Monobrand stores are losing importance, but they remain the linchpin for the new omni-channel strategies deployed by the luxury goods industry, provided brands will be able acquire an in-depth knowledge of their consumer profiles, and are ready to invest massively in digital tools.
In 2016, the total number of luxury goods and services consumers worldwide reached 415 million, and they spent €860 billion. The tip of the pyramid is made up of 17 million individuals, nearly 4% of all luxury goods consumers. They spend between €36,000 and €50,000 per year in luxury items, and accounted for 29% of the world’s overall luxury goods purchases.
According to the BCG’s study, in 2023 their number will rise to 490 million, and they will spend €1.185 trillion. The market is expected to keep growing, though at a slower rate than before. Yet, if brands want to keep up with the pace, they will have to redouble their efforts and reinvent themselves.
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In the last few years, luxury goods stores have lost some of their sparkle. One reason is that brands have increasingly adopted a ubiquitous, standardised format providing the same shopping experience everywhere.
To win back their clientèle, brands will greatly benefit from differentiating their store format based on the customer segment they are targeting. A case in point is represented by Tiffany at Harrods. The jeweller’s sales in the London department store have greatly increased after the creation of two clearly distinguished shop-in-shops within it, one focusing on the top-end range and the other on more accessible products.
At the same time, the web has gained much ground, both in terms of sales and influence. Also, e-tailing allows labels to cut costs significantly, especially from the logistics point of view, as there are no rents to pay and there is less staff to hire. Another advantage is that customers who are well-informed thanks to the internet waste less time in shops, becoming simply a place where advice can be offered and where customers go to see and feel products, and personalise them.
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“There are a few outstanding cases, and some major groups whose performance is improving, but also many brands that are struggling to respond to the demand for impeccable customer service both online and in-store, and for a real integration between the two,” said Nicola Pianon of BCG, who also underlined the “crazy” influence exercised by social media.
(Source: Fashion Network)