Winter shopping season

Luxury retail must go digital or be forgotten (column)

AJ Dalal says luxury retail ignores the connected shopper at its peril

The Conference Board of Canada tells us the rate of Canadian luxury sales is expected to grow twice as fast as general retail in the next five years. That paints a bright future for the likes of Saks, Nordstrom and Holt Renfrew. But to capitalize on the opportunity, luxury players will need to evolve the way they think about the retail experience.

The luxury market has long stayed away from digital integration and, as we’ve seen, the retail market is increasingly a digital one. Luxury has instead relied on traditional offline experiences. The go-to retail strategy of fostering popularity through social networks and apps does not typically align with exclusivity, which is needed in the luxury world.

However, delaying digital integration is no longer an option for luxury brands. Projections from the Business of Fashion suggest that by 2020, 40% of sales growth for luxury brands will be online.

Luxury retailers may fear that the pace of technological change is a mismatch with their cultures, customers and in-store experiences. But the truth is quite the opposite. To remain relevant, luxury brands must evolve from their traditional approach and extend their footprint into the digital space.

Executed correctly, every dollar a brand spends on digitization has the potential to provide six times the ROI by connecting the offline experience online.

This won’t require an investment of millions of dollars either, just a shift in thinking around brand loyalty — a deeper understanding of what creates your brand affinity. Brand loyalty is tied to products, while brand affinity is tied to companies. Brand affinity means forging an emotional connection with your consumer. Building an extension of that affinity online is the key to winning the luxury retail race.

How do you do that?

It Starts At The Top and Trickles Down
Unless the C-suite shifts its focus to removing silos and collaborating on execution, luxury brands will struggle to evolve.

Brands like Walmart and Target have spent millions on digital innovation, dedicating funds to internal teams that create differentiating online experiences. Led by C-level executives, employees are encouraged to innovative, share and collaborate without ROI being the main business objective.

However, while ROI shouldn’t be the only objective, every activity needs to be measured. Key performance indicators are typically used to track the success of performance with the customer, but they need to be expanded and applied to the organization internally as well. Rates of technology utilization, tool adoption and marketing campaign execution are a few examples of internal KPIs that should be used to measure the success of digital initiatives.

Find The Right Friends
All social channels serve a direct purpose, and leveraging ambassadors in key channels creates an authentic connection with your consumer while maintaining the brand’s allure and exclusiveness. These ambassadors need to be kept to an exclusive group of influencers. A select group of the brand’s VIP customers are a natural choice.

Christian Dior has created a true marriage of luxury and technology through its VR experience, “Dior Eyes.” A headset allows customers to experience the Dior collection in 3D runway style. While this is only in select stores, taking this program a step further by sending headsets to some top customers provided an exclusive experience that initiated sharing with other Dior fans.

Be A Disruptor
Consumers expect a seamless experience with a brand whether online or offline. Luxury brands have an opportunity to lead this transformation by ensuring their marketing spend truly drives personalized, convenient and seamless customer experiences. There is no one-size-fits-all solution.

Online luxury retailer Net-A-Porter has created a digital experience that feels like a traditional print magazine that is filled with relevant and engaging editorial content. It also produces a weekly digital magazine that is seamlessly integrated into the online shopping experience. By clicking on the items, shoppers are then taken directly to a purchase page.

The opportunities to be creative are endless. For example, based on shopping patterns and preferences, a personal shopper could contact their customers by phone or email to let them know they were just sent a list with new products, all of which are viewable in 3D on their phone. The customer selects the products they like and either books an appointment to swing by the store to take a look or chooses to have them shipped to their home to try them on.

The evolution of luxury retail should be a fluid experience where consumers feel the exclusivity of brand and deep personalization at every step of their shopping journey. This includes everything from direct mailers to targeted ads informed by deep analytics, in-app chat bots driven by artificial intelligence, and in-store personal shopper experiences.

aj-dalalAn omnichannel strategy that supports brand affinity over brand loyalty will result in a customer who has an incredible, seamless experience with a high chance of continued conversion.

AJ Dalal is the Performance Marketing Practice Lead at SapientNitro Toronto

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