Photo of VivaLuxury courtesy of Bergdorf Goodman
When it comes to omnichannel retailing, department stores perform better on average than their monobrand peers, according to a new report by ContactLab and Exane BNP Paribas.
Multibrand retailers as a whole are reaching 50 percent of their full omnichannel potential, higher than the collective mega brands such as Louis Vuitton and Gucci and beating out premium, jewelry and high-end labels. Consumers who shop both in-store and online spend 50 percent more in a year than those who buy in bricks-and-mortar boutiques alone, making it financially smart to create an omnichannel shopping experience for clients.
"I think that the picture is changing versus two years ago," said Marco Pozzi, senior advisor of ContactLab, Milan, Italy. "Two years ago, there was no dialogue between online and offline. There was a sort of separation between the two channels from the organizational point of view. Top management was not pushing for this integration because they didn’t realize the value of cross-channel clients because it wasn’t on their top management agenda.
"What we see as a major change in the last couple of years is that now most of the brands, almost the totality of the 30 brands we are monitoring, are convinced about the integration of online and offline, but they have difficulties in doing it," he said. "Before it was a barrier of willingness. Now they want to do it but they are late."
Digital and Physical Integration: Luxury Retail’s Holy Grail is based on 61 store visits in New York to 30 brands and four department stores. ContactLab and Exane BNP Paribas looked at 21 different parameters, which covered the service digital clients receive in-store, technology used in physical stores and how stores leverage technology in-store to make the most of store visits.
Bridging the gap
Today, digital purchases only represent approximately 7 percent of total sales, but online channels are anticipated to account for 40 percent of the luxury market growth between 2013 and 2020.
"Digital is not only ecommerce," Mr. Pozzi said. "Ecommerce is 7 percent of sales, but from our point of view, the impact of digital on in-store sales is 18 percent of sales, so more than double ecommerce sales. So put together it’s 25 percent, and it’s growing every year."
Luxury brands are taking note of the need for digital, but many of them still lag at connecting their online and offline channels. On average, the panel of brands studied is only reaching 30 percent of its omnichannel potential.
One key area where brands are missing out on a selling opportunity is in offering online purchasing capabilities in-store. Luxury boutiques, particularly smaller locations, may not stock a wide selection of sizes, making online fulfillment a means to satisfy consumer desires with a virtual expanded inventory.
Allowing for online sales in-store can also raise the productivity per square foot of retail space.
Burberry store in SoHo
Another cause of divide between channels is a lack of online training for sales associates. During their visits, the researchers asked sales associates for assistance about online services, such as the return policy for ecommerce orders in-store, and the responses given by store staff at seven brand boutiques differed from the information provided on the brand Web site.
Sales associates should also be using digital clienteling to reach their loyal shoppers, as those who are contactable through digital channels spend more in-store.
According to the research, the best brands overall at seamless connecting online and offline were Ralph Lauren, Bergdorf Goodman and Burberry.
Ralph Lauren differentiated itself in being the only studied brand to offer a smart fitting room mirror. This RFID-enabled system installed at its Polo flagship on Fifth Avenue can detect what merchandise consumers take with them into the fitting room.
During their session, consumers can interact with the touchscreen, requesting products in another size or sharing a photo of themselves in an outfit with friends and family outside of the store.
New Interactive Fitting Rooms in the Polo NYC FlagshipFinding the perfect outfit in one touch - new interactive fitting rooms in the Polo NYC flagship Posted by Ralph Lauren on Tuesday, December 29, 2015