What The Future of Luxury Retail Has In Store
In the past, luxury brands considered online shopping to be a channel reserved for selling low to mid-range luxury goods. Selling online was perceived as being inappropriate for a luxury company.
High-end goods were thus reserved for the boutique stores. Luxury brands thought indeed that affluent consumers wouldn’t spend more than a certain amount for high-end goods online. Indeed, wouldn’t luxury shoppers always prefer the personalised customer service and tactile shopping experience?
That assumption is now being challenged.
By 2025, one-fifth of luxury sales will take place online.
Net-A-Porter and Farfetch have successfully demonstrated that luxury consumers are willing to purchase high-end goods online at full retail price.
In parallel, digital is increasingly influencing how consumers make their purchase decisions. Research by McKinsey found that at least 40 percent of all luxury purchases are in some way influenced by a consumer online experience.
Millennials and Generation Z consumers drive 85% of luxury growth
“The growing importance of digital for luxury is driven mostly by a generational shift,” explains Florine Eppe Beauloye, CEO of mOOnshot digital a marketing agency for premium and luxury brands. “While older shoppers have traditionally been the growth engine of luxury sales, affluent buyers born after 1980 – the Millennials and Generation Z consumers – are now making up over 30 percent of all luxury spending. More importantly, Millennials and Generation Z consumers generated 85 percent of the global luxury growth in 2017.”
Luxury brands pivot their strategy to sell online
The Richemont group announced last month plans to purchase Yoox Net-A-Porter (YNAP) in 2018. YNAP is the largest digital pure-play luxury retailer. If the purchase goes through, Richemont would significantly strengthen its footing on online luxury retail.
After the launch of LVMH’s own multi-brand online retail last year, the competition to dominate high-end sales online is certainly heating up.
Through our series on the Future of Online Retail, Luxe Digital is providing in-depth analysis of the two main retail models available for luxury brands: in-house and fully-owned platforms versus selected third-party e-Commerce.
Retail Tech: How luxury brands tap into AI, AR, and Voice command
Beyond the retail strategy, technological innovations are also opening the door to new opportunities for luxury brands. Three major retail technology trends are particularly important for luxury leaders: augmented reality (AR), artificial intelligence (AI), and voice-controlled. Learning to master them will become increasingly critical for brands to gain market shares.
