Daniel Langer is one of the world’s most renowned experts on luxury in a digitally disrupted world and with Millennials and Gen Z. He was named one of the global "Top Five Luxury Key Opinion Leaders to Watch 2021” by Netbase Quid. He founded the luxury strategy firm Équité and is also the executive professor of Luxury Strategy at Pepperdine University in Malibu. With his team he consults some of the world’s most admired and iconic luxury, lifestyle and consumer brands and also several luxury startups and smaller brands. Daniel is the author of several top-rated luxury management books in English and Chinese and is frequently featured in leading global media publications including The Economist, Forbes, New York Times, Nikkei, Luxury Daily, and Jing Daily. His education includes Harvard Business School and he holds an MBA and a Ph.D. in luxury management.
Q: Why do you think that the internet, Generation Z and China are reshaping the luxury world?
Dr. Langer: The growing wealth in China, the rise of Generation Z, and the ever-increasing influence of the cyber world mean that luxury companies need radically change their game - to one that fuses physical and cyber fantasies - to drive desirability in a fluid fashion across digital and physical consumer experiences. Frankly, most luxury players are not ready, still clinging to their traditional craftsmanship-driven, “inside-out” approach. It becomes of utmost urgency to adopt a radically customer-orientated approach and start reinventing the luxury experience in the luxury metaverse.
Q: Can you describe luxury’s new landscape: the luxury metaverse?
Dr. Langer: The rapidly rising importance of consumers’ digital experiences is disrupting the luxury retail industry. The rise went from linear to exponential. Up to 95% of purchase decisions are made during the digital journey according to research insights generated by Équité. Even though many still purchase in stores, the “moment of truth” has moved from the shelf to the internet. I call the new landscape the “luxury metaverse”, where the physical and the digital fuse and in which the customer, instead of the brand, chooses how and when to interact with the brand. However, I find that few brands know how to play the new game right. Most have treated digital as an ancillary and lack a holistic approach to transform their customer experience.
Q: In this context, how important is the Generation Z?
Dr. Langer: Generation Z, aged 25 or below, plays a critical role in the high-end market. It is the most affluent, optimistic, tech-savvy generation ever, and Zoomers tend to be more willing to spend on expensive goods and services. Many of them view luxury purchases as investments. Another trait is a strong push for sustainability, much more so than previous generations. To appeal to them, companies should focus on brand-equity building and take ESG seriously. The time for greenwashing is over. This generation, digitally native, understands when brands are not walking the talk.
Q: Why is there such a sense of urgency to win the new game of luxury?
Dr. Langer: The game has changed and brands have to take action or risk losing out completely. However, through our work in deeply analyzing and optimizing brands in markets from fashion to jewelry, from luxury sports cars to private aviation, from beauty care to delicatessen, from luxury hospitality to luxury events - naming a few-, categories and brands in the luxury sector often have a lack of understanding and preparedness to address the magnitude of change. This is compounded by massive deficits in brand storytelling, customer journey strategy and digital competitive advantage. The luxury metaverse requires a different approach, more agile, culturally-open, tech-savvy, less playing not to lose, but playing to win in multiple dimensions and disciplines.
Q: You already introduced the luxury metaverse. Can you elaborate in more depth what are critical aspects and why the change is so dramatic?
Dr. Langer: The metaverse is the next iteration of our reality, where virtual and physical realities merge into one. While often put in the context of virtual reality/augmented reality (VR/AR) and the next wave of the internet amid much media and public attention through the rebranding of Facebook Inc to Meta Inc, the fusion of the digital and physical is the right way to think about the essence of the new game of luxury. Many still see luxury as a predominantly craftsmanship-focused industry in which consumers pay significant premiums for creativity, artistry, fine materials and service and where the main purchase place is the physical store backed up by the opportunity to buy online. While omnichannel has been a buzzword for at least half a decade, most luxury managers still think foremost in terms of store experience plus a digital extension. Digital is seen rather as an advertising channel and a way to connect with customers, key opinion leaders, and celebrities. The limitation here is that it focuses mainly on the brands (“inside-out” view), while omitting the most important decision maker: the customer, with her or his “outside-in” view. My call to action: Outside-in view needs to replace the traditional inside-out/company- focused view of luxury. This requires a new mindset, new methods, and new tools.
Q: Can you describe the new rules that the luxury metaverse requires?
Dr. Langer: I propose a totally different, radically customer-centric approach. Each customer decides what luxury is for them, which categories and brands they desire, and what creates value for them. In this definition, luxury is the result of the individual perception of extreme value creation - extreme versus non-luxury purchases - and the access to the brands happens through the channels that a customer wants to use in each situation. In practically all cases, as already mentioned, in up to 95% of luxury purchase decisions, the digital journey is the key factor on what to buy or what to experience. In other words, we form our preferences and decisions during the digital journey, whether we read something about a brand on Robb Report, Apple News, Buzzfeed, or The Wall Street Journal, whether we receive a digital ad, whether we see Kim Kardashian, Blackpink’s Lisa, or another celebrity wear the latest fashion item or handbag. Once we reach the point where we want to purchase, we either do it online or in a physical store environment. It’s a fluid connection between the virtual and the physical. Hence, the new rules need to focus on the experience fluidity.
Q: Many brands would argue that this is what they already do. Is that not the case?
Dr. Langer: I share the example of a recent experience audit done in three cities for a luxury fashion brand. Two locations in the USA and one in their Paris flagship store. In one instance, the sales staff was extremely arrogant, in location two, they were friendly and helpful, in location three disinterested and distant. None of them asked if the customer had already shopped the brand before. None asked about even basic things like if the customer had a profile with the brand. Three different brand experiences, no connection to the digital journey. We speak about a top ten luxury brand. This is the reality today, in many cases. To lead the change that the luxury metaverse brings, a totally different approach is needed. Radically customer centric, data-driven, and maximally humanized. If the customer does not feel a luxury experience in any touchpoint, then it’s not luxury. Period.
Q: What is the key takeaway?
Dr. Langer: The most critical action item: we need to think about luxury in a fundamentally new way. In building desirability for exceptional products and services through the digital journey that then translates into a long-term customer relationship that is fuelled by physical and digital interactions and where all monetary transactions and brand experiences happen in a connected way between virtual and physical realities. Welcome to the luxury metaverse and the new luxury game. Combine this with new, younger customers who have different views and expectations and who are digitally native, and you have the biggest disruption the luxury industry has ever gone through.
Q: What is the time horizon?
Dr. Langer: The urgency could not be higher. It’s a matter of leading the change or becoming irrelevant. The magnitude of change will be dramatically bigger than what luxury brands experienced during the digital transformation of the last decade. The speed of change will be faster, the implications larger, and the stakes higher. The time to act is now.
