Top ecommerce tips: Navigating the digital revolution for luxury retail brands – Netimperative

For luxury retail, the pandemic has been an enormous catalyst for change, with digital now be the foundational bedrock for any luxury experience. James Brooke at Amplience, looks at how can brands shift their operations and existing systems to accommodate this dramatic shift in customer behaviour.

The past eighteen months have propelled the luxury retail sector towards a digital-first, customer-centric approach with brands deploying virtual catwalks, e-vents around fashion weeks, virtual after parties, ‘see now, buy now’ eCommerce buttons, and social media-leveraged product drops.

While digital transformation has taken a giant leap forward for many brands, for others legacy systems, ageing infrastructure and disconnected customer services have become all the more apparent. The need to innovate is clear and simply tacking on a digital channel to the main business is no longer an option.

Luxury brands for too long have spent money on the wrong things including large budgets for digital marketing without getting it right, or huge sums on new fixtures and fittings in store to deliver the wow factor without meeting real customers’ expectations.

And in luxury, these expectations are at an all time high. Every time a customer has another groundbreaking and great brand experience, digitally or otherwise, it sets the bar even higher. It’s time to shake things up and adopt a digital-first approach to future proof the business. But first, there is the issue of legacy systems, siloed approaches and ageing tech stacks.

Brands need to look at the issues through three lenses: A strategic lens – what do we want to achieve? An operating lens – how do we achieve it? And an efficiency lens – how do we want to do it?

Shift in the market

Currently, the luxury sector is undergoing a transformation. There’s the move from physical bricks and mortar stores to digital platforms. Online sales were €49 billion in 2020, up from €33 billion in 2019, according to research from Bain. The proportion of sales online nearly doubled from 12% to 23% during this period. This represents five years of growth. As digital becomes the main channel for luxury purchases it is not surprising that physical stores are shifting from transactional to experiential.

Customers are demanding personalised shopping experiences and outstanding customer service across all touchpoints. Expectations set by global giants like Amazon, Netflix, Tencent and Alibaba mean high-spending shoppers want choice, convenience and competitive pricing, along with club lounge style assistance. The only way to achieve this is by working with customer data.

The direction of businesses in the luxury sector must be determined by real data that has been recorded, identified, analyzed and translated into key actions. These actions are based on a longer term and robust strategies that have been developed with the customer at center stage. Key strategies should also be underpinned by changing consumer behaviours. The data doesn’t lie.

Brands should listen to new, affluent audiences, in particular the digital native consumer and track the right key performance indicators to understand relevant customer touchpoints. Understand what customer experience really means to them because this is the next competitive battleground and nowhere more prevalent than in the luxury goods market.

This is not to suggest that the physical store has had its day, the craving for personalised, physical retail in city centres is not going away any time soon, but customers are looking for reinvented space with more social, entertainment and leisure facilities mixed in with the usual shopping experiences so brands must utilise their prized outlets as showrooms, while at the same time investing in their online presence.

Held back by legacy systems

Legacy systems are a fact of life for all industries, but in luxury retail manual management and input of product data and content is prevalent and all too often issues arise because buying teams are unable to coordinate online and offline systems. This is primarily because buying and merchandising platforms are managed separately with many siloed databases. Third-party logistics companies will use one system, and there can also be separate enterprise resource planning platforms (ERP) and electronic point-of-sale (EPOS) systems sitting alongside, yet separate to, clunky eCommerce solutions.

This creates a serious issue when it comes to knowing the overall stock position of the company at any one time, which can lead to mass discrepancies when physical stock counts are undertaken across the business, with limited or no loss prevention strategy in place. Historically, these kinds of issues are reflected at the boardroom level as well where a lack of IT and digital understanding in the C-suite is reflected in limited investment in technology platforms.

Getting stock levels correct is a key area that luxury brands need to focus on as part of their digital transformation. Customers want to check stock availability on their mobile phones and locate stores where that product resides, but without a single view of their inventory across the business luxury retailers are unable to meet this fundamental need.

The blueprint for success

The goal for luxury retailers should be a long-term digital transformation strategy and eventual total immersion in a digital-first, customer-centric, omnichannel approach to business.

This will create many more opportunities for brands to rethink the playbook on luxury and change the way they interact with customers. The goal isn’t about achieving a little more flexibility by replacing bits of technology, or upgrading platforms that allow more wiggle room or capacity. It’s about reimagining the customer experience through technology.

Many luxury brands are moving in the right direction, using large volumes of video, model imagery, product shots and brand storytelling online. But this is just first-base in a long-term game. Creating immersive and interactive, as well as personalised experiences fit for the digital age will delight consumers and meet rising expectations.

If a brand wants to create greater interactivity, a buzz and gamification around a fashion week, where Millennials and Generation Z can interact fully with social influencers, designers and the products themselves, luxury companies need total flexibility in terms of the technology stacks they deploy. They also need to be in control of their customer data and the insights it brings.

Luxury retailers not only need to deploy the right technological solutions; they need to integrate business best-practices alongside marketing best-practices. Success means being focused on self-disruption; investing in the right technology stack; putting the customer first and foremost, with a 360-degree digital view; answering consumers’ particular need for personalised, luxury experiences; and innovating at speed to raise the bar on brand experiences.

According to McKinsey, 80% of luxury sales today are ‘digitally influenced.’ This means consumers hit one or more digital touchpoints in their shopping journeys and as brands compete for consumer spending luxury retailers will have no choice but to embrace digital transformation.
It’s time to stop thinking that high-end consumers are unwilling to pay premium rates online, and to start really learning about customers. Those brands that leverage data, analytics and machine learning to find out more about their consumer base and act decisively on these insights will win.
This level of insight can only be achieved with a digital transformation program. It requires ambitious aspirations, a clear plan, and concrete milestones, as well as strong support from the C-suite.

In 2021, luxury brands must realise that digital isn’t just a channel for marketing and product delivery. A smart approach should be at the heart of everything a brand does, knitted into the fabric of the business to deliver a blueprint for the future.

By James Brooke

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