The luxury goods market is being shaken up like never before with the rise of new consumers and changing buying habits. This, combined with the late adoption of digital and technology, means that luxury brands face more uncertainty than at any point in their history.
To win in the new luxury landscape, where Apple is becoming as much a force as Burberry, requires new thinking and there is a real appetite for change. No more was this evident than at the Luxury Redefined showcase earlier this year, a forum where heritage brands and industry experts met to openly discuss the challenges, and opportunities, facing the sector.
Here is a recap of some of the main challenges facing the luxury sector that was identified at the event and my advice for brands on what steps you can take to remain ahead of the curve.
1. Quicken the pace
The pace of technological adoption is only going to get faster. We had ten years to get used to mobile and adjust to the impact on our lives. We will not have the benefit of time in the future; many luxury brands need to do more to adapt to rapidly-accelerated technology change.
Mobile has also led to an increase in ‘butterfly consumerism’. Brand loyalty simply doesn’t exist in the way it did a decade ago. If you don’t engage consumers when, where and how they want, and provide convenience in the last mile of the buying journey, they will leave you for a brand that can be counted on to meet their needs.
That’s even more true for high-spending consumers who naturally will have much higher demands for convenience, speed and a tailored experience - and less patience for those who fail to deliver.
2. Focus on experience
Modern luxury is about conveying a lifestyle; it is about creating an overall experience that products are a part of. A strong brand narrative combined with technology.
Unfortunately, many luxury brands continue to lag on the digital end, with ecommerce sites that lack usability, personalization and responsiveness, often leaving consumers frustrated with a digital experience that is not aligned with the service they receive in-store.
Our customer Holland Cooper, a brand which sells luxury British made tweed clothing, treats online like a personal appointment at their showroom. This attitude means they can provide a personalized experience across their digital channels.
This forward thinking approach should be the aim of every luxury brand - utilizing technologies to provide a seamless and value-added brand experience across all channels. Doing this does require a change of thinking.
But businesses within the luxury sector need to think like disruptors, whatever the risk to the carefully-crafted heritage of their brands, because the bigger risk is to do nothing.
3. Create a seamless path from inspiration to purchase
Brands, particularly emerging luxury retailers, are struggling with the ability to serve customers equally across all channels, whether in-store or online. With 73% of shoppers using multiple channels during their shopping journey, this is leading to a disjointed approach and unfulfilled customers.
To support greater channel integration, the luxury sector should be considering single solutions that provide visibility over inventory management, streamline order processing and automatically update sales channels in real-time with information on what products are available.
Some brands are getting it right; Net-a-Porter, for example, are managing to merge digital and physical touchpoints, to create a seamless and consistent purchase path that firmly integrates point-of-sale with marketing. Net-a-Porter understands that the contemporary consumer demands a strong omnichannel approach where service, experience and products interact.
Getting to ‘seamless’ is paramount for the luxury sector to retain its edge and having the right systems in place - both on the front end and operational side - is absolutely key to presenting the experience, from inspiration to purchase, that your customers now expect.
4. Reliability is key to luxury service
Many luxury firms we work with often utilize high profile celebrity endorsements and influencer strategies, which can have a major impact, leading to sales spikes. But this can also have a hugely damaging impact on a brand’s reputation if they are unable to meet demand, due to inventory shortages.
For consumers, the emotional impact of not being able to buy the product when and where they want could be detrimental to them ever coming back. In any case, they’ll certainly share that negative experience with friends and probably across social media too, compounding the damage to the brand.
Consumers expect a high level of trust and reliability from the luxury sector. The key to offering a reliable service in a multichannel environment is ensuring sales come into one ‘central hub’ that provides real-time visibility across all channels and the flexibility to meet spikes in sales, no matter the complexity of your operation.
5. Know consumers deeply: personalize their experience to reap rewards
A wealth of consumer data allows smart luxury brands to surprise and delight their customers via personalized offers based on their individual browsing and buying history.
With 43% of purchases being influenced by personalized recommendations, it’s clear that this is an avenue that must be considered if brands are to meet increasingly sophisticated consumer demands for excellence in all parts of their purchase.
Luxury brands arguably have it easier in the ‘age of personalization’, as buyers are spending significantly more, so their first purchase is never going to be unconsidered. This leaves so much room for personalization that brands should be exploiting.
However, the ability to provide a high level of personal service requires access to all data in one place. Having the right technology, for example, a solution to sync information across your different platforms, is a crucial component. It enables all areas of your business to have access to a single record for any given shopper, allowing you to gain deeper insights about your customers, such as their buying behavior, preferences, and loyalty.
The endgame is an enhanced customer experience at all ends of the buying experience, from up-to-date communication regarding delivery changes, to acknowledgments on social media after purchase, to follow up recommendations and personalized offers.
For the luxury sector, the ability to offer a truly personalized experience is crucial as it allows brands to better serve, engage with and reward customers on a more personal level. Brands that are able to do that will truly be able to redefine luxury.
About Luxury Redefined
Recognizing there is a shortage of forums for the luxury market, a few of us here at Brightpearl, alongside a group of experts, including Shopify Plus, Eastside Co., and Nosto, arranged an evening, titled ‘Luxury Redefined’, for brands to meet and discuss the challenges and opportunities impacting upon their sector. Attendees also received practical advice on carving out success in the face of an industry and consumer base that is rapidly evolving and becoming increasingly digitally focused. Take a look at the snapshot video.