The omnichannel imperative for luxury retailers
Posted: Thu Dec 05, 2024 5:35 am
Despite changes in styles and silhouettes and other product design trends, at its core, the fashion apparel and luxury industry has remained pretty much the same. It’s an industry anchored by a straightforward and creative process: designing and then selling apparel and accessories that appeal to a consumer.
But what has drastically changed is how fashion brands connect to that consumer. And for many companies, engaging that customer has been a struggle of late thanks to the global pandemic.
The need for omnichannel in luxury retail
Deploying an omnichannel retailing approach amid a “digital convergence” had already been evolving how merchants, brands and consumers interface. But COVID-19 accelerated this transformation as online sales soared last spring, and continued on an upward trajectory well through the recent holiday shopping season, which the National Retail Federation said was the best in five years with a whopping 8.3 percent year-over-year growth rate.
The current demands of e-commerce along with a retail landscape reshaped by thousands of store closures, presents a host of problems for many brands — especially luxury brands who differentiate by offering a high level of service to their customers.
This new retail landscape is being defined by a new customer job seekers database journey that can begin anywhere; online, on social media, on an app via a mobile device, or in a physical store.
And there’s the rub: as a brand, how do you engage with customers across all of those touchpoints? How do you meet the demands of the “new luxury shopper?” and what tools and tactics do you need to consider making investments in?
From our perspective as a leading global cloud communications platform that enables businesses to build connected customer experiences across all stages of the customer journey, and to do it at scale, there are three approaches fashion brands and merchants might want to consider:
First, you have to unlock and get inside the mindset of the new luxury shopper.
Then you have to tune into each of the touchpoints of engagement in this revised omnichannel environment.
And lastly, you have to create an exclusive and personalized digital shopping experience.
Who is the new luxury customer?
Well, they’re multigenerational and include Millennials and Generation Z as well as Generation X and older.
With Millennials, this cohort packs a punch when it comes to spending. According to Accenture, Millennials in the U.S. alone spend $600 billion annually, while Gen Z has the current spending power of over $75 billion. Boston Consulting Group estimates that by 2026, Millennials and Gen Z will collectively account for about 60% of the total sales in the global luxury market.
This shift in spending also means a change in how brands engage with consumers — especially Millennials and Gen Z who have different values, wants, and needs than other cohorts. Those values are also strongly influenced by culture, social justice, and environmental issues.
And communication is key.
In a Jan. 7 report in WWD, Pierre Dupreelle, managing director and partner at Boston Consulting Group, said brands that are “culturally credible foster loyalty by enabling and encouraging participation and communication. Successful brands no longer speak to, but rather through, their audience.”
The omnichannel imperative
That emphasis on the importance of communication spotlights the importance of digital engagement as more and more consumers are shopping online.
In a just-released report from The Harris Poll, 80% of consumers said they plan to shop online even as the global pandemic winds down. The report also found that 77% of those surveyed said they were satisfied with online shopping even though 47% of respondents said they miss the experience of shopping in a physical store.
With the luxury market, data from ForwardPMX showed a growing interest in online shopping for luxury brands. The company said in the U.S., the overall search volume for luxury brands increased 9% in 2020 as compared to 2019.
But what has drastically changed is how fashion brands connect to that consumer. And for many companies, engaging that customer has been a struggle of late thanks to the global pandemic.
The need for omnichannel in luxury retail
Deploying an omnichannel retailing approach amid a “digital convergence” had already been evolving how merchants, brands and consumers interface. But COVID-19 accelerated this transformation as online sales soared last spring, and continued on an upward trajectory well through the recent holiday shopping season, which the National Retail Federation said was the best in five years with a whopping 8.3 percent year-over-year growth rate.
The current demands of e-commerce along with a retail landscape reshaped by thousands of store closures, presents a host of problems for many brands — especially luxury brands who differentiate by offering a high level of service to their customers.
This new retail landscape is being defined by a new customer job seekers database journey that can begin anywhere; online, on social media, on an app via a mobile device, or in a physical store.
And there’s the rub: as a brand, how do you engage with customers across all of those touchpoints? How do you meet the demands of the “new luxury shopper?” and what tools and tactics do you need to consider making investments in?
From our perspective as a leading global cloud communications platform that enables businesses to build connected customer experiences across all stages of the customer journey, and to do it at scale, there are three approaches fashion brands and merchants might want to consider:
First, you have to unlock and get inside the mindset of the new luxury shopper.
Then you have to tune into each of the touchpoints of engagement in this revised omnichannel environment.
And lastly, you have to create an exclusive and personalized digital shopping experience.
Who is the new luxury customer?
Well, they’re multigenerational and include Millennials and Generation Z as well as Generation X and older.
With Millennials, this cohort packs a punch when it comes to spending. According to Accenture, Millennials in the U.S. alone spend $600 billion annually, while Gen Z has the current spending power of over $75 billion. Boston Consulting Group estimates that by 2026, Millennials and Gen Z will collectively account for about 60% of the total sales in the global luxury market.
This shift in spending also means a change in how brands engage with consumers — especially Millennials and Gen Z who have different values, wants, and needs than other cohorts. Those values are also strongly influenced by culture, social justice, and environmental issues.
And communication is key.
In a Jan. 7 report in WWD, Pierre Dupreelle, managing director and partner at Boston Consulting Group, said brands that are “culturally credible foster loyalty by enabling and encouraging participation and communication. Successful brands no longer speak to, but rather through, their audience.”
The omnichannel imperative
That emphasis on the importance of communication spotlights the importance of digital engagement as more and more consumers are shopping online.
In a just-released report from The Harris Poll, 80% of consumers said they plan to shop online even as the global pandemic winds down. The report also found that 77% of those surveyed said they were satisfied with online shopping even though 47% of respondents said they miss the experience of shopping in a physical store.
With the luxury market, data from ForwardPMX showed a growing interest in online shopping for luxury brands. The company said in the U.S., the overall search volume for luxury brands increased 9% in 2020 as compared to 2019.