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The Omnichannel Imperative for Luxury Retailers

The Omnichannel Imperative for Luxury Retailers

Our Chief Customer Officer, Adrian Grbavac, shares insights into engaging the “new luxury customer,” with a digital, omnichannel strategy.

Despite changes in styles and silhouettes and other product design trends, at its core, the fashion apparel and luxury industry has remained pretty much the same. It’s an industry anchored by a straightforward and creative process: designing and then selling apparel and accessories that appeal to a consumer.

But what has drastically changed is how fashion brands connect to that consumer. And for many companies, engaging that customer has been a struggle of late thanks to the global pandemic.

The need for omnichannel in luxury retail

Deploying an omnichannel retailing approach amid a “digital convergence” had already been evolving how merchants, brands and consumers interface. But COVID-19 accelerated this transformation as online sales soared last spring, and continued on an upward trajectory well through the recent holiday shopping season, which the National Retail Federation said was the best in five years with a whopping 8.3 percent year-over-year growth rate.

The current demands of e-commerce along with a retail landscape reshaped by thousands of store closures, presents a host of problems for many brands — especially luxury brands who differentiate by offering a high level of service to their customers. 

This new retail landscape is being defined by a new customer journey that can begin anywhere; online, on social media, on an app via a mobile device, or in a physical store.

And there’s the rub: as a brand, how do you engage with customers across all of those touchpoints? How do you meet the demands of the “new luxury shopper?” and what tools and tactics do you need to consider making investments in?

From our perspective as a leading global cloud communications platform that enables businesses to build connected customer experiences across all stages of the customer journey, and to do it at scale, there are three approaches fashion brands and merchants might want to consider:

  • First, you have to unlock and get inside the mindset of the new luxury shopper.
  • Then you have to tune into each of the touchpoints of engagement in this revised omnichannel environment.
  • And lastly, you have to create an exclusive and personalized digital shopping experience. 

Who is the new luxury customer?

Well, they’re multigenerational and include Millennials and Generation Z as well as Generation X and older.

With Millennials, this cohort packs a punch when it comes to spending. According to Accenture, Millennials in the U.S. alone spend $600 billion annually, while Gen Z has the current spending power of over $75 billion. Boston Consulting Group estimates that by 2026, Millennials and Gen Z will collectively account for about 60% of the total sales in the global luxury market.

This shift in spending also means a change in how brands engage with consumers — especially Millennials and Gen Z who have different values, wants, and needs than other cohorts. Those values are also strongly influenced by culture, social justice, and environmental issues.

And communication is key.

In a Jan. 7 report in WWD, Pierre Dupreelle, managing director and partner at Boston Consulting Group, said brands that are “culturally credible foster loyalty by enabling and encouraging participation and communication. Successful brands no longer speak to, but rather through, their audience.”

The omnichannel imperative

That emphasis on the importance of communication spotlights the importance of digital engagement as more and more consumers are shopping online.

In a just-released report from The Harris Poll, 80% of consumers said they plan to shop online even as the global pandemic winds down. The report also found that 77% of those surveyed said they were satisfied with online shopping even though 47% of respondents said they miss the experience of shopping in a physical store.

With the luxury market, data from ForwardPMX showed a growing interest in online shopping for luxury brands. The company said in the U.S., the overall search volume for luxury brands increased 9% in 2020 as compared to 2019.

And Bain & Co. said in a recent report that the share of online purchases of luxury goods jumped from 12% in 2019 to 23% last year. Bain & Co. also said that online is set to become the leading channel for luxury purchases over the next few years, further driving what we here at Infobip call the “omnichannel imperative.”

Underpinning this imperative is meeting the luxury customer where they are, which could be on a website with an AI chatbot (or via conversational AI technology), through an email, or a text message. And the key to that engagement is knowing that luxury shoppers demand exclusive, attentive, and personalized experiences every step of the way.

It’s also important to know that prior to the pandemic, the consumer’s experience with a luxury brand occurred mostly in stores, on a sales floor and with a store associate as well as on catwalks, at trunk shows, and at exclusive live events — all bolstered and reinforced by media, including glossy fashion magazines.

So, the challenge facing luxury brands and merchants is to replicate the same kind of exclusive experience, but in an omnichannel context, and with an emphasis on digital.

As part of this approach, each stage or step along the new luxury customer journey must be considered from the moment of inspiration (when the consumer first decides to start shopping) and product discovery to brand engagement, sales conversion, fulfillment, and returns.

There are also post-purchase touchpoints to consider, and engagement that requires ongoing communication that stretches across the entire customer lifetime value timeline. The aim will be for brands to replicate an exclusive, luxury shopping experience in a digital setting. Not an easy task, but achievable with a strategic approach that builds a meaningful customer relationship across all channels.

Providing omnichannel experiences for your luxury customers

To maintain customer loyalty and engagement, communications need to be streamlined, AI-powered, and dynamic — and deployed with a clear strategy. Having a centralized customer support structure is also essential and improves the overall experience for customers. Our clients who use cloud-based communications software have found that organizing a customer’s conversation history in one place streamlines communications by equipping customer service agents with relevant information needed to address their concerns.

Another key tactic is to use automated messaging. By implementing AI-powered chatbots, customer support agents can reduce the amount of time spent on FAQs and tackle more complex issues. And if there’s an automated, single conversational track, retailers and brands can easily translate it to other channels. AI chatbots can also be used to create personalized messages by leveraging prior purchasing and other data.

Merchants and brands also need to consider the power of messaging apps, such as WhatsApp and Messenger from Facebook. These can augment the automation process by enabling chatbot technology to answer FAQs via their platforms. And meeting the customer where they are — on Facebook and WhatsApp – improves the overall experience for them while instilling trust and comfort.

Finally, having live chat available on your website can complement the entire communications experience between your brand and the consumer. Doing so addresses any immediate concerns customers may have while also upping the chances for “in the moment” conversions.

It’s all a matter of knowing the customer, and meeting them at every touchpoint while elevating the online experience through seamless, personalized communications.

Learn more ways to improve your retail customer experience