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Future of Retail — Omnichannel
issue 03
Luxury retailers successfully moving online could generate an additional £43 billion in transactions between now and 2020.
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 replicating a luxurious look, feel and customer experience online instead. This is hardly surprising given that analysts estimate
that luxury retailers successfully moving online could generate an additional £43 billion in transactions between now and
2020.This is an encouraging sign that the sector is starting to take the opportunities that a successful omnichannel offering can bring. Historically, luxury retailers have been hesitant to
take the leap online fearing that it will confl ict with the traditional luxury experience – lacking intimacy, the ‘personal touch’ and exclusivity. However, this year’s report showed signs that the sector is starting to invest more heavily in omnichannel retail.
THE HENRY EFFECT 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 demonstrates 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 touch points infl uenced 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 sacrifi ces 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-affl uent, there are three times the number of HENRY households than ultra-wealthy creating a sizeable new market. This fresh generation of luxury consumers will bring
about a new era in luxury retail as retailers adapt to meet the expectations of a new clientele that demands a seamless digital experience both in-store and online. When taking this into consideration, it becomes clear 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. The sector, which until relatively recently was resistant
to digital transformation, will not only have to deliver an ecommerce offering but also optimise it for a range of additional platforms, including mobile and social. In short, it will have to excel at omnichannel retailing to deliver fast, exclusive fashion if it is to realise the true value of this emerging and growing new consumer group.
The report can be read in full here:
http://maginus.com/ news/downloads/luxury-retail-2016/
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