Omnichannel and fashion luxury: 2016 promises to be a critical year. As millennials grow up, the fashion luxury target becomes more varied and unpredictable and customers begin to ask for higher service personalization and new engagement models.
Without a strong commitment in this direction, luxury brands risk to be unable to provide effective responses to customer needs.
More than any other industry, luxury brands rely on a strong sense of heritage and tradition, while facing an ongoing challenge to stay modern. Therefore, it is essential that they are clear on who they are addressing and how to meet their individual preferences.
In the past, to build a strong relationship with customers, fashion industries had to offer the best in-store experience. For this reason, many luxury retailers have perceived the digital revolution as a threat. Today, however, customers have online access to all brands at the best price: often their very first approach to a retailer takes place online.
Research we produce every year at ContactLab shows that luxury high-spending customers usually have a digital personality, can be easily contacted and have clear purchase preferences. This group, which accounts for a quarter of the buyers, spends 20-30% more than “anonymous” customers (both online and offline). Not to “turn” anonymous or disloyal customers into digitally known or loyal customers means to miss a gold mine.
But then, how can we understand customer behaviour, both online and offline? First of all, we can rely on advanced profiling systems that can synchronise all touchpoints, including personalized emails, A/B testing (i.e., submitting two different email templates to two clusters of users, in order to choose the most performing one), website and traffic analysis. With the ensuing data, we can gather enough useful information to build a relationship with customers.
Let’s not forget that this trend comes at a time when the industry’s total revenue is growing annually at exponential rate, with buyers around the world looking for high quality brands at premium prices. According to the Bain & Company 2015 Luxury Goods Worldwide Market Monitor, the luxury business has exceeded $1,000 billion in retail sales, with Chinese customers accounting for the largest share of luxury purchases in the world (31%), followed closely by Americans (24%) and Europeans (18%).
Chinese consumers will continue to travel to buy luxury goods also in 2016, despite the partial cooling of the Chinese economy. But something might change: their destination and the amount of money they are going to spend abroad. The possible increase in purchase within the country could make North American, Western European and Japanese markets waver. Consequently, to continue to benefit from the purchasing power of China, brands will have to adapt to the new trend of online shopping, designing e-commerce platforms and digital strategies that meet consumer needs.
Luxury brands are well aware of this. Their goal should not only be e-commerce growth, but also better customer engagement, which requires a strong ability to keep track of preferences and the different ways in which a product is sold online or in-store. In order to combine the simplicity of online sales with the ability to re-create a high-street customer experience, a strong background in the luxury retail sector is necessary.
We are in a time when, thanks to technology, customers do not have much to lose when shopping. If luxury brands will not exploit this trend and turn theory into action, they risk to miss the opportunity to maximize customer engagement and will therefore lose customers.
(Video is in Italian)