By John Squire A cobalt blue sweater: Made of the finest spun cashmere and worth every penny paid for the suppleness, the style and the luxury of wearing it. But then the unthinkable happens. The hem begins to unravel, and little by little the quality and beauty diminishes to nothing more than a pile of torn fabric on the floor. The foundation of a great luxury retail organization is the quality of the components used to create its products. That soft cashmere is the starting point for creating something people are eager to own. But if that material or the skill of workmanship is compromised, it affects not only the piece, but also the quality and the ability to sell. Likewise, many omnichannel luxury retail organizations are trying to build success upon a foundation that has tears in it. Their customer experience is unraveling, with profits slipping away, because they are out of sync across marketing, merchandising, operations and finance. There are weekly meetings held in attempt to understand the business, with hundreds of spreadsheets and reports. Luxury brands are trying desperately to sew together an accurate understanding of their business health and determine where rips such as these are occurring: Brand Luxury brands have long been beholden to department stores or boutiques to communicate their brand aesthetic to their customer. However, online, the brand itself is in control of the messaging, the purchase path and the brand story from first click to purchase. Brands have the opportunity to showcase the entire collection online, and even use brand-elevating content such as behind-the-scenes video and high-fashion imagery. Yet many luxury brands are not taking full advantage of this owned medium. Furthermore, new distribution options for luxury retailers should be carefully weighed and decided upon. A high-end footwear brand found that when it began selling on Zappos, it not only demoted the brand sentiment from “luxury” to “upscale” with customers, it also limited the interest of the most-sought-after department stores from carrying their collections. Yet two years later, it has continued selling with Zappos. Due to the revenue generated and end-of-season product sold, it outweighs any brand image considerations for senior management. Look closely as well at your VIP customers, as they become your ambassadors to their social networks and are an extension of the brand. You must have synchronicity and provide the best luxury experience throughout the entire purchase journey. When a luxury retailer we work with viewed their order data and CRM data through the same lens, it came to realize that $75,000 worth of orders over a weekend from their most frequent purchasers – their VIP customers – were sitting in “held order” status and were going to miss the delivery date promised to the customer. By uncovering this issue early, it was able to proactively contact the customers to apologize for the mistake and refund delivery charges. By having this connected data, it was also able to track back the cause of the issue before it affected additional VIPs. Organizational There has been a great deal of industry discussion around the siloed organization, and the lack of connection between departments to drive overall success. This has never held more accurate than with luxury retailers. In the majority of organizations, the scenario plays out as follows: The Monday morning meeting rolls around. The design, merchandising, purchasing and marketing teams are in the same place for this one hour a week. They each come armed with their own priorities, their own KPIs and their own disparate data. They address their own issues and goal one at a time, without any insight or consideration of their action’s effect on the other teams. While this organization disconnect is prevalent for pure-play online retailers, it is an even greater hurdle for omnichannel retailers. A recent study by OrderDynamics and Forrester Research discovered that 39 percent of retailers have created a dedicated executive or C-level role to lead and coordinate omnichannel initiatives. Yet only nine percent of retailers have realigned their online and offline departments to become an omnichannel organization with a single P&L. Solving for this issue not only necessitates a shift in organizational mindset, it requires synched up data across all channels and all parts of the organization. Luxury retailers must have the data understanding and be empowered to act quickly when they discover cross-departmental challenges such as: - High returns on a product that was photographed incorrectly or has an inaccurate product description - Email or search marketing campaigns leading to low stock or out-of-stock products - Inventory sitting on the shelf that does not have exposure on the website - Promotion of the most popular products when less sought after products are overstocked There are hundreds of these areas of disconnect – each of them ripping the fabric of luxury retail – that can be solved to create a more healthy organization, as well as a more rewarding and enticing experience for the customer. BY FOCUSING on brand stewardship, carefully weighing and controlling distribution channels, gaining an accurate and holistic view of all of your data sources and how they affect one another, and creating a profit-focused organizational structure, luxury brands will protect and preserve that cobalt blue sweater long beyond next season. John Squire is president of eCommera North America, Redwood City, CA, and London. Reach him at john.squire@ecommera.com.