Luxury retail is ready for a digital transformation

Tobias Buxhoidt
16 October, 23

The luxury retail industry is currently experiencing a digital revolution following COVID’s impact on shopping habits. Customers are now spending more on average per purchase for luxury goods online ($1,814) than in traditional stores ($1,187).

Luxury shoppers that are used to tailored, in-person interactions are expecting more innovative digital experiences from their favorite retailers. How does this translate to ecommerce? 53% of UK and 46% of American and French luxury shoppers now expect to interact with brands digitally through a robust virtual assistant.

Luxury retailers must engage their customers through checkout and beyond to reach a new generation of digital-first customers while maintaining the tailored, luxury shopping experience that shoppers have come to expect.

Heritage brands can’t rest on their laurels – they must modernize the shopping experience

Luxury retail traditionally thrives on creating personalized, bespoke experiences that delight customers. While this focus has persisted, COVID has necessitated a shift to digital channels to achieve this same effect. Luxury brands can no longer rely on their long histories to keep attracting customers – they must meet a new generation of customers with unique shopping experiences to ensure sustained growth.

Personalized recommendations are considered a hallmark of luxury shopping experiences. Teams of  personal shopper attendants now must be offered in tandem with digital options to ensure a true omnichannel experience. To extend the services of in-person boutiques, luxury retailers should engage services like automated virtual assistants that can offer a range of product recommendations. These new AI technologies allow retailers to offer their personalized services at record-breaking speeds, even accounting for tailored recommendations based on a customer’s past purchases.

Tailored recommendations can delight customers by providing a range of options to specific requests. For example, customers can replicate in-store experiences by requesting items for a black-tie event or seasonal pieces such as resort wear. Not only do virtual shopping assistants provide the customized recommendations customers are seeking, but investment in digital transformation allows a wider range of fulfilment options for customers. Luxury brands can engage a much wider digital inventory, expanding product offerings that may be limited in physical stores.

Offering customers these types of customized experiences pays dividends. Not only are average purchases higher when shopping digitally, but engaging customers with a larger variety tailored to personalized shopping history and habits can go a long way to establishing a loyal customer base.

Engaging customers post-purchase keeps the luxury experience going

While digital transformation has changed the nature of luxury retail forever, retailers must go the extra mile to ensure they are connecting with customers beyond checkout. The post-purchase experience is an opportunity for retailers to turn transactional moments into revenue generating opportunities by customizing communications. This engagement can look like special campaigns and promotions, personalized buying recommendations based on recent purchases, and inspiring social and influencer content.

Retailers can also use post-purchase to engage in proactive communications on order status and delivery tracking to keep customers informed. Remember, customers are spending a pretty penny on luxury purchases. Each stage of the post-purchase experience is an opportunity to ensure that customers have all the information they need to avoid order anxiety. Luxury brands like Philipp Plein are already taking advantage of this – reducing where is my order (WISMO) and where is my return (WISMR) inquiries by providing personalized order updates during each step of the fulfilment process.

Of course, not every purchase is going to be the perfect fit for customers. Especially with the shift to ecommerce, retailers have sought solutions to make the returns process as seamless as possible while attempting to avoid revenue loss. Luxury brands have an opportunity to uplevel their returns process with the same care they are applying to their shopping experience. Deploying digital returns management is another way to ensure customers are finding the perfect fit for luxury investment pieces. This can look like a returns portal that offers options to exchange for another product, or even courier services that can arrange for returned product pickup. In either case, meeting customers where they are at is critical to ensuring they feel welcomed back to the brand.

The new frontier of retail is going digital. Luxury retailers are now tasked with the difficult mission of modernizing their white-glove service beyond brick-and-mortar stores. This will require a holistic shift to both the digital shopping experience and customer engagement post-purchase. Engaging tech partners to meet this growing demand is necessary to establish a new generation of customers for luxury heritage brands.

COVID has truly transformed the retail industry – it is time for luxury brands to digitize in response and ensure a new generation of stylish, savvy shoppers.

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