Known for its traditions and heritage, as retail evolves the luxury sector is also becoming a driving force for innovation. Drapers rounds up the key take-aways from Walpole’s Luxury Summit on 5 February, where some of the sector’s biggest names discribed their vision for luxury’s future.
Service is still king
British brand Ralph & Russo began life as a couture house, before launching a ready-to-wear collection for the first time for spring 18. Founders Tamara Ralph and Michael Russo said a strong customer understanding and impeccable service underpin the growth of the brand and its continuing success, and are what allowed them to compete with established names.
“Customer service is free for us to provide, so when we began, we were able to compete on that level with the more established brands,” explained Ralph.
“We found that when customers are at ease in the atelier, they spend more,” added Russo. He also stressed that luxury brands must retain this close customer connection to retain their exclusive appeal: “Luxury is becoming too commercial. It needs to be brought back to its roots.”
Bundled buys are the next big thing
In a world of never-ending options, choice has become a burden, rather than a benefit. Simplicity is the new luxury frontier: take away the need for shoppers to choose and make the buying process as simple as possible.
Fashion brands including Wardrobe NYC and The Kit offer bundles of items to buy all at once – almost as a ready-made wardrobe or outfit. In addition, luxe streetwear brands are turning to bundles to combat resellers. The brands sell bundles of items for large sums, deterring those who may be buying solely to sell on, and elevating the brand’s exclusivity one step further.
LOLs are the new KOLs
Influencers’ follower numbers no longer matter as much as they used to. The key opinion leader (KOL) group of influencers with vast social followings are increasingly being passed over by luxury brands, as they seek to form more tangible and authentic connections with their customers. The new type of influencer to note is the local opinion leader (LOL), who has a more niche following around specific locations or topics – brands are finding these people enable a more genuine interaction with their customers.
Lesley Crowther, vice-president for consumer engagement and retail at Estée Lauder UK, noted that tapping into these grassroots “micro-communities” brought the cosmetics giant closer to its shopper and allowed for “richer, real conversations”.
How to win Instagram in three steps
Instagram’s influence in fashion retail is still growing – some 30% of Instagram users have discovered a new product or brand online. Luxury shoppers are particularly engaged, and consume five times more content on the platform, said Lisa Yeates, client partner for luxury at Instagram’s parent company Facebook. Yeates shared three key rules for brands seeking to succeed on the platform in 2019.
1. Be relevant. You cannot have just one message to reach everyone. On social media. it is critical to be relevant, meaningful and timely. For example, Bottega Veneta ran a campaign that featured targeted ads for men and women, and specifically targeted users that had engaged with its New York Fashion Week content on the platform. It also targeted users that matched the demographic of their top customers to ensure they were seen by the right people at the right time.
2. Be fast. Creating “thumb-stopping content” is a necessity. Brands need to capture the attention of the viewer within just three seconds to stop them scrolling or tapping away from content. With Instagram Stories an increasingly powerful tool – the feature now has 500 million daily active users – this means engaging with videos and powerful visuals to catch the consumer’s roving eye and ever-scrolling thumb.
3. Be visual. Once upon a time, text dominated the social space on the internet. Today, images rule the roost, and Yeates estimated that in five years video will overtake static pictures. After that, augmented and virtual reality (AR and VR) are set to move into the mainstream, and some brands are already embracing immersive experiences to bring the storefront to the consumer.
Purpose-driven purchasing is on the rise
Aleksandra Szymanska, art director at research firm The Future Laboratory, noted that the millennial predilection for conscious consuming is also present in luxury shoppers. Changing attitudes to wealth are creating a sense of “uneasy affluence”. This could be set to drive an increase in purpose-driven purchasing – where shoppers buy luxury items that have ethical or sustainable benefits for others, as well as the shopper.
Augmented reality is becoming a practical reality
It is anticipated that the VR and AR market will be worth $77.4bn (£59.7bn) by 2021, and for several years, VR and AR have been teetering on the brink of usability for brands. Szymanska said the formats will enter a new, truly usable, phase in the near future, moving away from being marketing tools to become more practical. She highlights Nike’s SNKR app, which used augmented reality to allow customers to shop for exclusive products, as a sign of what’s to come. A more left-field trend may be the emergence of digital-only clothing: where consumers buy products that are superimposed onto their Instagram images and never actually made.
International or not, luxury should be looking to China
Although there have been some whispers of a slowdown in the Chinese market, the power of the country remains vast. Chloe Reuter, CEO of Chinese consultancy firm Reuter Communications, said 32% of luxury shoppers globally in 2018 were Chinese – a figure that is set to rise to 45% by 2025.
The market is digitally driven and incredibly fast moving, but as Chinese shoppers begin to travel more to international markets, the UK will receive a 13.5% rise in international traveller numbers by 2020. Retailers could look to harness the international spending power of the Chinese consumer by engaging with platforms such WeChat, but also lesser-known sites and apps such as DouYin (known as TikTok outside of China), Fliggy and Little Red Book, to enhance their appeal for the Chinese market.