right? So, how do you do that? We went to Hong Kong, and we had workshops. And, and the beauty of this is that the workshops you organize, you do it with people from the shop floor. Right? Why do it? Do it with them because they know their customers best. And they also, if they design this signature themselves, rest assured that they will follow through. They will do it. They will bring it to life. It's sometimes a bit disheartening to see that an emotional intention is created, a signature is created at headquarter level, and then doesn't really resonate with, you know, the local teams in all those countries. So, by doing it locally, you create something that people actually embrace because it's theirs. So, for this specific brand, pampering clients, how do you do that? How do you create a signature that delivers this emotion in a story in Hong Kong? And they came up with really interesting ideas. I can remember two. The first one was that whenever a client was entering the store, and bear in mind, Hong Kong, we are talking about street-level stores, it was not a shopping mall. And Hong Kong is humid, hot. So, when you typically enter a store from the outside, you're sweating. And the first thing they wanted to do is to offer a refreshment towel to any customer that was entering the store. A bit like what you get on, you know, Emirates business class or first class, right? But nobody was doing it in retail. So, it's a really nice way to show that you're welcoming a guest, you know. In, um, maybe a little detour. In French, we say that a luxury brand is actually a maison, okay? Maison, which means a house. And when you welcome somebody in your maison, in your house, there is a notion of hospitality. You are, you know, you are a host, and they are guests. So, you need to be hospitable. And I think hospitality in this region is very, very strong. I had the opportunity to experience it over and over, and I'm always amazed by how hospitable and nice people can be here. Um, so they had this first element, which was the refreshment towel. And the second thing they said, "We know that a lot of our clients are coming from mainland China, typically around 3:00, 4:00 p.m. in the afternoon. They are becoming a bit anxious because they're running low on battery. They are heavy, heavy users of their cell phone." So, "We want to give them the opportunity, actually, at any moment, any time of the day, when they come in, after having refreshed themselves with a refreshment towel, to actually put their phone on charge." Okay? So, they designed beautiful cases, chargers. Yeah. And it was absolutely incredible because not only do you set up a new relationship with a client, but the client, Chinese client, is very pragmatic. He's doing the, and he's saying, "Well, I'm going to stay in this store a bit longer because I'm recharging my my phone at the same time, right?" In retail, an empty store is dreadful. However, quite the opposite, if you see a store where you already have quite a few people, it gives you the impression that it's a brand that is working well, and you would want to get in, right? So, it was really a very positive, um, vibe that this sign, this experiential signature, emotional signature, was actually bringing to this retail network in Hong Kong.
Wow. That's really, uh, quite. It's very simple details, very small details, but that mean a lot to that customer at that moment in time when they're hot, and their mobile phone is run out, and perhaps they're thirsty, etc. Um, one of the things that are quite common are queues, creating a queue outside the store with a rope. And my personal take on this, and I'm quite opinionated on this, is I, you know, if I'm a luxury customer, I don't want to be standing in a queue to enter a store. Please share your take on this.
It's a tough one. Um, it's a tough one because the queue really started to generalize right after COVID, right? You didn't have, you had it, but you had it in, I would say, the big flagship stores. But then all of a sudden, every single store started to have this queue system. In some cases, I've been myself in situations where there was nobody in the store in New York. Once I was still queuing, I ended up speaking to the CEO of this brand, telling him, "What's going on? Why did your team get me to wait outside for like five minutes to actually before I could enter the store?" So, I'm like you, I'm a bit aggravated with this idea of having to queue. However, I think the brands right now are trying to have a better management of the number of people who are in the store at a certain moment in time, and that makes sense because they want to be able to handle those customers better. Now, queuing, when it has to happen, has to be managed a lot better. Queuing for a brand is an opportunity because you have people who are willing to spend their time. And again, let's not forget, time is our most precious commodity, sure, right? They are willing to spend time before entering a store. So, they are idle. You have their undivided attention. So, and this is a moment where they actually don't expect much, you know? It's, I think in, in marketing, it's all about expectation on one hand, and what do you deliver on the other. So, when the expectation is low, if you were to be queuing in front of a luxury brand, you, you know, you're like, "Okay, I don't like it, but I have to do it." And you have low expectation. So, that's an opportunity for the brand to actually come up and do something out of the ordinary, so that this moment, on which you had low expectation, and which is not a very pleasant moment, could actually become one, right? So, how do you do it? Now, brands that have been doing things which are interesting. I think one of the things that is critical when it comes to queue management is giving an idea to people on how much time they are going to have to wait, okay? More or less. Yes. Yes. That's quite important. And then you can entertain people in some way. You can find ways to maybe start storytelling about the brand, or storytelling about the building, especially when you are in a city like Paris. The buildings have so much history, the neighborhood has so much history. So, there are things to be done at this moment because you have people's attention. Yes. Yes. So, there are ways to to go around this or to, to manage the negative emotions that might arise while waiting in a queue. Yeah. Uh, but I think not many brands know that. And, you know, there's room for improvement. There is room for improvement. Absolutely. And, and queues, even though, again, the, the industry has is experiencing a slowdown, but I was in Paris 10 days ago, and I was walking in front of the Louis Vuitton store, which is between Avenue George V and Avenue des Champs-Élysées, and there was still a queue of at least 150 meters. Yeah. So, at 11.
Your company recently published an article on the service recovery paradox, which I found very interesting and used in some of my classes. So, can you give us insights on this?
Yeah, the service recovery paradox is is fascinating. It basically says that if you have a group of customers who are in a relationship with a brand, and everything is going smoothly, they're going to have a certain level of loyalty, right? Which is expected. If you were to take another group of customers, and they are experiencing a service issue with a brand, MH, you would see that either the brand is not able to actually solve the issue, in which case you might lose the customer. But the paradox is that if the brand is managing to solve the issue in the right way, the loyalty of this customer would actually become higher than the first group. Okay? When a customer realizes that the brand is actually going above and beyond to solve the problem, the customer is actually realizing the brand is here not only in the good moment, which is, you know, when the customer is buying, but the, the brand is going to stand by you even during difficult times. And this is really what makes the customer realize that, yeah, this is a good brand. This is a serious brand. They don't look at me as a problem. They look at me as a real person, and they're here here to help me solve this problem. Which is why their loyalty is higher because they know they went through a difficult situation with this brand, and they can count on it.
Can you give us examples of particularly creative solutions that you helped your clients come up with?
I would say, um, what I was telling you about with the emotional intention, emotional signature, is really something that we have developed and which is, which is very strong in, in our portfolio now. Um, we are helping brands a lot on the training side as well. The training, typically in retail, has been done face-to-face, and there's a lot of value to training done face-to-face, you know, either on the shop floor or in classroom training. However, our approach is to say that while valuable, such trainings are short-lived because people tend to go back to their old habits, or they tend to forget. So, there is like a bell curve. If you look at what people remember from this kind of training, where you get enthusiasm at first, and you get people who are going to, uh, somehow adopt the behavior, attitude, and behavior you want them to adopt, um, until a certain point. And my challenge has always been to say, "Well, how do we make sure that those improvements are actually sustained? How do we make sure that we keep the good habits in place?" So, what we have developed, um, and I'm very happy about that, because we signed a, um, an exclusive partnership with a French startup which is doing digital. It's a digital form that will actually help us to work like a constant reminder with the team following a classroom training that would have happened, so that it would, it will reinforce and make sure that it solidifies the training that has been delivered.
Right, right. I see what you mean. So, I've heard a pattern here where you like to be close to the touch points, the sales. Yeah. And then you mentioned something really interesting, culture. You mentioned Hong Kong, Chinese culture. Did you, and I noticed that your organizations are all over, you know, various parts of the world. Did you notice any significant cultural differences in the way that those particular consumers want to experience luxury?
Absolutely. There are very big differences. Obviously, um, not only on the way they want to experience luxury, but on the way they report on their experience. So, maybe let me start with this last point. We evaluate the experience with various methodologies. One of them is the famous Net Promoter Score, NPS. And NPS is in essence, for people listening to us who don't know about it, it's, probably actually everybody probably has received an NPS survey, which is asking, "Would you recommend this brand to family and friends?" And you have to score from zero to 10, right? I think we've all received this survey. Yeah. In essence, when you score from zero to six, you are what is called a detractor, who is somebody who will probably say something negative about the brand. Seven, eight, you are neutral, you are a passive. And nine and 10, you become an ambassador. And this is really, this is really a growth. This is what brands want to have. Now, what's really interesting is that when you ask this NPS question in countries like the US, you have a very large amount of people who are promoters, who are, yes, promoters, ambassadors, nine and 10, because in the US, people have a tendency to be cheerful, to be positive, and to give high scores, right? If you come to a country like France, or even worse, Japan, the people are going to be very reluctant to give you a nine or 10. So, reading, coming back to your question, reading the customer experience is something that you cannot do in the same way depending on the people who answer. Now, the experience itself is also very different. Coming back to Japan, which is a fascinating country when it comes to customer experience, the Japanese have, um, a word for it, which is called Omotenashi. Omotenashi is really an art of hospitality, the art of serving people, the art of basically anticipating the customer's needs. And this is absolutely incredible. So, the level of sophistication that you have on a market like Japan is second to none, right? You don't find it in other countries. However, the flip side of this is that they have sometimes difficulty to express their emotion and to connect at a personal level, right? Right. Because it creates, somehow, a distance. On the other hand, if you go to New York, you have people who are extremely friendly, extremely open, and you feel that, you know, they could actually be friends with you. So, it's a very, very friendly attitude and friendly relationship that is built. So, very different depending on the countries, right?
And in terms of the customer expectation with luxury, for example, what's the expectation of the experience of entering a retail store?
That's a good one. Because the expectations usually are really high, simply because brands are spending so much on marketing. You know, a luxury brand is going to spend anywhere from 5 to 12% of its turnover on marketing activities. If you're talking of a brand, a major brand, which is doing more than 10 billion, you're talking about easily 1 billion euros spent in marketing. So, of course, when you spend so much money on your brand, on the story of the brand, on the appeal of the brand, you create expectation. So, people are coming to your store with the expectation to live a luxury experience. And of course, the challenge for the brand is to make sure that this promise, this brand promise, in a way, is going to be to become a reality at the level. And that's where we play a big role. Yes.
Yes. And so, in retail, you have the opportunity to use the five senses to create that experience that you've designed or that emotional signature that you've designed. And then you would follow the brand strategy or the brand identity in order to reflect that across the five touch points or the five sensory elements. But when it comes to being online, I remember in the early days when all the luxury brands were really resistant and very reluctant to go into the, the digital online kind of sales mode until they felt like they had to. I feel like Burberry kind of pioneered that for a while, and then others followed suit. And still, some of them are not doing it well. They're just, just there because they, they, they have FOMO. All their peers are doing it, so they need to be online. And I totally understand because as a luxury brand, you're all about creating distance, aspiration, being a little bit, uh, unobtainable, maybe, or, you know, exclusive is the word. So, how do you manage to create that? And if you've had any projects digitally, how would you tackle these?
It's a tough one because indeed, you, you are not, um, you are not addressing all the senses of the client. So, there is a limitation in what you can actually do, uh, online. However, again, online is a place where the client will go at first. Today, 80% of the customers going to a luxury store have been online on the website or on other social media to discover the brand or to get to know more about one specific product if they know the brand already. So, online is a critical moment. It's a critical element of this journey that we call the omnichannel journey. Right now, there are many things, and you're right to say that for a very long time, brands were reluctant. I remember having conversations back in, you know, 2010, 2011, and brands were saying, brand CEOs are saying, "We will never be online. There is absolutely no way we're going to go there." Right? Eventually, people, you're right, were were somehow forced to go online. And, and today, I would say 90, 90% of luxury brands are online. I can't think of one that is not, but there are probably a few that are not. Now, the question comes, do you actually only display your product online? Yes. Or do you also sell? Yes, online. And some brands have decided to only sell one small part of the collection online, which is the one which is the less, probably the least expensive, or the one which is the kind of entry-level collection. Because if you start to enter a territory where the product is more expensive, they still want the customer to come to the store. So, you need to give, at the same time, a good reason for customers to come to the store. But there is a, somehow psychologically, a certain price point beyond which the majority of people say, "You know, I want to go to the store. I want to touch. I want to feel. I want to smell. And I want to get my luxury experience as well. So, I want to hear the story of the brand, and I want to somehow to also maybe put a face in front of of this product I'm going to buy, which is a sales associate I'm going to be dealing with." Yes.
And what about, uh, the outlet shops?
Oh, best village, village du, they call it also in Milan. There is one that has been a blessing and a curse for brands. You see a lot of brands that have decided not to go there, and you see brands that have been actually very, very active at opening stores in, in those, in those outlets. Now, the problem is a problem of, um, probably brand dilution. When you sell product at a discounted price as a luxury brand, you probably damage your brand a bit, right? And we've seen, and again, I've spoken to a lot of CEOs who have told me, "If you want to put the brand back on track, and if we want to restore, revive the desirability of the brand, we're going to have to close many outlets because this is not helping us." Right? You need to keep in mind that some brands were actually manufacturing some products that were designed to go to the outlet. So, they had specific collections for the outlets, which is again, not something I would say a good, a strong luxury brand would do ever. Yes.
So, you think that would dilute the brand? And so, even, even if I, I think it, you know, again, it depends of the positioning of your brand. But, in my view, luxury brands and outlets, is not something that should go hand in hand. Yes. Yes.
And what surprises me sometimes, in even in the main stores, for example, if you go to one of the malls here, you would see there's a discount, there's a sale, which I couldn't explain. You know, why is there a sale on luxury brands? Is this something that would kind of dilute the experience as well, or dilute the brand?
I think it would dilute the brand. And if you look at the strong brands, you never have any sale. Go and try to get a discount at Louis Vuitton, Hermès, Dior. You won't get it. Yeah. Don't get it. So, it's a sign of weakness from the brand. And, and a luxury brand to be legit has to be strong, right? So, as soon as you start to to discount your product, you discount your brand at the same time. Yes.
We were studying the quiet luxury. So, quiet luxury, where you know, it's the complete opposite of loud, demonstrating the brands and so on. And one of the things that occurred to me, or I was wondering about before our meeting, is then, you know, how does that impact the brand in terms of the consumer experience, if at all?
My definition of of quiet luxury is a, is a brand and a product that is quite of high quality, elegant, discreet. You don't see the logo. And in essence, most people will not even know it's a luxury brand. But the people of a certain category and who knows a brand will recognize the product. So, it's kind of an elite luxury. And brands that are really, really recognized for their quiet luxury are, I would say, Brunello Cucinelli, Loro Piana, Hermès as well. But it's, it's an interesting dynamic because if a quiet luxury brand becomes too, too successful, then ubiquity happens, you know? And then it starts to become a brand that you start to see more and more. And are you still quiet luxury when you have so many people wearing it? So, it's a fine balance between being quiet but not too quiet, or being quiet and being, you know, too loud eventually, because you become too successful to remain quiet. But I'm a big fan of of quiet luxury brands. You know, the ones I, I told you about, I really love. I think about like a brand like Belstaff as well. It's a typical quiet luxury brand, you know, very, very low-key, but beautiful product and fantastic collections. Yeah. Yeah.
Okay. So, we cannot avoid talking about AI, because it's basically gone into all domains. It's gone to all sectors. So, how do you see that being an impact on it?
Look, AI has been actually, um, something luxury brands have used for quite some time, especially in supply chain. Your, um, you might remember a few years ago, there were a few scandals because a brand had been destroying products, right? And that doesn't go well in today's world. So, brands now have been using AI to make sure that in terms of production levels, they are really, uh, nearly at par with what consumers will, uh, will actually buy. So, there is a big use of AI in supply, in logistics as well. It's coming on floor, but slowly. We see it arriving very, very strongly in call centers. Yes. So, call centers, to me, is a place where AI, machine learning, is really going to make a big difference. And, you know, there are already experiments that are that are being done, which are showing that with a bot that has been, again, well-trained, you can deliver a fantastic customer experience, sometimes even better, and using emotions and being empathetic. It's quite impressive. So, I think the, again, AI is going to to have a huge impact here. AI on the, again, on the shop floor, things are happening, but slowly. And I don't see any application as of today.
And just to conclude, I mean, looking to the future, where do you see customer experience going with all this innovation and change in customer demands and sentiment?
Yeah, it's, it's really interesting because, um, luxury, we've been saying for a long time, um, that luxury is going experiential. So, most people today expect luxury brands to not only deliver a product, but to deliver an experience that goes with the product. So, technology can allow that. With NFTs, when you buy a luxury product, a physical product, with an NFT, you can have a digital experience as well, right? So, that's interesting to me. There are many things where technology will play a real, real important role in evolving the customer experience. But we need to keep in mind that technology in itself is only, it's only a tool, right? It's not solving your problems. It can help you solve your problems, and there's a big, big difference between the two. Um, I see big opportunities for luxury brands in the circular economy, when they will be actually taking back products and managing all the secondhand market by themselves as well. So, um, yes, it's, um, of course, data is something that brands are using already in marketing for hyper-personalization, and that will continue. That's really an interesting opportunity as well for brands. But, yes, a lot of things are happening because the technology allows, um, the customer to have, again, different things. Thinking about the digital passport for products as well. When you buy a product, you have a digital passport, which is basically telling you where the product was made, and which is going to, if you were to sell the product, is going to be a proof that this is an authentic product. So, there's a lot to, to me, I see it as, as we move forward, the product plus experience plus services as well. So, there's going to be an interesting evolution toward that. And the digital, uh, passport is a, is a good way to kind of combat replicas and the gray market. Yeah. Absolutely. Absolutely. Yeah. Yes.
Well, Kristoff, I, I mean, this could go on because it's such an important topic, and actually, it's at the heart of all brands, but specifically luxury brands. Thank you for joining me today and sharing your insights.
Thank you so much. It was a pleasure.
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