The importance of a seamless clicks and mortar shopping experience

Hello all. Thank you for taking the time to join me today for my next ForeFront instalment. My name is Felicity Gardiner, and I’m part of the strategy and planning team here at RocketMill.

A little bit about me. Before forging a career in digital, I worked in the fashion industry, and have five years experience working in fashion, merchandising and buying. Although I’ve now made the transition to work in my other passion, digital marketing, I still have a very keen interest within the fashion retail sector, and in particular love reading about case studies where these two worlds collide. This is why I’m going to talk to you today about the luxury retail sector. In particular, the current challenges the luxury retail sector are facing, the opportunity this poses, and how brands are adopting holistic strategies and embracing tech to provide a seamless clicks and mortar shopping experience to their customers.

Why is change needed?

Well, digital is increasingly influencing purchasing decisions of high net worth individuals. According to Bayne & Company, 70% of luxury purchases today are influenced by online interactions, with shoppers partaking in at least one digital interaction with a brand before buying an item. This doesn’t mean we should discount the value of physical stores. As specifically to the luxury retail sector, their contribution to a conversion is very high. While online offers convenience, with a higher price tag, premium items people need to touch, feel, experience the high-end product before they purchase it.

In addition, online stores thus far haven’t been able to offer the same upsell opportunities as their online counterparts, where the spend per transaction is much lower. While digital has disrupted the way we shop, physical stores still offer a unique experience that isn’t currently available online.

The generational shift in luxury sales

Another change driver comes from the generational shift that’s happening in luxury sales. Traditionally older shoppers have been the driving force behind luxury purchases, but the power has now shifted towards millennials and generation Z, who generated last year 85% of the growth within the luxury retail sector.

Why is this a problem? Well, this generational shift has also caused a shift in customer expectations. Millennials and generation Z are constantly online and have much higher expectations when it comes to convenience and personalization at scale. This is especially prevalent within the luxury retail sector, where these younger shoppers expect a brand experience that is personalised and seamlessly integrated, whether you’re in the physical store or online.

What’s the challenge?

Well, historically eCommerce has been a struggle for luxury brands. The reason being that the only option available to them was to trade through purely functional, and therefore bland, off the rack, multi-brand distribution platforms. These were designed to shift high quantities of low to mid-range items, therefore not suitable for high-end luxury brands who want to sell their experience as well as their product. In short, this meant that high-end products were reserved for the premium offline experience, which taking into consideration the aforementioned shift in customer buying behaviour, needed to change.

Examples of digital transformation in retail

Fast forward to present day, and luckily things are looking very different. Has anyone heard of Net-a-Porter or Farfetch? Good. Well, they might just be another eCommerce website you can browse during your lunch break, but to a whole host of high-end designers, including Armani, Alexander Wang, Moschino, Prada, Valentino, they are the gatekeepers with the power to unlock the opportunity of digital transformation in online retail to the avant-garde. These companies don’t only provide a multi-brand platform exclusively for luxury brands. They’re also at the forefront of retail technology and have revolutionised the retail landscape for high-end brands for good.

With this in mind, which one will reign supreme? Well according to Farfetch, neither. Instead, it predicts a future of connected retail, which consists of a blend of the digital and physical realms, which will allow consumers to seamlessly move between the two.

Farfetch – delivery

To demonstrate this in action, I’m going to show you two case studies from the billion-dollar fashion unicorn, Farfetch. The first is a brilliant example of how a brand has used their understanding of their target market to identify a gap and become a disruptor and pioneer within that sector. Just as Deliveroo has done for fast food or Uber for transport.

Farfetch and Gucci, in their new joint venture F90, promises to hand deliver Gucci clothes and accessories within 90 minutes of when buying online. Now, that is really cool, but the best thing about it is that this 90-minute delivery specifically targets the, “I want it now.” mindset of millennials, which is a direct response to the fact that this generation take one-third less time to make a purchase decision than the more mature audience. This is just one example of how a luxury brand has used their understanding of the target market to adapt their retail experience to match the changing expectations of buying habit of the customer?

Why do I hear you saying, “That’s great and all, but Argos kind of already do it, and it’s not really blending the realms of the physical and the digital.” Well, time for Farfetch case study number two.

Farfetch – in-store technology

In spring last year Farfetch launched the store of the future, combining online retail tech and in-store retail technology, Farfetch’s store of the future aimed to bring online convenience in store. The goal was to dramatically improve productivity for luxury brands by using customer data to enhance human interactions between shoppers and buying systems.

In practice this translated into a universal login that allows customers to check into the store, allowing the retail assistant, and the in-store retail tech access to each customer’s individual profiles, which included size, purchase history, product wish list, et cetera. An RFID enabled clothing rack, which detects which products the customer’s looking at, adds any they show particular interest to, to their wishlist.

A digital mirror that provides information about the products they’re trying on, so materials, origin, et cetera. Also, allows them to interact with the mirror and request in different sizes and colours. A quick and simple payment experience, and of course an underlying data layer that connects all of the in-store tech, and the eCommerce platform, allowing every interaction with the shopper in store to better inform the targeting online, and vice versa.

This is just the start. You can expect to see the digital transformation for luxury brands accelerate over the next few years. With retail technology solutions getting more sophisticated day by day, and here are a few more examples to prove it.

To amplify the interest from Fashion Week, Dior launched a virtual reality headset in store that gave customers a sneak peek at their new runway show. To increase convenience, De Beers launched their Forevermark fitting app, and Sephora launched their virtual reality app, both of which use augmented reality to allow customers online to try on their products before buying.

How to take on the challenge?

As a luxury retailer or brand, how can you prepare yourself to take on this challenge? Well, I’ve got a few tips for you.

Identify new ways to engage with your audience

Firstly, be visible and active on all appropriate platforms they are. Don’t let them forget about you. Adopt a channel agnostic approach. Don’t view each platform or property in silo. Offer the same experience throughout, and use data from one to inform the strategies and targeting on the other.

Make your retail space share worthy

An increasing number of customers, notably millennials and generation Z, make purchase decisions based on their social media feed, with 75% of Instagram users visit a store or website after seeing a post from a brand. By making your store an environment customers want to share, you can leverage Instagram’s 800 million-plus users to build brand awareness and drive footfall into store.

Just like the examples I’ve shown, find creative ways to make your store interactive. Put creative control in the hands of your customers. Customization and the want for alignment on personal beliefs and values is high on the agenda for millennials and generation Z. Personalization tools like Nike already offer are old hat. I foresee a future where customization will allow you to switch out cow for vegan leather, for example, or choose components that are only sourced locally.

Logistics

A big one, sort out your logistics. Effortless payment and fast delivery aren’t a nice to have, it’s a must-have. Finally, use tech and data to enhance every stage of the purchase funnel, no matter whether your customer is offline or online. You can’t be lazy with this, because every interaction counts.

Overview

To bring this back to what my topic is about, why do luxury brands need to offer a seamless click and mortar shopping experience? Well as we’ve established, the profile of the luxury customer has changed, and with this, so have expectations and buying habits. The change has and will force digital and physical channels to converge, as customers expect convenience and a seamless brand experience.

To not get left behind, you’ll need to take stock. Assess what contribution digital currently has on your sales funnel, and therefore how much it’s used to influence your customer’s buying decisions. This will then give you an idea of the size of the challenge, and more importantly the opportunity, which in turn can be used to map out the tactics that will provide you with a long-term holistic marketing strategy that blends both the digital and the physical.

Offering a seamless click and mortar shopping experience that specifically targets the wants and needs of the new power generations. After all, the customer experience of your brand is the sum of all interactions with it, digital or otherwise. Thank you.