After years of viewing online and mobile sales as mass-market tactics, new Adobe research reveals luxury retailers are diversifying their approach. Fashion powerhouses like Louis Vuitton and Chanel continue to make most of their sales in-store, but they are also investing in omnichannel experiences that bridge the online and physical worlds, allowing them to personalize customer interactions at the individual level across every touchpoint.
Omnichannel retail is essential to growth, and luxury brands are embracing this new reality. Indeed, 74% of consumers use multiple channels when shopping, according to Adobe Digital Insights (ADI). And while ecommerce still accounts for a minority of high-end purchases, online sales are growing 22 percent yearly, outpacing in-store sales.
A recent Bain report suggests this growth is in part fueled by Generation Y and Z, who are now responsible for 33 percent of luxury purchases. ADI has found that this healthy appetite for luxury goods among young people has made mobile the top channel for product discovery and web traffic, accounting for 66 percent of site visits and 46 percent of revenue. By comparison, just 24 percent of visits came via desktop, tough it is worth noting average transaction values were significantly higher for these customers.
To quote Philippe Mastroyannis, Senior Digital Strategy Associate at Adobe, “The path to purchase is no longer linear, and that means there’s no single best way to reach customers anymore. Even luxury shoppers who prefer to buy their Balenciaga sneakers and Moncler puffer coats in-store will have done their research online first, either on their mobile or using a mix of channels”.In response to these changes in consumer habits, and to the changing face of their audience, leading luxury brands are investing in digital service models that better serve the needs of omnichannel shoppers
Digital influences VIP shopping
Personalisation helps brands to drive sales. Adobe’s research found that 80 percent of consumers are more likely to buy from retailers that offer personalised experiences, and that 63 percent would increase their spending with a brand if it puts more emphasis on personalized shopping experiences.
These findings should sit well with luxury brands, which have a reputation for highly personalized in-store offerings. Chanel’s private VIP shopping experiences is a prime example, as is Hermès’s made-to-measure service, which allows customers to have virtually any item they can imagine created out of thin air. But while these experiences still resonate with wealthy shoppers, personalisation has evolved to include tailored digital experiences as more people engage with luxury brands online.
These more tailored experiences are built on a deeper level of customer insight, fueled by data. With a 360-degree view of each shopper that includes both their online and in-store history, retailers can target people with relevant content at the opportune moment, helping them to drive additional sales and get closer to their customers.
“Whether it’s through in-app push-notifications or product recommendations sent directly to in-store associates, luxury brands are embracing analytics as the engine of their omnichannel offering,” says Campbell McDermid, Practice Director of Digital Strategy Group at Adobe. “Data will highlight the role of different touchpoints in each customers’ shopping journey, helping brands to optimize their content and experiences for each channel. Meanwhile, the store will evolve to complement the digital shopping experience, going from a single point of sale to a true “service point”.
For McDermid, data capture in store will lead to more intimate connections between shoppers and sales associates. He uses the example of brands that have connected their inventory data to a centralized platform, which means associates can stop spending their time on inventory control and instead become in-store influencers that are fully focused on customers. “It’s similar to when airlines introduced online check-in,” he says, “Airport staff were freed up to become true customer service agents that deliver high value services and personalized experiences.”
This season, personalisation platforms are in
The next step for retailers is to consolidate the data they collect from different channels to inform their personalisation strategies. This is particularly important for luxury brands, which mostly sell to first-time buyers and need all the information at their disposal to tailor each shopper’s experience.
Consider the case of a customer who visits a Chanel store, asks when the new winter coats are coming out, and leaves. Unless that query is fed into Chanel’s analytics or CRM systems, it will die with the associate who served them instead of being used to target the individual with a relevant offer once the coat becomes available.
“Retailers can get paralysis trying to figure out how best to serve individual customers, especially if they can’t match up their data across touchpoints,” says Mastroyannis. “They need to be able to respond to signals in real-time, and that takes a unified platform approach”.
The rising popularity of RFID (Radio frequency ID) adds a new dimension to the way luxury brands build customer profiles. RFID allows retailers to see how long each customer spends in their stores, which products they browsed, and which payment methods they prefer. These data points are extremely valuable in building a complete view of each shopper, not just to make sales in the short term but also to engage them with relevant content and experiences over time.
Staying on trend
The wider retail sector has run into some difficulty, but larger luxury brands have been thriving. LVMH recently announced year on year growth of 11 percent and a $16.2 billion acquisition of Tiffany & Co., solidifying its position as the world’s largest luxury group. In addition to buying up smaller luxury houses, the likes of LVMH and Kering have also set themselves apart by investing in their ecommerce experience, according to the Economist. By embracing digital while remaining true to their luxury ethos, Europe’s luxury powerhouses have built a strong foundation for future success, even as online sales grow in popularity.
For its part, Louis Vuitton was named alongside Moncler and Nike as a leader in cross-channel retail. According to High Snobiety, the retailer’s mobile app stood out in a recent study for providing associates with a 360 degree of each shopper, both in its owned locations and in department stores. This is in stark contrast to the bare bones experience offered by most of the 200 apps examined, more than three quarters of which did not even have a store locator.
The new fabric of success
Digital sales will only play a more prominent role for luxury brands as spending power rises among their core demographic of young shoppers. Not only do millennials and Gen Z make one third of luxury purchases, they also account for 47 percent of the luxury market as a whole. Crucially, they will expect brands to deliver a digital offering that is as helpful and personalized as the best in-store experiences.
Unique brick and mortar stores will always be a major differentiator for high-end retailers, but even these are evolving for an omnichannel audience. Burberry, a name synonymous with digital innovation in the fashion world, is now exploring new forms of branded content. The retailer recently created a video game called B Bounce for visitors to its Regent’s Street Store in London, which serves as both a clever brand-building platform and a way to promote Burberry’s latest puffer coat.
Joining Burberry in the gaming arena is Gucci, which released a pair of 8‑bit arcade games via its mobile app earlier this year to tell the story of its company and the inspiration behind its designs. The high-fashion arcade is inspired by the 70s and 80s style that continues to influence Gucci’s style today. For both brands, gaming presents a novel way to delight customers with personalized content while serving a clear marketing agenda.
This type of experimentation will soon become the norm for leading labels. Some brands are releasing digital fashion collections, tapping into the world of avatars and virtual fashion. While this remains a niche market with many barriers to entry, it is also an indication that our real-life and online personas are merging, and that presents an opening for brands who can capitalize on the trend. Glu Mobile’s Covert Fashion games, which allows players to dress up models in digitally rendered clothing from the likes of Roberto Cavalli and Balmain, made sales of $53.4 million in 2018.
The fashion and luxury sector will grow five to ten percent annually over the next three years, by some estimates, hinting at major opportunities ahead for high-end brands to tap into a growing audience. With market leaders continuing to modernize at pace and smaller fashion houses nipping at their heels, one thing is clear: luxury fashion has officially entered its omnichannel era.