Luxury labels still have work to do on online

To say that the retail industry is undergoing a significant transformation is an understatement. Last year closed with a glimmer of hope for retailers who spent the better half bolstering strategies to retain their hold on shoppers.

The impact of an increase in the number of tourists from Russia and China, the volatile gold market and the rise in online shopping led many brick-and-mortar retailers to rethink, refocus and redesign their offerings. And as the tide continues to ebb and flow, the success of 2017 depends on a bold new wave of thinking.

The fast-growing online retail industry is a reality and likely not to fade away anytime soon; instead it will continue to expand. There is much to be learnt from the success of retailers like Amazon and Souq.com that have taken on the brick-and-mortar giants and disrupted the foundations of the industry.

Online retail giants have completely changed fundamental purchasing habits and this shift has prompted even the biggest brands to invest more in understanding what makes their millennial customers tick. Classic brands have been forced to realise that their new customers cannot be easily influenced by the brand — rather customers now influence the brand itself.

So, there is scope for more and retailers, willingly or not, to look harder and dig deeper to find the right formula. Whether it is a new omnichannel marketing strategy, more personalised in-store experiences or better defined analytics, the core driver will still be the value.

A relationship with a customer, no matter how aggressively sustained by a brand, has to fundamentally be built on value. The trick is determining what kind of value will fulfil the needs and desires of the customer and how that matches with the brand’s attributes, without compromising its very essence.

Short-term solutions, like quick and easy in-store activations, can get customers there. But recognising that their journey begins online, and continues after they have walked out of the store, will help inform long-term strategies to build more deep-rooted bonds with the brand.

As the industry undergoes renovations, the now obvious gap between the brand and the customer, are being filled through the help of digitalisation building more community-based retail experiences. Many luxury brands however, still have their guards up when it comes to experimenting with revised retail strategies in a digital landscape.

Understandably, this fear steams from the dread of losing control of their brand image. However, if the brand knows its value, and what it wants to say, it simply comes down to changing the way this value is communicated.

Selling luxury products can translate to selling a dream, creating a sense of belonging among customers and consumers. Evidently, these characteristics are much easier to convey in-store, through physical attributes and senses like smell, sound and set up.

Conveying a similar experience online stands as an obstacle for most brands aiming to adapt. However, keeping digital channels at an arm’s length is not the solution. Instead, luxury boutiques should be tailored and reformed to resemble the online experience.

This can come from improvements of in store mobile or digital connections as well as tailored online and offline tactics in key markets. Luxury fashion brands should aim to create in-store experiences that are parallel to brand interactions on all other channels, to deliver a superior customer experience aligned with the pace of modern consumers and the brand’s DNA.

An ideal approach combines community based tactics by prioritising customers’ emotions as part of the business strategy and creating a collective feeling. This contrasts with previous strategies set in place by luxury brands who established more “you and me” relationships with customers.

Brick-and-mortar will never really be out of the game when it comes to retail. For luxury retail brands, the future is in creating unique brand experiences throughout the purchase journey that emotionally connect with customers who ultimately still believe in “real” experiences when it comes to luxury.

What is needed is to tear away the existing conceptions of the market and rebuild with better focus and understanding. The signs are everywhere and the best of luxury retailers will recognise the tremendous opportunities amid all the challenges.

— The writer is CEO of Damas.