Four ways luxury retail is evolving
A transformation is taking place across the retail sector. And luxury is no exception.
The move away from bricks-and-mortar stores towards digital platforms is continuing apace. Research reveals that the proportion of luxury online sales almost doubled to 23% (from 12%) between 2019 and 2020. That equates to five years of growth in just 12 months.
Luxury brand purchases are on track to become dominated by digital by 2025. So, it comes as no surprise to hear that physical stores are turning their attention away from transactional and towards experiential.
But there are other changes taking place in the luxury retail sector, too. For one, today’s customers expect a more personalised shopping experience. Plus, they want exceptional customer service across all touchpoints. Thanks to the Amazons and Netflixes of the world, the stakes are high.
Customers want more choice, convenience and competitive pricing when they are on their purchasing journey. Meanwhile, high-spending customers expect all of those things as well as club lounge-style, one-to-one assistance.
But that’s not all luxury retail is having to deal with right now. The sector is also facing the challenge of defining what the customer experience means to them and their customers in the digital age when customer expectations are rising so fast.
Here are four ways the luxury retail sector is evolving right now.
1. Streamlining the in-store and online experience
Luxury brand physical stores have a challenge on their hands. If high rents and business taxes weren’t enough to deal with, the pandemic has added to their woes. In 2020, the luxury market as a whole (both goods and experiences) shrank by 20%, dragging the sector back by six years.
This year, it is anticipated the market will recover 50% of 2020’s profit loss – however, that won’t be enough to bring it back to pre-2019 levels.
For too long, legacy luxury stores and online luxury shopping have simply existed alongside one another. It’s time for that to change; for the two to behave less like silos and more like an integrated system.
Rather than being mutually exclusive, there needs to be a shift in the education and culture that exists within these organisations. If anything, the pandemic has helped shine a light on the urgency for these changes to take place and help luxury brands to move in the right direction.
2. Technology: A help and a hindrance
While technology presents a wealth of opportunity to luxury brands, it can also create a huge obstacle. Legacy systems, manual input of product data, and other out-of-date processes are the bane of many brands’ lives. They create a significant stumbling block in the quest to coordinate online and offline systems.
Databases are siloed, while clunky ecommerce systems often sit separate to third-party ERP platforms or EPOS systems. For anyone keen to know the overall stock position of a company at any given time, they’ve got their work cut out.
Historically, many IT issues can be traced to the boardroom. With limited understanding of digital technology around the C-suite, there has been equally limited investment in the necessary technology platforms. Fortunately, things are now moving in the right direction.
3. More focus on supply chains and stock
Let’s be clear: stock control can cause a real headache at the best of times. Items are continually moving from warehouse to store, store to store, and back from store to warehouse. Sometimes all in one day. Every movement creates a high carbon footprint, eats up valuable employee time, and narrows profit margins.
But in the world of online shopping, stock control is key. No consumer wants to see ‘item out of stock’ pop up on a brand’s website. To avoid lost sales and allow consumers to check availability online or in-store via their mobile phones, brands need to focus on their supply chains and stock management tools. A single inventory view is absolutely essential.
4. The value of customer insights
In today’s digitally fuelled world of retail, virtually anything and everything can be tracked. The direction in which luxury brands are now headed has to be driven by the findings of this data translated into key actions. Consumer purchasing behaviours are changing all the time, and strategies will fall short without the right insights in place.
The merging of online and offline channels in luxury retail is vital. Yet some brands are just starting to understand how their digital presence and online channels can compliment their bricks-and-mortar stores. At the heart of all this are customers’ wants and needs – that is, more personalised, interactive retail experiences.
If you’d like to find out how your brand can reinvent its physical stores, maximise opportunity and focus on experiential retail, get in touch with Delta today: email@example.com.