Luxury retail in Sri Lanka after the pandemic

As I started my baby steps of retail in Colombo, it was always a pleasure for me to see multiples of luxury brands enter Sri Lanka after the war in 2009. Luxury retail was in the forefront of a high growth sector especially due to changes in the lifestyles, growth in tourism and even relaxed taxation.

Opening of malls such as Colombo City Centre and One Galle Face definitely show strong long term plans of putting Colombo as a shopping destination for luxury goods. Colombo City Centre is a joint venture between local Abans Group and a Singaporean partner Silver Needle Hospitality. One Galle Face is owned by the renowned Shangri-La Hotels and Resorts. International investments in creating such real estate further proves how retail is expected to grow in the future.

The current situation

Unfortunately the COVID-19 pandemic has become a blow into the sector which was slowly recovering from the Easter Sunday bombings last year. One bomb was in the Shangri-La Hotel itself adjoining the One Galle Face mall.

Tourists will not travel as soon as we expect due to closures in airports and travel restrictions.The economy may enter a recession due to the global negative outlook. New investments may hard to come by, as per the World Economic Forum there are already losses of USD 6 trillion & counting globally.

With such a backdrop how can luxury retailers bounce back? Following can be a few steps to consider.

 Explosion of E- commerce

The pandemic definitely made a lot of consumers shift to a digital space. Right now almost all in the country are buying their essentials online. Most have learnt and mastered on how pay bills online. This paved the way to an exponential growth in online banking and contact less payment methods.

A luxury retailer can benefit by opening up to e-commerce. Most companies are well established in the mind of the client but they have to visit the boutique to experience their brands. Their websites are just small windows of corporate backgrounds.

Websites should be expanded to offer almost all the variety online. Think of it as another boutique in operation. Give the same attention to detail.

Offer online customer support through chat, call or Whatsapp. Gathering feedback is a necessity to develop the platform long term.

Present exclusive online offers through invites to existing customers. An existing customer does not require an introduction about the retailer.

Ethos Watches from India are a great example in managing physical and digital retail space in the watch industry.

White Glove service

Luxury lives in the finer details. It is hardly about the product but more on how the brand trigger the right essence of emotions.

The main issue when an organization embrace e-commerce is that they hire third party logistics. The courier can be taken by a person who has little or no knowledge about the product.

Going the extra mile, the organization can have their professionals to deliver the product to the doorstep. Demonstrate how it works and give certain care instructions. This will strengthen the relationship with the retailer.

It can be further enhanced that if the customer is reluctant to visit crowded malls due to the pandemic, the client should be able to reserve 3 items and give an appointment. The retailer can visit the client and offer a product presentation. The client can then make the payment through cash or card.

A consumer can worry about the authenticity of the item and the legitimacy of a website. A physical and professional approach through an innovative white glove service can bridge that gap.

Corporate Partnerships

Many organizations in Sri Lanka have high net worth executives. Partnerships through their human resources departments can tempt to add new sales revenue. It can be even foreign organisations operating in Sri Lanka. There are many construction companies attached to building Port City and highways.

It can be not limited to exclusive price reductions. Especially when it comes to watches, it requires service and maintenance. Therefore extended warranty or complimentary polishing can be considered.

Furthermore, add EMI plans with credit cards for the purchase from such corporate clients, it can add more value for the client to purchase. This can be in line with the already existing plans by the retailer in general.

If agreements can be made directly with payment networks such as Visa, Master card, American Express or Unionpay it will be easier to promote such partnerships. Then whichever bank the credit card is issued become irrelevant. It can capture a larger audience. It needs to be timed to create maximum impact. End of the year is when most tend to make luxury purchases.

Relationship

The Sri Lankan clientele want more selection, exclusivity and in some cases discretion.

How well the retailer knows their client can create loyalty toward them.

Certain clients would want a rare and exclusive item, such clients need to be invited or contacted in priority if a limited edition arrived.

Discretion, this is an area critically important but due to some reason overlooked by retailers. I have met many Sri Lankan VIPS shopping in Dubai but reluctant to do their purchases in Colombo due to various personal reasons. Confidentiality should be valued at all stages of the relationship with the client.

If an organization can take extra steps such as have exclusive shopping areas/rooms for VIPS or even keep the boutique open to facilitate a private viewing. It can bring success in the long term. This is a small high influential society which is well connected. Once you manage one client, they will introduce you to more.

 Again going the extra mile in knowing your client can build a rapport which will last a life time. Wish the client on their birthdays, anniversaries and even their children’s birthdays can mean a lot.

Certain luxury brands facilitate many loyalty rewards such as send personalized gifts, offer exclusive dining experiences or a stay-cation or spa treatments on special occasions.

Pricing is an area of concern in luxury, some may feel most go overseas to purchase because the prices are more attractive. To a certain extent one can agree but I have seen multiple times that the client purchase in Colombo due to the trust and relationship that they have with the respective institution.

In the luxury watch industry there is a global pricing strategy by the brands. It always varies due to the local taxes. Retailers have to be creative through loyalty programmes to retain clients.

Tourism

It is not all doom and gloom for tourism, most countries are looking for methods to be open for tourism. China can be the first country to reduce travel restrictions. Sri Lanka being positioned as a favoured destination can capitalize from this situation. If Sri Lanka can manage COVID-19 effectively, during the winter season there will be an influx of Chinese tourists because many destinations will be closed to travel.

As China continue to dominate the luxury consumption, retailers in Colombo can position correctly to cater them.

 It is important to check the bestsellers in Hong Kong, Macau and China as it will assist to manage the inventory effectively.

Partner with hotels to have exclusive offers for their guests. Specially Shangri – La hotel Colombo can have pop up kiosks. It will create an opportunity for retailers to link the customers with the main boutiques in the adjoining One Galle Face mall.

Retailers need to lobby to the government to have tax refund kiosks open in the malls. The tourists should be able to process their refunds immediately. The tax refund will be debited once the tourists leave the country but it will ease the pressure for them at the airport, many countries now have the practice of such refund mechanisms. It will encourage them to compare the benefits and it can lead to more shopping. It will definitely help luxury retail in Colombo

Challenges such as the COVID-19 pandemic will direct organisations in paths unexplored or less travelled. Through creating a unique online experience, combining it with unforgettable customer experience and building long lasting relationships with the clientele will definitely lead to blossoming of luxury retail in Sri Lanka.