The retail sector has had its fair share of woes lately with iconic brands filing for bankruptcy while others are working hard to find a new strategy to preserve their market share. But one part of the retail industry is bucking that trend – luxury brands. Luxury brands have done an exemplary job of engaging customers, both online and offline, by putting what they know about their customers to work. By using customer insight, they can offer customers the type of engagement and experience that resonates and builds loyalty at a time when consumers have been seen as fickle. “As retailers adopt this customer-centric approach it enables them to build their bottom line by focusing less on which category is selling and more on what the customer is buying,” said Andy Reid, Global Head of Retail at Pitney Bowes. To explore this topic, Retail Technology Insider has compiled the top stories on evolving luxury retail.
Online luxury sales are projected to triple by 2025, according to research by McKinsey. Findings showed that 80 percent of these sales will be digitally influenced thanks to millennials who are willing to spend more for personalized services and items. In traditional luxury shopping, customers are wooed with refreshments, personal shoppers, and beautiful décor. So, how do luxury retailers create that same experience online?
Personal search results, localized websites, personalization of products, and enhanced outreach are just a few ways luxury brands can pull customers in. “For most brands, when they don’t have a product in stock, the customer simply moves on. With Verado, the customers preferences are stored online. Then, when a matching product becomes available, the customer is contacted via email, so they can make a purchase,” said Claudio de Giovanni, CEO of Verado, as an example of how a brand can customize experience.
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As luxury brand sales are growing, retailers must find ways to embrace the wave and attract new customers and keep existing ones engaged. Shopping in-store and online are completely different experiences and they should stay that way. Instead of luxury brands trying to replicate the in-person experience, a new digital journey must be crafted.
To engage customers luxury brands can partner with digital influencers to attract a younger clientele who draw in consumer via social media. Exploring third-party selling like Amazon or eBay is another way retailers can connect with a variety of customers.
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At The New York Times International Luxury Conference, industry leaders discussed the challenges that luxury brands may face in the next five years. “History provides some interesting insights for us here. Consumers spend, whether the economy is good or bad. I think what we need is to have the right products at the right time. As for Qeelin, we have never catered to the state of the economy. Instead what’s important to me is to create something with emotional resonance; something that touches hearts; something that you wear for the first time and it just feels like it belongs to you, an almost inexplicable bond,” said Dennis Chan, founder and creative director of the fine jewelry brand Qeelin.
Retailers discussed the changing e-commerce trends, digital innovation, and consumer spending habits. Challenges facing luxury brands include brand loyalty and cheaper comparable products.
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Customer Centricity the Future
Andy Reid, Global Head of Retail at Pitney Bowes, discussed conflicting trends and what the future of the retail sector holds. “Retailers that are succeeding are able to drive customer loyalty and improve customer lifetime value,” said Reid. “They’re not throwing technology at customer challenges and hoping an email brings them to the store or the website. Rather, the retailers that are succeeding in driving customer loyalty and lifetime value are creating a seamless shopping experience for their customers.”
Brands that are seeing success are providing customers with seamless experiences across all platforms. “There’s no ‘online/offline’ distinction for leading retailers these days,” shared Andy, “It’s all just shopping.” Customers want an experience that is smooth and personal which retailers can accomplish this by using data to analyze and engage consumers.
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