Next Frontier of Luxury Retail

Next Frontier of Luxury Retail

Digital disruption has changed the norms of the traditional luxury retail industry. It has resulted in a radical shift in consumer shopping behavior, their beliefs, and expectations. Consumers live online today, even while they are inside physical stores. They have become more demanding than ever. Their growing need for ease of shopping, prompt service, and personalized solutions has left retailers with the only option, ‘either go digital or die’. It has become imperative for retailers to redefine their traditional business models, embrace digitization and unleash tremendous opportunities provided by emerging new ecosystems.

In today’s complex business environment scenario, luxury retailers need to work towards re-inventing consumers’ shopping experience by understanding their pain points, needs, desires, and aspirations. Retailers should embrace technologies such as blockchain, artificial intelligence, smart sensors, computer vision, chatbots and facial recognition to solve problems like counterfeiting, delayed check-outs, queuing, product navigation, waiting time for product returns, delays in online order pick-ups and late order fulfillment.

Just as e-commerce giants like Amazon and Alibaba offer remarkable online consumer experiences, luxury retailers are trying to curate lifetime memories for consumers through facilities like spas, beauty salons, personal styling classes, coffee houses, restaurants, fitness facilities, cookery sessions, wine bars, theaters, and art gallery. Top brands such as Gucci, Tiffany, and Chanel are giving shoppers better reasons to stick around longer and engage with the brand through coffee and caviar. High-end brands like Ralph Lauren are using smart mirrors to help consumers see how they look in different dresses and lip shades without actually putting them on. Rebecca Minkoff’s store in New York features an interactive video wall and self- checkout.

Brands like Ralph Lauren and Polo are using interactive fitting rooms to engage consumers. It uses RFID technology to recognize the product a consumer brings inside the fitting room. The mirror shows other available colors, cuts, and sizes for each product. It also makes suggestions based on the item a consumer has brought in and also enables consumers to do social media sharing. In addition, the consumer can change light settings and avail language options. A ‘call an associate’ button connects the consumer with a sales associate who gets all that a consumer has asked for. It provides consumer access to the entire store and the associate just being inside the fitting room. This is how technology is helping the companies to blend physical and digital channels to reinvent in-store shopping experience.

Millions of people visit luxury stores and once they exit from the store, there is no way to trace them. Technology is helping brands to replicate the concept of e-commerce data collection and use this data to make informed decisions. The trail of digital data that consumers leave behind is used to engage, inform and provide tailored offers to them. As soon as a consumer (X) enters into the store, through data analytics, he /she is addressed as, “Hi X, how are you doing”? It’s all about bringing what consumers expect on digital into the physical. Retailers like Neiman Marcus and Burberry have leveraged data analytics and smart technology to provide personalized product recommendations based on shoppers past purchase behavior and predefined preferences. Burberry has been successful in introducing an array of digital experiences into its physical store, created to replicate the online website experience. It includes magic mirrors, live 3-D streaming of runway shows and RFID tags that gives access to interactive digital content which has greatly helped the brand to boost its performance.

Although, digital channels have undeniable advantages physical stores still rule the hearts of the consumers with most consumers choosing to end their journeys there. The next frontier of luxury retail will seamlessly merge the physical and the digital to offer hyper-personalized experiences and provide operational efficiencies. Digital channels would reshape store footprints. Most of the tasks done today by store associates including checkout customers, fold clothes, inventory management, open and close store, etc. will be taken over by automated processes and machines. Store of the future will be equipped with a robot- enabled inventory management, AI-generated recommendations and wish lists, touch-less checkout, smart shelves, virtual shopping assistants and smart mirrors to name a few, relieving store associate from mundane tasks to work as a specialist and client’s mentor. Associate will be instrumental in providing a wonderful experience to the consumers and transforming them into loyal advocates and brand ambassador, thereby humanizing the technology-enabled retail experience. Thus, the coming years will be the golden era for consumers, with technology-enabled shopping experiences giving them simplicity, flexibility, convenience, information and pleasure they deserve.

(This article has also been published in ET Retail on Jan 16, 2019).