The market for personal luxury goods is set to grow to €295-305 billion globally by 2020 — with 75 percent of these purchases occurring in physical stores, according to a new report from Bain & Company.
The growth seen in 2017 in this sector across Europe, Asia, and the Americas is good news for retailers. But Bain & Company’s report points out that department stores selling luxury goods — rather than individual stores like, say, Louis Vuitton — are still struggling to manage sales across channels.
“The role of the store is definitely changing,” said Federica Levato, a Bain partner and co-author of the study. “But this doesn’t mean stores have lost their purpose – brands need to reinvent them to create an on-going engagement with customers that transcends channels.”
Making The Most Of Brick-And-Mortar
So, how can brick-and-mortars — comprised of both individual retailers and department stores — take advantage of the rebounding of the luxury sector?
It’s easy to see why more shoppers turn to physical stores when it comes to personal luxury purchases: The more expensive the item, the more likely they are to want to try it on or test it out, to ask questions to an experienced store associate, and/or to look for an elevated shopping experience. As such, its up to retailers to provide an in-store experience that matches the price tag of the item — but combined with the ease and speed of purchase that customers have come to expect in the e-commerce era.
In pursuit of this goal, luxury retailers like Rebecca Minkoff have explored the “connected store” concept — with largely positive results.
Rebecca Minkoff’s connected stores feature smart walls that suggest new styles when customers enter the space, smart mirrors in dressing rooms that allow shoppers to browse for other sizes or save their shopping activity for the future, and more.
“Back in 2014, we [tried] to ask, ‘what will the store of the future be?’ How could we take the best of the ecommerce experience and bring it into the store?” Uri Minkoff explained. “What were the human elements that were uncomfortable shopping in store that [are solved] online? The first part [we came up with] is that everything was RFID tagged. Basically, when you walk into the fitting room, everything that you brought into the fitting room is there on the fitting room mirror. You can order things brought to the fitting room right from in there; all the communication is done via touch.”
Luxury retailers can perhaps also take a lesson from online-to-offline pioneers like Blue Nile, which sells fine jewelry: Its “Webrooms” are diverse physical showrooms that employ digital tactics, giving e- and m-commerce fans a new way to experience retail. They’re smaller than traditional jewelry stores, and in order to give shoppers a seamless checkout experience, all transactions happen online via in-store tablets — and online prices are in effect. But shoppers still have the opportunity to view and try on Blue Nile’s wares in person, and non-commissioned consultants are on hand to help with selections.
Customers still have a desire for the luxury shopping experience that only physical spaces and human interactions can provide. But still, “today’s shoppers want the freedom to shop in their own way — via PC, tablet, phone, or in-store,” a spokesperson from Blue Nile told GeoMarketing. “We’re not simply opening a traditional store with massive overhead. Instead, we’re creating an efficient model that allows us to simultaneously disrupt and leverage the brick and mortar experience.”