Today Maginus released its second annual report, ‘The Changing Face of Luxury Retail’, examining the omnichannel offerings of the UK’s top 100 luxury retailers and analysing trends across the sector.
In producing the report, we 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 for a ‘luxurious’ online experience included promotions and discounts on the homepage, content driven commerce, click and collect, gift wrapping, Live Chat and a 24/7 customer call-centre. From this we outlined examples of luxury brands that are managing to replicate a ‘luxurious’ customer experience online.
Historically, Luxury retailers have been hesitant to take the leap online fearing that it will conflict with the traditional luxury experience – lacking intimacy, personal touches and exclusivity. However, this year’s report showed signs that the sector is starting to invest more heavily in omnichannel retail.
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 ways to deliver a luxurious customer experience digitally. This is hardly surprising, given industry analyst BNP Paribas estimates that luxury retailers successfully moving online could generate an additional £43billion in transactions between now and 2020.
One of the key drivers behind the burgeoning value of online luxury retail, and the subsequent shift in attitudes from the retailers, is the emergence of the High-Earners-Not- Rich-Yet (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 demonstrate many of the behaviours of other millennials including relying heavily on digital devices. According to McKinsey this new group of consumers were one of the key reasons that digital touchpoints influenced 44% of all luxury purchases last year.
Tellingly, 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. However, 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. When taking this into consideration, it becomes clear to see 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.
This fresh generation of luxury consumers will bring about a new era in luxury retail, with a clientele that expects a seamless digital experience both in-store and online. 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. In short, it will have to excel at omnichannel retailing and deliver fast, exclusive fashion if it’s to realise the true value of this emerging and growing new consumer group.