The Tides and Times of Luxury Retail

1. Luxury
Retail
T H E T I D E S A N D T I M E S O F
How luxury is metamorphosing in the realm of
changing consumer demands and income patterns.
INSIGHTS
FROM THE
KEYNOTE
“THE CHANGING
WORLD OF LUXURY
RETAILING”
COMPILED BY
ASHLEY MACKEL
AND SHASHWITH
UTHAPPA
OGILVY &
MATHER

2. THE CHANGING WORLD OF LUXURY RETAILING
P
ERHAPS EVEN MORE THAN some other
industries, the world of luxury retail has had
to evolve with the changing times. While a
generation of folks with expendable income
presents an incredible opportunity, many luxury
brands are finding it difficult to tap into this new,
youthful consumer base. DAVID SELINGER, CEO
and Co-Founder of RichRelevance and MATTHEW
WOOLSEY, Executive Vice President, Barneys New
York discussed the changing landscape of luxury
retail at the recent National Retail Federation:

3. THE CHANGING WORLD OF LUXURY RETAILING
DEEP
POCKETSTHE US CONSUMER MARKET for luxury is the world’s largest, and it is a
melting pot of brands at consumers’ fingertips, consumers whose high
disposable incomes increase their purchasing power. With scales tipping
in their favor, brands need to effectively communicate and engage if they
are in for the long run. Constant feedback and social listening in the digital
age is imperative. The most engaged consumers online are the same
customers who spend the most in the store and having continuity for the
consumer across platforms will help in retaining them. It’s about continuous
business performance through every part of the customer journey.
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4. THE CHANGING WORLD OF LUXURY RETAILING
THE MOST
WANTED
GENERATION
TEN YEARS AGO, brands used to be able to segment
customers in 2 to 3 categories, but now a singular
definition of a luxury customer is being shattered. The
new luxury consumers are younger, better-informed,
ethnically diverse, tech savvy, more educated, have
household incomes more than the national average,
and lead complex multi-tasking lives. At 80 million
strong, Millennials are about 25% of the total U.S.
population, outsizing Gen X as well as Baby Boomers.
A new cohort called HENRY’s (High Earners Not Rich
Yet) should be on the constant vigil of luxury brands.
They have the ability to cut through the marketing
clutter and find true connections. Building brand
credibility is crucial to influencing this category.
An interesting and meaningful
development around these new young
consumers is that they’re not obsessed
with ownership. Millennials are renting
plush apartments at exorbitant amounts
rather than owning one, using Rent the
Runway for a perfect evening dress,
or Uber for a drive around the city.
The world shouldn’t wonder about
whether Millennials will ever engage,
but rather anticipate how and where
they’ll choose to do so. Millennials are
82% more likely to use their phone
than speak with a sales associate,
which means that brands must change
their inspiration, story, and discovery
process before they enter the store.
Brands needs to understand how to
catch their attention and what added
value they can bring to the table.
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5. THE CHANGING WORLD OF LUXURY RETAILING
THAT F WORD:
FUNCTIONALMILLENNIALS are often looking for more than just something that’s
shiny and new, so luxury brands need to adjust accordingly. It’s
certainly easier to justify a purchase that has utility, rather than one
that’s merely amusing. In luxury parlance, this is functional luxury and
this will redefine what luxury means. However, there is that need to
express your own lifestyle while whipping out the credit card, and new
American luxury brands are addressing this through customization.
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6. THE CHANGING WORLD OF LUXURY RETAILING
THRIVING
IN THE
DIGITAL
STORMNO BRAND IN ANY INDUSTRY can afford to ignore the
new realities of our digitized world, especially luxury
retailers. Technology is both increasing customer
touch-points and providing unique experiences
through personalization, enhanced through data.
The luxury goods market is using big
data technologies to combat Amazon in a
different way. Barney’s uses big data tools
to gain a better perspective of who their
customer is, rather than using them in a
product-centric manner like Amazon.
Mobile remains incredibly important as
well. Selinger shared his observation on
how a mobile site was launched to put out
new merchandise right after the Burberry
Prorsum Show, which represents how
quick the continuity of the consumer
journey needs to be. He added that 2015
is the first year that we can really use data
to glean the most segmented and direct
luxury consumer and establish a one-
to-one relationship with a customer.
Predictive analytics can be used to identify
patterns and profiles of the most profitable
customers, perform smart segmentations and
execute automated marketing campaigns
to not just drive sales, but increase
inspiration through enabling discovery
through personalized editorial, product,
and search. Brands need to get smarter
at creating unparalleled experiences for
customers more quickly if they want the
industry to go from tepid to blazing hot.
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