Maginus, provider of omnichannel retail solutions, has released its second annual report, 'The Changing Face of Luxury Retail in an Online World', revealing that the sector is increasingly turning to digital commerce as it looks to engage with a new generation of luxury consumers online.
In producing the report, Maginus examined the eCommerce sites of 100 luxury retail brands including Net-a-Porter, Burberry, Selfridges, Rolex, Jimmy Choo and Cartier to see if they delivered some of the key functionality of a successful eCommerce offering. Key criteria included promotions and discounts on the homepage, content driven commerce, click and collect, gift wrapping, Live Chat, personal shopping and 24/7 customer call-centre. From this Maginus outlined examples of luxury brands that are managing to replicate a 'luxurious' customer experience online.
The report found that:
- 68% now offer discounts and promotions on the homepage – up by 33% from last year.
- 69% now deliver content driven commerce - up 10% on 2015
- 42% of luxury retailers have a click and collect offering – down slightly by 3% from last year
- 62% now offer luxury gift wrapping on the site – a 15% increase from 2015
- 74% now have a customer contact centre – up 49% from 2015.
- 25% are now also creating personalised digital experiences using 'Live Chat'
Commenting on the findings Maginus' Marketing Director, Mark Thornton said: "The rise in the number of luxury retailers offering discounts and promotions on the homepage was particularly interesting as it would seem to indicate that the sector is shifting its focus away from using 'high cost' as a symbol of exclusivity and investing time and resource in in replicating a luxurious look, feel and customer experience online instead.
"Given analysts estimate that luxury retailers successfully moving online could generate an additional £43billion in transactions between now and 2020 this is an encouraging sign that the sector is starting to take the opportunities that a successful omnichannel offering can bring," added Thornton.
Historically, Luxury retailers have been hesitant to take the leap online fearing that it will conflict with the traditional luxury experience – lacking intimacy, the 'personal touch' and exclusivity. However, this year's report showed signs that the sector is starting to invest more heavily in omnichannel retail.
It found that a key driver behind this shift to be the emergence of the "High-Earners-Not-Yet-Rich" (HENRY) consumer demographic. This demographic is predominantly male, aged 25-34 with a household income of £100,000 to £250,000, desires exclusive goods and demonstrates many of the behaviours of other millennials including relying heavily on digital devices. McKinsey found that this new group of consumers was one of the key reasons that digital touchpoints now influence 44% of all luxury purchases.
A key difference between this new group of consumers and the traditional luxury shopper is that they often make sacrifices in overall household consumption to fund their luxury purchases and, as a result, are more careful about where and what they spend their money on. According to the Robin Report, while they spend half as much on luxury purchases when compared to the ultra-affluent, there are three times the number of HENRY households than ultra-wealthy, creating a sizeable new market.
Thornton explained: "This fresh generation of luxury consumers will bring about a new era for luxury retailers as they adapt to meet the expectations of a new clientele that demands a seamless digital experience both in-store and online. When taking this into consideration, it becomes clear why an increasing number of luxury retailers are not only starting to offer discounts on their homepage, but are seeing eCommerce as a key component of their business.
"The sector, which until relatively recently, was resistant to tackle digital transformation, will not only have to deliver an eCommerce offering but also optimise it for a range of additional touchpoints, including mobile and social," continued Thornton. "In short, it will have to excel at omnichannel retailing if it is to meet the fast, 'I want it now' demands of this emerging - and growing - new consumer group. "