Luxury retail brands: Elevate your online experience and win loyal customers

By Luke Griffiths

Advances in technology have resulted in the retail industry evolving at a breakneck pace. However, while the digital transformation has made itself at home with high street brands, it’s taken a little longer to reach the area of luxury shopping.

Recent research by Klarna suggests that almost half of shoppers that regularly buy luxury items feel they cannot get the same luxury experience online as in-store – a mindset which is largely the result of the slow adoption of innovative online tech by luxury retailers. As a result, they are missing out on significant revenue.

According to market monitor Altagamma and management consulting firm Bain & Company, the global personal luxury goods market is expected to grow 6-8% in 2018. With such a huge opportunity for luxury companies to captivate their market and win loyal customers, brands will need to make some substantial changes if they want to stay relevant to shoppers that are increasingly online-first.

Here are some of the key areas luxury brands should focus on:

Tech trumps tradition

Online shopping has revolutionised the way we purchase items. Long gone are the days where books and electricals were the sole focus for online shoppers. Customers now seek everything from groceries to jewellery to cars through the click of a button, and this means that in the luxury sector, shoppers are increasingly valuing tech over tradition. Our figures show that 51% of customers want the luxury brands they shop with to be seen as up-to-date and innovative. That insight is incredibly powerful for luxury retailers who have historically placed their value on the heritage of their brand, and the ‘investment’ element of shopping with luxury brands.

But while the experience in high-end stores has always been top-tier, luxury retailers are not providing the level of service expected on digital channels.

Interior of a luxury car

56% of luxury shoppers want their preferred luxury brand to adapt quickly to changing customer demands, exaggerating the fact that luxury shoppers want a modern experience. Technology in retail has developed immensely since the first online shop. Shopping apps, click and collect, and ‘shop similar’ features have all contributed to lofty customer expectations and luxury customers now expect a seamless and convenient experience across all their devices.

Businesses now rely on digital methods to process their payments and returns, or organise logistics and delivery. Getting the best from technology can transform a brand’s offering and see them benefit from streamlined returns and slicker payments. Anything which contributes to a smoother, more personalised online retail experience will help boost conversions.

Luxury retailers have woken up to the fact that it’s no longer enough to ‘wait-and-see’ what developments their competitors choose to make. They need to act quickly to keep pace with their peers. This is exactly the mindset which is now crucial for luxury retailers to adopt. It’s time for them to create a better online experience, consider the digitally-enabled services customers might want and invest in technology accordingly.

Luxury attire

Retailers have to embrace and respond to mobile, as well as other technologies, in order to deeply engage their customers. In fact, innovation and being up-to-date are now more important to customers than heritage and tradition. In today’s landscape, it’s the retailers who are clever with their use of the latest tech, and who are putting their customers first, that will win the luxury retail battle.

Getting digital right in a luxury environment isn’t easy, and some brands might fear that their target market isn’t cut out for online. However, brands that fail to satisfy customer demand for an easy ecommerce experience lag behind their competitors. To make sure this doesn’t happen, innovations in technology shouldn’t be ignored, and while it’s true that luxury brands have long excelled at creating special experiences for customers in-store in order to differentiate themselves, they need to be nimble and ready to respond to today’s increasingly convenience-driven times.

Close-up of a watch

Finance gives brands the edge

Cost is always a major deciding factor as to whether shoppers follow through with a purchase, and this is particularly important in the luxury sector where prices are higher. Most high-end brands, however, are not traditionally sensitive to this and are not catering to the ‘occasional’ shopper.

Our research has shown that financing could give luxury brands the edge, with almost 40% of shoppers claiming they would choose one luxury retailer over another if one offered instant financing and the other didn’t. With competition such a major focus for retailers, ensuring that your brand has everything to keep shoppers happy is essential. On top of that, retailers could be missing out on bigger spending opportunities, with 42% of shoppers revealing they would be likely to spend more with a retailer who offered instant financing over one who didn’t.

It’s clear that cost is still vitally important to luxury shoppers, with 58% waiting for a sale before shopping with their preferred luxury brand and 39% looking for discount codes before purchasing an item. Such shopping habits are putting a considerable dent in the revenue of luxury merchants and could easily be avoided if brands offered a simple and efficient way to spread or postpone payments.

Stack of coins

Payment options which let shoppers try items on before they have to part with their hard-earned cash allow customers to be more flexible with their money and can vastly improve customer experience, while also driving sales. In fact, 51% of respondents say they would be more likely to buy more luxury items online if retailers gave them the option to pay for the item after it was delivered and they were able to try it on.

The benefits of flexible payments are undeniably vast. In order to adapt to increasing competition and customers who want to be in control, high-end retailers must adopt new strategies. A focus on increased flexible financing is one such strategy to make shopping for luxury items online much more accessible and enjoyable.

Ultimately, luxury shoppers want more forward-thinking behaviour from their preferred brands, and retailers must consider the digitally-enabled services customers might want. Focusing on flexible and convenient financing should be top of the list for luxury retailers wanting to stay relevant and thrive.

Woman making a purchase online

Consistency of experience is crucial

It is a common misconception by luxury brands that their customers prefer to shop in-store, making investment into online experience a wasted effort.

Times are changing fast though, and our research reveals that this is simply not the case anymore — with 90% of luxury customers claiming to use online platforms at some point during the shopping journey. Luxury shoppers are also aware of the discrepancy between luxury and high street brands when it comes to online, with 40% agreeing that high street brands provide better and more intuitive online shopping than luxury competitors.

This belief could be what has held luxury brands back. Embracing the opportunities of ecommerce could transform the way customers interact with them. Online shopping has touched almost every area of retail, and there’s no reason why luxury fashion shouldn’t be reaping the benefits too. Just like other commerce sectors, fashion cannot afford to ignore the most recent digital trends. This is even more important now as customers simply expect a good digital experience from every brand they engage with.

Standing out from the crowd

On top of this, cross-device connectivity has created an environment of choice for customers.  Mobile devices make it easier for people to access the internet at any time of the day, and most customers now switch back and forth between online and in-store shopping channels during the shopping journey. This mixing of channels, combined with changing customer buying habits, is impacting the demands placed on the luxury retail market. Retailers that don’t get with the times, and put their ecommerce strategies front and centre, risk having their customers turning to competitors.

The message is clear: it is essential for high-end retailers to remain agile enough to respond to changing trends, and to deliver on customer needs for speed and convenience without sacrificing quality of service or the products themselves. Heritage, quality, and glowing reputations may have got them this far, but in order to still be considered influential and relevant brands in today’s luxury retail world, they need to embrace the technology which their high street peers have successfully installed.

Luke Griffiths, General Manager, Klarna UK

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