Digital Transformation of Luxury Brand Marketing in the Context of

e-Economy

Hongxuan Zhu

School of Chinese Language and Literature, Fuyang Normal University, Fuyang, Anhui, 236000, China

Keywords: Digital Transformation, Luxury Brands, e-Commerce, Millennials, Marketing Innovation.

Abstract: Under the new situation, China's luxury industry is already facing various problems. Consumerism has waned,

and the structure of the consumer base is changing--millennials are entering the luxury market, and e-

Commerce and digital marketing models are spreading. The development of the luxury industry is in dire

need of a revolution. This paper analyzes the necessity and path of digital transformation for luxury brands in

the context of the continuous development of the e-Economy. This paper argues that with the younger

generation of consumers and the online transformation of consumption patterns, luxury brands need to change

their traditional concepts and establish a digital marketing mindset. This article suggests that luxury brands

should cater to the tastes of new groups in pursuit of individuality, use new technologies such as NFTs, launch

co-branded products through live broadcasts, carry out "sinicization" reforms, gradually get rid of the

traditional "aristocracy", adapt to the new market environment, and make luxury goods become popular works

of art in the future.

1 INTRODUCTION

After the wave of consumerism subsided, people's

consumption concept became more rational and

pragmatic, while long-term home working has

contributed to the deepening development of online

trade. With the rapid development of e-Commerce in

China, many luxury brands are speeding up on

opening the Chinese market, but at the same time,

there are also conflicts between the positioning of

some luxury brands and the e-Commerce economy.

Around the world, Gen Z and millennials are growing

and are gradually becoming the main force of new

luxury consumption, whose aesthetic, worldview, and

outlook on life are also forcing luxury brands to make

changes that match The Times. At the same time, with

the development of digital technology, many top

luxury brands have expanded into the primordial

realm of business, which may seem like a bubble to

some outsiders, yet this is not the case in an economy

where 18 to 34-year-olds are expected to account for

50% of the luxury market by 2025. The development

of luxury games, digital products, etc., may make

young people more accepting of luxury brand culture,

which can encourage them to consume luxury goods.

But when the electronic economy and the Chinese

Internet metaphysical culture combine, some factors

that are very conducive to the development of luxury

goods have emerged. The electronic economy brings

both opportunities and challenges and in turn, luxury

goods also promote the development of the electronic

economy. Therefore, with the change in market

development background and the trend of younger

consumers, the luxury industry should further seize

the development opportunities to meet the

development challenges. Based on this, this article

analyzes the challenges faced by the luxury industry

and its influencing factors and analyzes the strategies

for its development on this basis.

2 NECESSITY OF

TRANSFORMATION AND THE

GENERAL DIRECTION

2.1 Social Environment and Changing

Concept

After the COVID-19 pandemic, the dramatic

transformation of people's consumption concept has

promoted a new round of revolution in the fashion

circle. Due to the pragmatic consumption concept,

people now prefer more neutral, more casual, and

more sporty wear. This could cause extensive damage

212

Zhu, H.

Digital Transformation of Luxury Brand Marketing in the Context of e-Economy.

DOI: 10.5220/0014111200004942

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 2nd International Conference on Applied Psychology and Marketing Management (APMM 2025), pages 212-216

ISBN: 978-989-758-791-7

to the luxury industry, which is entirely based on

traditional consumerist ideas. The high-profile

facade, the luxurious interior decoration, and the

attentive reception of the waiters. All these measures

aimed at creating an atmosphere of elegance and

dignity are no longer competitive in this new

environment. How to guide young consumers into the

luxury decoration style and extremely high standards

of service in physical stores is what to think today.

In the current prevalence of feminism, more

women recognize the diversity of beauty. Women are

no longer shackled by consumerism and appearance

anxiety and instead seek to show their beauty and true

selves. Based on this, luxury goods are also making

corresponding strategic adjustments. Some sales of

luxury goods started to release photos of ordinary

consumers wearing brand clothes on social media. To

some extent, these pictures become the motivation for

other consumers to purchase, because compared with

those celebrities, the successful dressing cases of

ordinary consumers can make people think that they

can also wear fashion effects. In doing so, brands

cater to a shift in consumer thinking.

Meanwhile, luxury marketing in the context of e-

Commerce is also facing challenges from the concept

of environmental protection. The transportation of

goods between offline stores and warehouses is

bound to consume transport packaging and generate

carbon emissions (Thompson, 2021). Moreover, the

excessive packaging of luxury goods may cause some

people's aversion, not to mention that the new

generation is more aware of sustainable development.

2.2 New Consumer Group

Combined with the change in the main consumer, the

luxury industry has to cater to the new tastes of the

millennials who have a lot of access to the Internet,

especially Instagram, WeChat, Little Red Book, and

other social media. They are more willing to express

their individuality, and cool culture and subculture

have become a mainstream culture among young

people, which is different from the traditional luxury

culture. When designing digital marketing ideas,

more consideration should be given to their new

aesthetic and the actual needs of the new generation

of consumers. Not only is it about personalizing the

product but also thinking about the value they want to

get from luxury (Okhmatovskiy, 2023).

What's more, since women have long been the

main buyers of luxury goods, it is important to attract

more male customers using what men are interested

in, such as metaverse, NFT, and gaming. Many

international stars and Internet celebrities have been

sought after by many fashion bloggers because of

their luxury and fashion wear, and professional

jewelry designers have also begun to popularize the

necessity of men wearing jewelry on the Internet.

This "Walking Hormone" trend is gradually breaking

the stereotype that men look feminine when wearing

jewelry. In a study of the Korean market, it was found

that men are more into luxury NFT products than

women, which can help attract more male consumers

(Sung et al, 2023). This, to some extent, has triggered

the development of luxury goods in the field of meta-

universe and NFT and unexpectedly achieved a nice

result. For example, Bulgari's NFT advanced

necklace Beyond Wonder uses sophisticated

techniques to set precious stones, yet some

miraculous details can hardly be aware of. Thanks to

the NTF can people appreciate it as real beauty. NFTs

can provide assurances for copyright and ownership

of digital items, verify transaction transparency, and

authenticate digital art using blockchain technology

(Sung et al, 2023). Consequently, NFTs have become

distinctive, verifiable, and easily tradable digital

assets. Since the time of Louis XIV, technology has

perfectly demonstrated its great driving force for

innovation in the luxury industry, and the

development of the meta-universe of luxury and NFT

is the product of the Internet 3.5, Industry 4.0. Games,

as a new channel to reach sales goals, are more like a

side business that can be used to motivate consumers

to buy. The four sets of skins sold by Balenciaga on

Fortnite and Gucci Bee, and Gucci Grip games

produced by Gucci are typical cases. The sense of

accomplishment players get from their virtual

characters can guide them to get immersed in the

game, and the dependency generated will allow them

to engage in relevant community discussions and

transactions between players, which will ultimately

lead them to the luxury world and begin to consume

them (Milanesi et al, 2023). Therefore, luxury brands

can create a complete game system on the e-

Commerce website to deepen their independence and

uniqueness.

2.3 The Popularity of Digital

Marketing

While the traditional physical store business model is

breaking, people are more aware that the online

marketing model could bring people great

convenience, and consumption patterns have already

evolved. The huge market of e-Commerce has

Digital Transformation of Luxury Brand Marketing in the Context of e-Economy

213

already attracted various brands. Since the underlying

logic of business has already changed, that is, from

operating products to operating customers, luxury

brands have to capture and hold their market, or, they

will never be able to attract new consumers, which

could lead to a loss of old customers (Li, 2024).

Digital media is a huge draw for millennials, and

millennial attitudes have led to the popularity of

social media. Social media such as Instagram, which

has long been an important platform for millennials

to discover fashion trends, is being used by luxury

brands and Internet celebrities. Small Internet

celebrities with less than 50,000 followers have

higher fan loyalty on the contrary. Therefore,

updating brand marketing strategies according to the

characteristics of today's social media information

dissemination has become an important trend for

brands to achieve information development. For

example, many fashion brands have found that

instead of paying high prices for celebrities' push, it

is even better to find lots of small influencers to

promote their products. Virtual influencers,

meanwhile, are gaining luxury brands' focus, such as

Noonoouri, who appeared in a video having breakfast

with VOGUE's creative director, and Miquela Sousa,

who was signed by Prada. Advertising agencies have

developed new businesses as a result, for example,

Publicis Omnicom has reluctantly started preparing

scripts and marketing services for influencers, which

is a combination of Internet celebrity and luxury

brands realized by artificial intelligence technology

(Thompson, 2021).

3 ATTEMPTS AND

SUGGESTIONS TO INNOVATE

LUXURY BRANDS

3.1 Develop Online Sales Channels

First of all, it is necessary to focus on broadening

sales channels and making full use of the advantages

of social media to develop online marketing

strategies. Many corporations, for example, the

Channel, have developed online shopping channels.

Channel is, to some degree, a brand that deeply

implements the classical concept of luxury circle

while other brands such as Louis Vuitton, Dior, and

Yves Saint Laurent, have more business online.

However, some limited, one-to-one private orders are

still been restricted in physical stores, some even are

regionally limited. At the other end of the spectrum

are Ralph Lauren and Tommy Hilfiger, whose

products are relatively inexpensive. Balancing the

accessibility and inaccessibility is what to do in this

new business climate. The means to show products

are not ameliorating either. Some customers are not

used to one-on-one guidance services. These could

propel consumers to check the price and compare

products carefully online before offline purchases.

Therefore, the online display should be meticulous

enough to attract consumers (Akram & Lavuri, 2024).

Accessibility in e-Commerce was found to have a

slight significance on luxury (Pulli, 2024). When

consumers view Prada Re-Edition handbags on

shopping platforms, they can rotate the model to get

a 360-degree view of this exquisite luxury. This

technology of displaying products provides a richer

shopping experience. As a result, luxury brands can

take full advantage of the possibilities of information

technology in online sales channels and highlight the

advantages of their products.

3.2 Cooperate with E-Commerce and

Second-Hand Trading Platforms

The development of some large luxury e-Commerce

platforms that integrate multiple resources is a chance

for luxury brands to expand their business. These

platforms are now providing buyers with the same

emotional value in the shopping process as offline has

become an important means of attracting customers.

With Jingdong's provision of the "JingZunDa"

service, consumers can pay an extra 99 RMB to enjoy

a series of private services such as the delivery of

goods by a chauffeur, which meets the psychological

needs of the middle and senior groups of customers.

This is a case worthy of reference for luxury brands

that want to expand their online marketing market.

Under the new consumption pattern of luxury

goods triggered by the sharing economy, the second-

hand luxury goods sales, rental, and authentication

industries are booming. Some of those who endorse

conspicuous consumption simply want to post

pictures on social platforms like Instagram or WeChat

moments of them driving luxury cars or checking into

a luxury hotel wearing a fancy dinner dress (Ruiz &

Cruz, 2023). Without actually buying these luxuries

at full price. This temporary consumption seems bad

for the sale of luxury goods, yet the prosperity of the

second-hand luxury goods market will eventually

affect sales, for example, those businesses selling

second-hand luxuries will inevitably purchase new

styles. People who regularly rent luxuries will

generate the idea of "having a luxury of their own",

which can indirectly boost the sales of luxury goods.

As a result, brands should strengthen their

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cooperation with second-hand luxury goods e-

Commerce, or even launch their own luxury rental

and recycling business.

3.3 Brand Localization and

Cross-Industry Track

Based on the common understanding of global brand

localization, luxury brands should learn more about

Chinese culture and Chinese aesthetics. The choice of

models used to endorse products greatly affects

consumers' purchase intention. Most Asian people,

for example, do not find boob eyes and a flat nose

attractive, yet some brands choose Asian models who

happen to have exactly these characteristics, which is

counterproductive to marketing. These brands do not

understand the aesthetic taste of consumers, as a

result, they are ridiculed by consumers for not

understanding local culture. This is also true of the

values that luxury goods want to convey. The 2018

film Crazy Rich Asians is a typical case of failure.

Many luxury brands competed to sponsor the film to

appear in it, hoping that the clothes featured in the

film would leave an impression on Chinese

audiences. However, due to the differences between

Asian culture and Chinese culture, and Chinese

people have long been desensitized to the president's

literature, the film, which has sold out in North

America, has had a poor reputation and box office in

China. In 2023, Louis Vuitton released a new edition

of the Louis Vuitton Shanghai City Guide, and built a

pop-up space by the Suzhou River, one of Shanghai's

landmarks, to sell LV books and gifts. LV's "Nong

Hao Shanghai" hashtag had received more than 1.78

million views on Little Red Book up till the end of

2023, leading to intense attention and discussion

among netizens.

Based on the background of the electronic

economy, luxury companies should also expand the

cross-border circuit. As millennials and Generation Z

comprise the vast majority of Internet users, a variety

of young people's favorite IP co-branded products

emerge more 3and more. Fendi cooperated with

Chinese milk tea brand Hecha to launch the "Fendi

Joy Yellow" tea drink, which is a tribute to the

classical yellow DNA, and partnered with Hecha to

open a month-long "hand in hand" tea room in Beijing

while selling tea based on the traditional Yi spice

"majiang seed". This series of events has aroused

wide repercussions among young Chinese

consumers. The "hand in hand" project, which aims

to spread Italy's excellence in craftsmanship, was

hotly discussed on social media. This is a successful

cross-border cooperation between luxury brands and

the beverage industry, which has a high demand for

inspiration.

At the same time, the increasing threshold of

cross-border cooperation has put forward higher

requirements for luxury companies. As the majority

of fashion houses' innovation operations are separate

from management functions, designers' ideas need to

be approved by executives who do not know much

about fashion. Therefore, the reform of senior

management to be younger and more professional is

urgent. Brand consultants should also be versatile and

talented with experience in multiple fields to facilitate

the quick search for inspiration in cross-border

cooperation. However, the ideas that designers

generate while "sitting at their desks" may not

necessarily win the approval of consumers, so it is

indispensable to listen to the attitudes and ideas of the

target consumers when developing new projects.

3.4 Innovative Marketing Model

Luxury brands should focus on exploring consumers'

preferences and preferred consumption paths. Based

on the current trend of continuous development of e-

marketing, live streaming has become a form of

marketing and sales that cannot be ignored.

Science China's live-streaming ranks first in the

world, luxury brands should put their efforts mainly

into the field of live streaming industry when

exploring the Chinese market, which owns the

world's largest online luxury retail industry (Wu,

2023). Establishing real-time communication

between live broadcast hosts, co-hosts, and viewers,

namely consumers, can effectively narrow the

distance between brands and customers. Under the

precondition of ensuring that keep the brands'

"luxury" attribute, brands can appropriately give up

the rules of none price reduction and none discount,

such as offering limited-time discounts from time to

time to better integrate into the Chinese e-Commerce

festival culture, which is also very willing to be seen

by the consumers.

Louis Vuitton's first live broadcast on Little Red

Book in 2020 is a typical case of failure. Since the

decoration style of the live broadcast room was very

similar to that of the promotional online store, and the

technical restrictions prevented consumers from

directly accessing the official website in the live

broadcast room, this live broadcast was hosted by

famous actresses and Internet celebrities contributed

poor sales (Li, 2024). Surprisingly, four years later, in

July 2024, the same live broadcast room of Louis

Vuitton set a new marketing record for a single live

streaming. This time, LV not only uses the

Digital Transformation of Luxury Brand Marketing in the Context of e-Economy

215

representative of "Cute" culture in China's Generation

Z, the "inflatable animal toy", as a collective memory

carrier but also provides a novel way of interacting:

An 100 minute "resee live broadcast" to the show,

online consumers gain a same shopping experience as

VICs. Not only can they observe the new products in

the early fall of 2024 in HD lenses and detailed

lighting, but can also book offline experience quota

(Gao & You, 2024). These products itinerant

exhibition all around China. According to the cases

mentioned above, the luxury sales studio should be

different from the ordinary promotion studio by

adding the introduction of the craft, brand story, and

local highlights which can make consumers feel

close. The announcement and promotion before the

live broadcast, the resumption, the tour, and one-to-

one customization after the live broadcast can also

make the live broadcast effect better. This

combination of online and offline allows brands to get

current feedback from the consumer side to make an

accurate estimate of production and more effective

inventory management.

4 CONCLUSION

Fashion watcher Miriam Varadi believes that luxury

goods, religion, and art have a lot in common: All

three aim to give people an intangible value beyond

themselves. Art can build a bridge between luxury

culture and young people. Art can be as difficult to

understand as philosophy, or it can belong to the

public. To cater to the tastes of new consumer groups

and gradually adapt to the new consumption

environment and marketing model is what luxury

companies have to do in the new era. In the future,

luxury goods should strive to get rid of the traditional

"nobility", and become a popular art that is expensive

but not too high-profile, elegant but also within reach,

and towards a broader market.

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