Great roundtable on June 29th on the Future of Luxury Retail in a digital world organized by Bettina Fröhlich (Luxe Partenaires) at Digital Luxury Meeting 2017: Avak Der Boghossian (Deloitte partner) introduced the market trends of digital experiential and personalization (Deloitte report Global Powers of Luxury Goods 2017,https://www2.deloitte.com/content/dam/Deloitte/global/Documents/consumer-industrial-products/gx-cip-global-powers-luxury-2017.pdf); Béatrice Querette (Merchanfeeling) provided insights from the field; Hortense Sauvard shared her perspective as a co-founder of OuiAreMakers.com.
Marie-Cécile Cervellon (EDHEC Business School) shared her research outlook on luxury etail and retail: The boundaries between retail and etail are blurred. The customer is the focal point of the omnichannel strategy. On one hand, online brands make their online presentations concrete, tangible and humanized through pictures of human models, zoom on details, 360 spin rotations, videos and the possibility to interact with human advisors. This strategy decreases the perceived risks associated to the online purchase. The chances to purchase online are multiplied by 1.5. The consumer is encouraged to pick up his purchase in the physical store (click&collect), creating traffic to the store and cross-selling opportunities. On the other hand, the digitalization (or phygitalization) of the point of sales is a major stake. From connected windows that allow purchases 24/7 to order and payment through mobile apps, the store becomes a replica of the e-boutique as much as the e-boutique becomes a replica of the physical store. Yet, in this digital world, let us NOT forget the BASICS… the reasons why clients go to the store: living an amazing in-store experience. Particularly the Millennials who will represent 40% of the personal luxury goods market by 2025, look for experiences that they can share. Unfortunately, 1/3 finds monotonous the experience in the store. Even more worrying, the service is bad, to extremely bad, in half of the visits. Our research shows that a young client activates a stereotype which makes him/her an unprofitable potential client and might lead to discriminatory treatments (Cervellon, Poujol and Tanner, 2017). Training to avoid stereotype-based behaviors is key.
What should the Luxury Store of the Future look like? Marie-Cécile said “A DESTINATION in the customer journey, a place for experimentation and a source of inspiration”.
Fashion and Beauty Monitor 2017 investigated among professionals how the luxury sector embraces Influencer Marketing. Among the many interesting findings: “59% of luxury brands are spending less than 10% of their marketing budget on influencers but spends are on the rise” and “73% say maintaining exclusivity and aspiration on social media is their biggest challenge”.
Read the report: https://econsultancy.com/reports/the-new-face-of-luxury-maintaining-exclusivity-in-the-world-of-social-influence/
I was called as an expert on Luxury by British consultants Canvas8 to forecast the most influential trends in consumption over 2017. One of the trends which will shape the future of luxury will be the development of the Second Hand Market. In 2014, Bain&Co estimated the market to be worth EUR16bn, less than 10% of the global personal luxury goods market. Bain&Co calculate a potential 30 times higher with the development of online sales. The new platforms such as InstantLuxe and VestiaireCollective provide consumers security on the authenticity and usage quality of the products purchased, thanks to a team of experts, specialized per product category.
Download Canvas8 report https://www.canvas8.com/content/2017/01/03/expert-outlook-2017.html
If you want to read about the motivations to purchase vintage luxury fashion versus second-hand luxury fashion:
Marie-Cécile Cervellon, Lindsey Carey, Trine Harms, (2012),”Something old, something used: Determinants of women’s purchase of vintage fashion vs second-hand fashion”, International Journal of Retail & Distribution Management, Vol. 40 Iss: 12 pp. 956 – 974
The summary of the paper “Vintage has been a growing trend in clothing recently, leading to major fashion brands launching collections inspired by vintage pieces or luxury haute-couture houses digging into their archives to revive past designs. Yet, as this market develops, little is known about the profile of the consumer and the motivations to purchase vintage. This paper aims to explore the veracity of a number of assumptions relating to vintage consumption, equating it to the consumption of used, previously owned clothes by nostalgic prone, environmentally-friendly or value-conscious consumers. The results show that the main antecedents to vintage consumption are fashion involvement and nostalgia proneness as well as need for uniqueness through the mediation of treasure hunting. In contrast, second-hand consumption is directly driven by frugality. Eco-consciousness plays an indirect role through bargain hunting. In essence, the thrill of the hunt is present for vintage and for second hand consumption. Yet, while vintage consumers shop for a unique piece with history, second-hand consumers shop for a unique piece at a good price. Additionally, the main characteristics of vintage fashion consumers are a higher level of education and higher income whereas age is not directly related to the purchase of vintage pieces.”
In June, McKinsey presented its latest research on Digital Luxury at FT Business of Luxury Summit in Monte-Carlo (see June post). McKinsey analyzed the omnichannel journey of 7,000 luxury consumers. Results confirm past studies: luxury shoppers are highly digital, mobile and present on social networks. Thus, the question is not anymore if luxury brands should be present online; Rather, how could luxury brands propose an omnichannel experience which matches the expectations of their demanding customers? In addition, McKinsey 2005 points to a very current concern discussed in class: On social media, does the luxury brand control its brand identity anymore? or is it co-created by the fans, with a risk of damaging the brand image? On average for each official luxury pic posted on Instagram, 10000 more containing the brand hashtag are generated by followers.
Be prepared. Read the report at http://www.mckinseyonmarketingandsales.com/digital-inside-get-wired-for-the-ultimate-luxury-experience