For decades, luxury retail has been a key driver of personalisation and exclusive experiences. The foundational experience of brick-and-mortar stores largely relies on the luxury market segment. According to Bain and Company, since the pandemic has begun, the luxury market has witnessed a decline in sales, by approximately 23%. As the world was taken up with travel restrictions and lockdowns, the visits to luxury stores were halted and are yet to return to normal. For retailers, it is the need of the hour to innovate customer’s in-store journeys. Therefore, phygital retail is the latest buzzword in the dictionary of luxury retail.
Sensory-rich Experiential Retail
Customers yearn for and expect a sensory-rich ambience as part of their shopping experience, especially a luxury shopping experience. In a digital-led world, the experience of seeing, touching and feeling is what makes customers crave in-store experiences. According to Deloitte’s survey, 63% of respondents prefer offline shopping to online shopping experiences because of personalised and interactive benefits. As a result, more and more luxury brands are increasing their brand awareness and adopting experiential tactics to offer phygital experiences to shoppers. Burberry is one of the primary luxury brands that provides a personalised experience on Pinterest. John Frieda, a British luxury brand has used Instagram’s algorithm to analyse users’ feeds to generate customised videos of hair colour recommendations, for its campaign - #ShadesofMe.
Collaborations are not new in retail, but they have gained popularity due to Instagram-like apps. Luxury brands are now collaborating to improve their offerings and tap into a wider audience. Recently , popular luxury brands have successfully collaborated to offer unique experiences - Louis Vuitton with NBA and Dior with Nike are two examples of recent collaborations that have integrated an element of mystery and newness into luxury shopping.
Augmented Reality & Virtual Reality Model
Brands cannot ignore the influence of AR and Virtual Reality on the retail industry, as the use of both is steadily increasing. Dior has launched Dior Eyes, a new virtual reality headset that provides a completely immersive experience to shoppers. The beauty giant Sephora too tapped into the world of AR, but earlier than most. They introduced ‘Sephora Virtual Artist’ in partnership with an AR company.
According to Vogue Business, Facebook recently held a conference on the potential of virtual and augmented reality for luxury retail. The conference was joined by more than 40 luxury C-suite professionals, and aimed to understand the potential of AR and VR in the luxury segment. LVMH, the luxury conglomerate, has been investing in tech start-ups, particularly in the augmented reality space. In China, the luxury retail sector has successfully used AI and facial recognition combinations to provide ultra-personalised experiences. Brands have also been using AI and predictive analytics to collect customer’s data and track their preferences for accurate demand forecasting. Chanel is another major luxury brand that has partnered with FarFetch for an augmented retail experience. They have co-created a high-tech dressing room experience for shoppers, to add to the seamlessness of their shopping journey.
Luxury and Digitalisation
Luxury consumers have high expectations these days, and brands need to keep up with these expectations to maintain their competitive edge. As digitalisation is changing the markets, luxury brands need to implement social media apps and advanced online technologies for a better customer experience. Sustainability will also play a key role in fashion and luxury goods companies, as stated by a report from Deloitte’s Global Powers of Luxury Goods 2020.
As the pandemic has changed consumer behaviours and made people more aware of what they are consuming, it has also opened a door to new opportunities for retailers, in terms of technology adoption. Retailers need to compliment the physical and digital world by leveraging technology to offer customers unique, elevated and luxurious shopping journeys.
Our Retail experts can help you keep up with the times, so that you can reach your full potential as well. Connect with them to learn more.