Luxury brands prioritising omnichannel, says research report
By Retail4Growth Bureau | April 05, 2024
Research And Markets has come out with a new report, "Where Consumers Shop for Luxury Goods" which shows that Luxury retailers and brands are prioritising omnichannel strategies, delivering seamless online and offline experiences, and enhancing the online shopping journey through innovative techniques, such as personalisation and AI.
Research And Markets has come out with a new report, ‘"Where Consumers Shop for Luxury Goods" which throws up some interesting findings.
It says the pandemic, cost-of-living crisis and high inflation continue to have an impact on affluent consumers, their wealth, and their shopping habits on luxury goods. Offline retail maintains its importance alongside e-commerce, as luxury consumers demand seamless integration of online and offline channels, leading to store renovations. E-commerce is projected to outperform offline channels, and generative AI as well as re-sell and "third space" retail holds promise for the future of luxury goods.
Key Findings
Macroeconomic Factors Continue To Weigh Heavily On Industry Recovery
The global luxury goods industry continued on its road to recovery in 2023 with 4% year-on-year growth, driven by Asia Pacific and the US. However, challenges persist as it moves into 2024 thanks to slower global growth and high inflation, teamed with ongoing energy pressures, rising cost of capital, tight labour market, geopolitical risks and a reset of globalisation.
Blurring The Boundaries: Seamlessly Fusing Online And Offline Shopping
While luxury consumers still expect the convenience of e-commerce, they also seek a high level of customer service and distinctive experiences that only brick-and-mortar stores are able to deliver. In this context, building an omnichannel presence has become paramount for luxury retailers, including digitally native direct-to-consumer (DTC) brands and retailers.
The Emergence Of Interactive And Tech-Driven Enhanced In-Store Experiences
Offline channels experienced a revival as luxury consumers embraced in-store shopping again. To cater to consumers' emerging expectations for in-store shopping, companies are prioritising store renovations and the incorporation of technology.
Leveraging Technology For Enhance Customer Experience, Streamlined Processes And Completeness
In 2023, e-commerce accounted for 18% of sales, just slightly up from the 17% in 2022 but significantly higher than the 10% recorded in 2018. Luxury retailers and brands are prioritising omnichannel strategies, delivering seamless online and offline experiences, and enhancing the online shopping journey through innovative techniques, such as personalisation and AI.
E-Commerce's Dominance And The Rise Of Generative AI, Re-Sell And The Future Of Third Space Retail
Challenges persist for the industry's growth in the five years to 2028, including high inflation, and the war in Ukraine. E-commerce is projected to outperform offline channels, diminishing the market share of physical stores. Generative AI holds promise for product innovation, as well as the re-sell model and "third space" retail as luxury looks towards future innovations.
Store-based channels- some takeouts
• Luxury department stores retain their leading status despite major challenges in key markets
• Luxury brands benefit from their own monobranded stores and the D2C channel
• Leisure and personal goods specialists continued to thrive
• Embracing the unique offerings that only physical shopping can provide
• Luxury consumers will continue to crave the physical aspect of in-store shopping
• Shoppers yearn for the customer-centric and tactile experience of brick-and-mortar stores
• French luxury department store Galeries Lafayette expands into next frontier markets
Non-store channels
• Growth in e-commerce stabilises from pandemic highs with steady expansion in all sectors
• Continued acceleration of luxury e-commerce albeit at a slower pace of growth
• Increasing digitalisation reshapes luxury shopping habits across all regions at varying speeds
• Generative AI to shape online experiences ushering in next "Uber moment" in luxury retail
• The increasing prevalence of mobile internet usage has significantly impacted luxury sales
• Consumers increasingly favour businesses that offer a hassle-free experience
• Leveraging social media and s-commerce to cultivate Gen Z engagement in fashion
• More luxury consumers flock to TikTok and Douyin with China leading the pack
• Fresh wave of livestreaming and social commerce further drives luxury digital sales
• Luxury brands aim to capitalise on TikTok's popularity with viral video content of their own
Non-retail channels
• Inflationary pressures encourage consumer exploration in non-retail channel
• The "third space" and hyperphysical stores as the next luxury retail channel?
Future developments
• Outlook for luxury retail development faces continued pressure due to economic uncertainty
• Selling to the 1% of global VICs will become ever more challenging amid a market slowdown
• The TikTok economy looks set to become a significant part of the luxury retailers' puzzle
• Bridging e-commerce and offline retail to complement each other's strengths in luxury goods
• Luxury consumers will continue to want the best of both worlds
• Omnichannel strategy paves the way for the future of retail and luxury transformation
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