Customer Experience is Evolving for Retail Luxury

Yasmin Diekmann Yasmin Diekmann
minute read
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It is no secret that shoppers expect luxury brands to provide a higher level of quality and experience compared to other retailers. So far, luxury brands have been characterized by an aura of opulence, status symbolism and exclusivity.

However in recent years, the focus in Europe is increasingly on those luxury products that offer a story, an experience value as well as an individual and emotional experience. According to the Zukunftsinstitut, digital-affine buyers of luxury goods (Millennials & Generation X) are focusing less on "bling bling" and glamour (Zukunftsinstitut 2012/2017). Rather, there is a luxury behavior ("Stealth Luxury"), which defines itself more through noble workmanship, qualities or insider knowledge that is only visible or known by connoisseurs.

The emergence of the masstige market (mass and prestige) in Central Europe has continued to shape the European luxury industry in past years. Due to the stable economic situation in recent years and the opening of the luxury market, more and more social classes have been able to enjoy purchasing luxury consumer goods. The increasing presence of products and exclusive offers both in the online and offline world has also created a generally higher expectation of the brand experience among digital-savvy consumers.

Against this background, it is important that the shopping experience continues to position itself particularly in the luxury segment and exploit all possibilities to offer the best user experience to an increasingly digital-savvy clientele.

Brand experience as a Prerequisite for a Special Customer Experience

When you think of luxury brands, you associate the big ones: Louis Vuitton, Yves Saint Laurent, Burberry, Chanel. Traditional brands with a history, an identity.

For example, Chanel is associated with the French fashion designer and entrepreneur or Aston Martin with James Bond. Luxury brands give a feeling of being special and promise an identity.

The identity belongs not only to the brand, but rather to the customer. Because millennials are willing to spend more money in return for a better customer experience, products at all touchpoints must become a vibrant brand experience.

Millennials Determine the Luxury Market of the Future

50 percent of "luxury consumers" will be the millennials by 2024. The other half is Generation X. Two generations that are very social media affine. In addition, they are very environmentally conscious and demand transparency and trust through product information such as origin, production, and more. As a result, the customer experience must create a great deal of trust between brand and customer by explaining the added value. Shoppers are guided by emotions, which is why the brand experience is so important. However, this also means that they may quickly regret their purchasing decisions. The decision to buy a luxury product must therefore be confirmed at all possible touchpoints.

Touchpoints and the Omnichannel Experience

It is no longer enough to have demographic information about your customers. Rather, behavioral segmentation is required. Why do they buy, what do they like, where do they buy, how and where are they influenced in their purchasing decision?

According to the BCG study, mono-brand stores, social media and especially ROPO (Research Online, Purchase Offline) will continue to be the most important touch points in the luxury segment. ROPO in particular offers great potential for a brand-own online shop linked to stationary touchpoints. But interaction with the smartphone is also becoming increasingly relevant - especially in interaction with in-shop experiences. The younger the shopper, the more they prefer their smartphone to their laptop or PC.

Ideally, the linking of digital channels, social media, online shops, fashion shows and physical stores should offer seamless omni-experience.

Burberry as a Digital Pioneer

The English fashion group Burberry has understood that Millennium's technology loves and is today at the forefront of digital luxury brands. Burberry is increasingly focusing on communicating its emotions and brand identity on digital touchpoints. In the store, mirrors are transformed into screens with content matching the selected product, fashion shows can be followed via livestream at events in Burberry stores and via Twitter.

Innovation cycles are becoming ever shorter these days, as is the fashion industry. Collections that are only available months later after a fashion show are now available "for a limited period of 24 hours immediately after the show via WeChat, Instagram and in the flagship store on London's Regent Street".

With partnerships such as Snapchat, the English brand offers a preview of the new collections and live interactions with celebrities and top models worldwide. Burberry understands its customers' needs and offers a world-class omnichannel experience.

Millennials will largely change the global luxury market, as their buying behavior is strongly influenced by digitization. This will also create new behaviors and consumer demands in the luxury segment.

The Digital Future of the Luxury Segment

The demand is becoming ever higher and so is the standard of the customer experience. Shoppers are no longer addressed by price, but by brand identity. The brand experience and the associated brand promise should be the focus of the customer experience, because promises must be kept. One of the most important rules in customer experience management.

Also in the future buyers will be willing to spend a lot of money for something special, with a unique customer experience. As digitization has progressed over the past two decades, luxury brands have the potential to have more channels, options and reach to deliver their brand promise in reality. Realizing the full potential of these many opportunities and channels in the offline and online worlds is both a challenge and an opportunity for luxury brands.

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