Change is coming for all businesses, luxury retail included, and the herald of that change is digital transformation. Nowhere is this more apparent than with the retail experience.
Whereas brands had to rely primarily on the in-store experience to address the experience of luxury retail to the high-end consumer, they have multiple means to do so now.
From exclusive offers delivered to customers’ phones and emails, to e-commerce platforms, to 24/7 online chat customer service, to tailored marketing based on a user’s purchase or search history, luxury retailers now have the tools it takes to hit home with consumers, and it’s no longer limited to the in-store experience.
For luxury retailers that have built their business on tried and true sales methods, it might be jarring to ask them change now. However, the cost of not transforming your retail experience is grave, and few learned this truth as harshly as the now defunct video rental company Blockbuster.
Adapt your retail experience, or go bust
When Blockbuster shut down all of US its stores early in the decade, it was because they had refused to change. The retail experience was changing, with customers demanding more convenience in the way they rent and watch movies and series. The retail experience of going to the store, renting a DVD or Blu-ray (post the VHS era), driving back to return it, and sometimes even paying late fees for films was no longer going to cut it.
This wasn’t the 90s anymore. Customers today expect immediate payoff, with little to no downtime between payment and receipt of the product. Look at Amazon Prime, for example, where users pay a subscription to get virtually any product delivered to their home in as little time as possible.
So with the high internet speeds now available, video-on-demand (VOD) meant that Blockbuster would have to adapt its retail experience, or perish. It stuck to the tried and (not so) true, and succumbed to the latter, even after it had the opportunity to acquire the forward-thinking Netflix in the early 2000s. Netflix used to run a similar DVD rental service to Blockbuster, but realized that VOD streaming was the future, and released its own streaming platform in 2007 to moderate success. However, it did not scrap its DVD rental business immediately, expanding their overall Omni channel experience rather than simply transitioning from one service to another.
Today, Netflix has a market capitalization of $153.9 billion, while Blockbuster is defunct.
Luxury retailers: Be Netflix, not Blockbuster
At Arab Luxury World 2019, the region’s leading luxury event that brings together experts in the luxury sector to engage in meaningful talks and workshops, industry professionals discussed the luxury consumer’s experience in the digital world.
Today, as a luxury retailer, you have a growing set of options at your disposal. From heat maps in stores, to product customization options online that allow for a unique final product, to automated recommendations for matching accessories and clothes wear, you have a myriad of tools at your disposal to make sure you keep up with the times. Consumers, and especially those of luxury products, expect much more from their favorite brands. To stay afloat, you need to be able to sell to consumers everywhere, and at any time, and in a manner that suits them first.
The workshop also addressed the ways a business should handle consumers and employees of different levels of digital literacy.
The Middle East remains a primarily analogue venue for consumer interactions, but customers are changing, and so are their expectations. Retail strategy and employee experience will have to shift accordingly.
The fundamental thing is that as a luxury retailer, when the time for change and transformation comes, do not turn it away at the door the way Blockbuster did.