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High end retail Q&A: Data and analytics in understanding consumer behavior in the luxury sector

Data and analytics in Luxury retail, how to use them and to what extent they can boost sales

Some brands are allowing customers to construct their own personalized products by color, style, and models For Middle East brick and mortar retailers, attracting Millennials is about aligning omni-channel experiences across the end-to-end customer journey While all types of companies want in-depth data on their customers, the differentiator is how luxury brands use their customer data to launch new targeted initiatives

It's not just the luxury retail sector that is trying to manipulate data and analytics to better understand and reach customers. But high-end retail has its own specificities and we addressed those with Dr. Hichem Maya, GM, Consumer Industries at SAP, in the below Q&A.

1. How does data science/analysis with the assistance of AI and ML help better understand consumer behaviour in the Luxury sector?

Middle East luxury brands are rapidly adjusting to a growing Millennial market of digital natives — shifting from a limited online presence to one that embraces an omnichannel e-commerce presence. This can be a sea change for some luxury brands, which are used to being offline for maintaining their brand exclusivity. Now, by segmenting users with digital tools, luxury brands can give certain customers exclusive event invites and early access to products.

Now, many Middle East luxury brands are using Big Data analytics, and increasingly artificial intelligence and machine learning, to analyze customer purchasing histories, to personalize shopping experiences for example with limited edition runs of products. Some brands are allowing customers to construct their own personalized products by colour, style, and models, which can become increasingly easy to manufacture with the advent of 3D printing.

Read more: Will marketers rely on data or creativity in advertising 3.0?

2. Since luxury is about the experience, how can brick and mortar retailers use consumer data and behavioural insights to attract Millennials back to their physical shops?  

For Middle East brick and mortar retailers, attracting Millennials is about aligning omnichannel experiences across the end-to-end customer journey. Millennials tend not to have a straightforward customer journey. They may try something in-store, comparison shop online, then order through a mobile app on their smartphone.

Real-time analytics – using increasingly powerful tools such as artificial intelligence, machine learning, and chatbots – can help to enhance Millennial customer experiences. One of the best Middle East examples is Majid Al Futtaim’s Carrefour brand, which has one digital platform running on the SAP Hybris solution, which integrates over 100,000 products on its website, in-store kiosks and tablets, and mobile app. Majid Al Futtaim is re-inventing experiences for over 750,000 daily customers, simplifying its supply chain, and launching Scan&Go for seamless shopping.

SAP Customer Experience Labs are co-innovating on the latest retail solutions to transform customer experiences, including 3D images of online ordering, online marketing data, smart anti-theft security devices, and artificial intelligence-based customer experience data across commerce systems, call centres, social media, and email.

3. How does data on the luxury consumer differ or interpreted differently from data on traditional retail consumers, i.e. Is there a specific way to use AI, IoT or ML to interpret or manipulate analytics for the luxury consumer?

While all types of companies want in-depth data on their customers, the differentiator is how luxury brands use their customer data to launch new targeted initiatives in the Middle East. Two great global examples of luxury brands using analytics to transform customer experiences are automaker Mercedes Benz and the credit card American Express.

Mercedes Benz leveraged Qualtrics solutions to segment older and younger customers. To attract younger buyers, Mercedes Benz created a more affordable model, advertised on the Super Bowl, and created Generation Benz, an invite-only social media community for Generation Y customers for gaining additional social media data insights.

American Express wanted to differentiate and re-energize their product line and used Qualtrics solutions to segment customers by income, spending, travel frequency, shopping preferences, and lifestyle characteristics. American Express segmented the deeply-loyal and high-spending customers and created a new card for them to drive profit and new types of customer experiences.