If you’re a retailer or a brand, it seems as though eCommerce and the rise of smartphones and mobile shopping have made your customers more cost-savvy and price-aware than ever before.
Very few consumers want to pay full price for an item any longer, and there are plenty of off-price and off-brand sellers and third-party retailers lining up to get them those deals, both online and at brick-and-mortar stores.
So, if you’re a luxury brand or luxury goods retailer, what can you do to compete with bargain-hunting consumers who can carry around the entire world wide web in their pockets and always be aware of the latest sale, deal or bargain?
Well, the rise of eCommerce and mobile shopping doesn’t have to mean doom and gloom for luxury brands or retailers. Instead, it can be a windfall opportunity if those luxury brands or retailers are just as savvy as consumers and connect with shoppers through just the right channels in just the right ways.
“The past 10 years have comprised the single most powerful and innovative time in the history of technology. Every industry is being disrupted by technology. Everyone and everything is being connected by the mobile and social revolution, which has placed hundreds of thousands of applications at consumers’ fingertips. This has created a sea of data unlike anything that has ever existed,” according to a study by WBR Digital, an online brand and engagement strategist, entitled “Luxury Retail’s Digital Moment." “In the last two years alone, 90 percent of the world’s data has been created. Cloud, social and mobile technologies have transformed business models and consumer behavior. Customers are interacting with brands more frequently and more profoundly every day.”
Quite simply, consumers are being deluged with more digital information than ever before — everything from Facebook posts about what your neighbors had for breakfast to Instagram pics of your uncle’s vacation to Snaps from your friends of that cool party across town that you’re currently missing out on.
The companies that are going to succeed and be successful in this space — and it doesn’t matter if they’re selling a can of Coca-Cola or an $80,000 Tesla — are the companies that “embrace” social, mobile and omnichannels and use them as tools to better connect with potential customers and “foster brand loyalty,” according to WBR Digital.
“While creating digital brand awareness and adapting to consumers’ preferences continues to be at the forefront of marketing campaigns for luxury brands, retailers have begun to realize the linchpin of the brand experience is delivery consistency across the omnichannel journey,” WBR Digital’s study found. “Creating a great customer experience is the driving force in fostering customer loyalty.”
In other words, if people are paying top dollar for a "luxury" item, they also expect a "luxury" customer service experience.
The study found that luxury eCommerce was “growing faster than the retail industry at large,” with online sales of luxury products doubling from the beginning of 2014 to the beginning of 2015, according to WBR Digital’s data. During that time, about two-thirds of luxury brand marketers saw conversion rates increase as well, due to an increased investment in digital advertising and the advent of highly targeted or personalized ad campaigns.
Nor should price be viewed as a hindrance for luxury brands' ability to “compete” in any market against off-brand products or fast-fashion competitors, according to a study from Deloitte, entitled “The Luxury Opportunity,” that looked at the purchasing habits of the average U.K. luxury consumer. Deloitte’s study found that “impulse is still the dominant driver of luxury purchasing decisions.”
“In the ultra-competitive world of luxury goods, deeper insight on your consumers is an essential component to creating value and protecting brand heritage,” the Deloitte report found. “[Consumers] are evolving in terms of their purchasing behaviors, the drivers of their decisions and the way in which they want to be engaged with — most notably in digital channels.”
Deloitte found that the biggest “decision driver” for a luxury purchase among U.K. consumers was impulse, which came in at 36 percent for shoppers over 35 years old and 27 percent for millennial shoppers ages 18 to 34.
But an interesting thing happened with millennials when the luxury item in question suddenly became “trendy.” Deloitte found that 24 percent of millennials were willing to buy a luxury item because it was trendy, compared to only 7 percent of consumers over 35.
And how did most of these millennials hear about that trendy new luxury product? Through the social media channels of their friends or celebrities or brands that they followed, of course.
Which is why Deloitte found it was more vital for luxury brands than ever before to make sure that their brand and social media strategies were aligned.
“Knowing what drives your customers’ purchasing decisions can be a key source of competitive advantage for luxury brands,” according to the study. “Leveraging the available, and often untapped, pool of data on your customers’ behaviors, habits and decisions drivers can ensure that you know what your customers want, when they want it and how they want to experience it.”
A luxury brand or product doesn’t have to be a handicap in the digital marketplace. In fact, it can be an asset, as luxury brands tend to have greater name recognition, more cache and a higher aspirational value.
Brands and retailers just need to understand that the way consumers interact with and shop for luxury items is changing thanks to the ever-changing digital landscape of retail.