How luxury retail has evolved
International Luxury Group (ILG of Switzerland AG)
Here are 5 major ways in which luxury retail has evolved.
The rise of experiential retail
Experiential retail – the process of creating memorable shopping experiences for shoppers – has become increasingly important. Indeed, a recent report from BoF Insights showed that nearly half of the frequent luxury consumers in North America surveyed agreed that luxury stores should be more than a place to purchase products. They want brands need to meet and exceed customer expectations by innovating around three key pillars: “supercharged connectivity,” or innovative technology that facilitates deeper human relationships; “sustainable retail” both inside and outside stores; and “inclusive luxury,” which creates engaging retail spaces that can offer something to all visitors.
The need for a strong online presence
Online luxury sales had been growing steadily for several years and were given a supercharge by the pandemic with shoppers mainly confined to home. Now, e-commerce has skyrocketed with 60% of luxury brands having an online presence – this trend is being driven hard by digital loving Gen Z and Millennials who account for almost 50% of luxury purchases.
AI making brands more efficient
AI and luxury may not seem an obvious fit but in fact they’re starting to form a powerful partnership. Several leading brands have realised AI can be helpful in better understanding customers’ needs and expectations, allowing them to develop more effective and lucrative strategies. Several big names have also begun using AI?in supply chain management, finance, human resources, product development, marketing and merchandising. This doesn’t mean human expertise is out – the extensive data collected must still be interpreted according to knowledge of the market, products and of the brand. ?
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Trust matters more
After the fear and uncertainty of the pandemic, consumers all over the world have increasingly put brand trust as one of their top concerns. This trend is continuing to play out in 2023 with shoppers looking for companies they can rely on to deliver quality products, an easy shopping experience, and outstanding customer service. One interesting aspect of this is that while generally consumers believe reputable, established luxury brands to be the most trustworthy, in some cases the reverse is true. According to global consultancy Kearney, older generations and Millennials tend to put the most trust in local, small brands, while Chinese consumers are most trusting of niche brands.
The arrival of advanced materials
Technology is having a huge impact on the luxury garments and accessories market and there has been a growing trend in using tech to create new types of fabrics. From silk inspired by spider DNA to “vegetable cashmere” (or soybean fabric), there has been a rise in ‘eco-luxury’ retail with consumers demanding eco-friendly alternatives to traditional raw materials, such as animal free leather. These fabrics are good for the environment and can also be good for the human body – for example “green” fabrics made with algae biomass or discarded pineapple plant leaves are non-toxic and more breathable than synthetic textiles.