Saks Fifth Avenue’s use of NuOrder’s cloud-based wholesale buying platform will allow for better collaboration with its vendors, drive inventory efficiency and ensure merchandise effectiveness across all touch points. Image credit: Saks Fifth Avenue, NuOrder
Digital authentication and traceability are becoming more important as ecommerce and resale gain popularity as retail channels for luxury and fashion. Image courtesy of Arianee
David Friedman. Photo: Michael Falco
Several years ago, at a luxury conference in Monaco, Richemont chairman Johann Rupert made headlines when he announced that his biggest fear was around robots.
The audience, which was filled with executives from the top luxury brands in the world, was somewhat thrown off guard as they were expecting a typical discussion around the future of luxury fashion and watches.
At the heart of Mr. Rupert’s apocalyptic keynote was the notion that with the rise of robots, there would be a fundamental shift and with it, the gradual displacement and deterioration of the middle class.
Middle class and how the optics and engagement strategies of luxury have shifted
In a world where the middle class does not exist, the polarization of wealth becomes more acute. It was that acute polarization that frightened Mr. Rupert because against that backdrop, he lamented that wealthy people would be deterred from buying Cartier watches anymore.
There is also the aspirational aspect of luxury that subconsciously buttresses the purchase as unique.
Several years ago, I recall a discussion with executives at Rolex about one of its advertisements for a watch priced around $400,000 to $500,000. After I questioned the value in such an advertisement in actually generating sales, the manager in Hong Kong remarked, “Its not to sell more watches, it’s so that everyone else knows how much it costs.”
It was about the extreme optics.
While at the time, his prophetic vision seemed a bit outlandish, I have come to appreciate his foresight.
For example, imagine a luxury buyer whose business and wealth comes primarily from trucking or logistics. Most certainly over the next five years with the rise of autonomous driving, a majority of those employees will most likely be displaced.
Under that scenario, the owner of the business is going to assume a hyper-sensitivity around the displaying and showing of wealth. Moving forward, those optics will be implanted as a key part of the luxury decision-making process.
Fast forward, and while Mr. Rupert’s apocalyptic vision has yet to unfold, we do a similar potential pattern of the economic implications facing much of the middle class.
There have been record unemployment figures. Yet, we do not have the same potential optics around the purchase, for the moment.
In some ways, COVID-19 has provided a layer of anonymity combined with the time and focus for a luxury buyer who might have been on the fence or evaluating a purchase.
Being that many people are sheltering-at-home, those luxury items that play well in terms of ecommerce are poised and experiencing growth in revenue.
COVID-19 has sowed the seeds for a potential fundamental decoupling of high-end luxury purchases from the assumed luxury experience. COVID-19 has challenged this fundamental assumption that high-end luxury purchases have to be integrated with an experiential lifestyle.
The impact has specifically predicted to be bifurcated between “soft” luxury and “hard” luxury, but the reality has been much more nuanced.
Luxury Daily ran a recent article about the growth of Range Rover sales driven by the online car configuration tools where buyers can create their own “bespoke” version (see story).
However, this is always been what the consumer wanted anyway and what marketers pray for: the ability for consumers to merge their own personal narrative with the narrative of a product, which, in this case, is a car.
There are other super car companies that have been experiencing bursts of oversubscription with their most recent launches.
Whereas typically the buyers would need to “kick the tires” or have a “test run,” the sale cycle is being truncated and done mostly virtually.
However, it remains to be seen how many of those acquisitions are by first-time buyers versus existing owners and collectors.
A key sales implication of COVID-19 has been to fundamentally shift customer touch points and engagement further up the digital or virtual customer journey. This offers both opportunities and challenges to luxury brands seeking to define and chart a strategy during this time.
In similar fashion, as legal firms and family office firms, who were the last bastions of physical meetings, vowed that they would never go fully virtual have been adapting to virtual meetings and processes at lightning speed, high-end luxury items can leverage this unique time to connect with their key clients who typically are very challenging to engage.
Best practices, strategies and tactics during COVID-19
While it makes great economic and strategic sense to be using virtual technologies to connect with key clients, especially since often their schedules are challenging, only the brands that equip their sales professionals with how to do this will be able to capture the opportunity of this moment to build and potentially deepen authentic and genuine relationships with their key prospects and VIP clients.
The COVID-19 lockdown has meant that digital has more say in conversion to in-store and ecommerce sales. Image courtesy of River Island, Qubit