By Jukka Aminoff
The current market environment is changing because of digitalization. Consumers are savvy, and they use their smart devices to search for inspiring products. However, luxury retail has a very lucrative position because brands do not practice wholesaling and resales. Hence, luxury brands use their concessions, retail shops, and e-commerce sites. However, some products, like cosmetics, are sold via resales channels but a vast majority of products are being sold through own sales channels.
One of the key advantages of luxury brands is that they have their unique values, which makes them charismatic. Strong brand personalities are one of the keys to succeed in the marketplace. Strong brand identities also protect the whole industry. Still, digitalization brings some interesting opportunities for luxury brands. We must remember that luxury consumers like to purchase their products mainly in shops because they want to experience brands in real life. However, some consumers like to buy online. Therefore, it is vital to understand what sort of business models can be used in luxury retail.
Most sales come from shops because shops can provide high-quality experiences. One of the most common tactics is to use e-commerce sites to receive market data. Consumers are encouraged to create their online profiles because in that way a luxury brand can collect more detailed market data, and this is how the magic happens. The online market data, loyalty card data, and smart device applications will be used to improve customer service in shops.
Customer service staff have their smart devices, and therefore, customers can be effortlessly recognized if they have their loyalty cards and smartphones or tablets with them. The smartphone or the tablet must have the brand application installed and a profile created to recognize a client. The smart application does not have to be activated because it can send data without being activated. Loyalty cards can also be used to send data to inform customer service. This is the way to create a bridge from the online world to a physical shop. Data can be used to serve clients with precision.
One of the pioneers, which utilizes heavily digital services and data is Burberry. The brand has created many digital touchpoints to receive market insights. All of the information can be used to make better products, reduce unwanted products, and to know what are the most desired products. One of the key benefits is to serve customers on a personal level. Creating bridges between digital and physical worlds is of the keys in order to succeed in the future. However, a luxury brand must be true to its brand values and strengthen them.