Luxury retail is being revised — and in some cases, reinvented — and those trends are worth attention as the 2019 holiday shopping season approaches.
One of the latest, ongoing trends is the rise of online luxury resale commerce. Indeed, in its recent U.S. initial public offering (IPO), eCommerce luxury reseller The RealReal Inc. has notched $300 million. The company has raised a total of $288 million in funding from venture capital and private equity backers, including Great Hill Partners, Greycroft, PWP Growth Equity, Sandbridge Capital, Industry Ventures and Canaan.
Not only that, but the luxury online consignment retailer opened a brick-and-mortar store on New York City’s famed Madison Avenue. Its new store offers a mix of women’s ready-to-wear items, along with jewelry, fine watches, home decor and art pieces.
That’s not to say brick-and-mortar is doing well in all areas of the luxury retail world. With a liquidity crunch brought on by a rise in rent at its flagship store in New York City, Barneys New York is reportedly preparing for a bankruptcy filing. Rent at the retailer’s Madison Avenue flagship increased to roughly $30 million in January from approximately $16 million. According to previous reports from the outlet, that nearly wiped out earnings prior to tax, interest, amortization and depreciation.
Barneys New York dates back to the 1920s at the time that Barney Pressman opened the doors to a clothing shop on Seventh Avenue and 17th Street. Fred Pressman, who was Barney’s son, took over the store and guided its move from a discount store to a luxury retailer in the 1970s. The retailer then made its mark on luxury fashion in New York and introducing designers such as Giorgio Armani while creating its foothold in menswear.
But even without traditional physical stores, luxury retail is finding new homes — and not just online. Among the more interesting storylines of this era of digital commerce and payments is the maturation of vending machines — sorry, “unattended retail.” And now that story involves Champagne (along with similar beverages that are Champagne-like but not technically Champagne).
Look to the Ritz-Carlton in Philadelphia for the freshest evidence of that. According to a report, “a Moët Mini-matic popped up at the luxury hotel in Center City. Moët and Chandon’s vending machines are filled with chilled mini bottles of Brut Impérial and Rosé Impérial that each come with a tiny gold sipper, making it easier to down your bubbly straight from the bottle.” The payment process does seem to have a bit of friction, though — but that’s perhaps to be expected when it comes to sales of an age-restricted product such as classy alcohol. “To get Champagne at the press of a button, go to the lobby bar and purchase a $25 gold token,” the report stated. You’ll insert that into the vending machine and a robotic arm will gently lower your chosen bottle to the window without shaking it.”
Luxury retail is also getting more social, especially in China. Luxury brands are increasingly using chat app WeChat in China to reach customers and sell big-ticket items. Brands like Bulgari, Cartier and Louis Vuitton are on the platform and connecting with millions of customers. Part of the appeal is that customers can create relationships with brands. They can talk to assistants in shops or join loyalty programs, and the social aspect creates return customers.
While WeChat is China’s largest messaging app, it has morphed in the past few years to a platform that provides a whole slew of services, including money transfers, errand running, hiring services and of course, shopping.
Pablo Mauron, a managing director for Digital Luxury Group, said the luxury market has noticed WeChat’s potential.
“I think WeChat is finally becoming what it’s supposed to be for luxury brands, which is not just a social media app,” Mauron said. “One [function] could be for customers to buy the product. Another could be for brands to build a loyalty program. Customers can pre-order a product or set up an appointment with the [offline] store.”
There will always be a big luxury retail market — but as these developments show, luxury commerce is always changing.