Global luxury retail: Millennials are the driving force
In a DigitalCommerce360 article, Qubit CMO Leah Anathan discusses how the shopping habits of millennial consumers are changing the strategy of luxury retailers.
Catering to a new generation of luxury buyers
Millennials will account for half of global luxury spending by 2025, predicts Boston Consulting Group. The challenge for luxury brands will be how to engage this generation that has grown up with digital technology, while still catering to older buyers of high-end goods.
There’s been plenty of talk about how millennials are killing the breakfast cereal market, casual dining, department stores, cable TV, etc. This has generated considerable backlash. And, while some of this is understandable, it also deserves some pushback, because millennials are actually “disruptors” in their own right.
This is also true when it comes to the luxury retail market. According to Boston Consulting Group (BCG), by 2025 the global luxury market will top $1.5 trillion and 50% of those luxury product buyers will belong to the Millennial Generation.
Millennials are a generation that has grown up with technology and they expect to quickly find products and services, with very little hassle or friction. The challenge for high-end brands is to accommodate all of their customers’ needs; appealing to millennials while at the same time making sure their ‘traditional’ VIPs are being catered to.
Re-creating the in-store shopping experience online is easier said than done, but there are many luxury retailers that are two-steps ahead of the game. Bain & Company’s new Global Personal Luxury Goods Market report confirms this, stating: “Digital will disrupt the entire luxury value chain and necessitate a holistic redesign of the technology ecosystem, with an emphasis on luxury experiences over products.”
Balancing online and offline retail
Striking the right balance between increasing traffic to physical stores and catering to a new generation of luxury shoppers is tricky, but not impossible. Brands that embrace this balance and nurture the digital experience will be better able to adapt their business models to the increasing number of younger shoppers that prefer to shop for their favorite luxury goods online. Data tells the story: by 2025, nearly one-fifth of personal luxury sales will take place online and the contribution of online luxury sales will triple, reaching $91 billion by 2025. (McKinsey, The Age of Digital Darwinism)
Rather than just creating a functional website that’s more of an online catalog than anything else, luxury companies must create a slick, on-brand digital experience that mirrors the in-store or runway experience. Some of the personalization methods that luxury brands are currently employing create a consistent experience between physical and digital stores by recognizing repeat customers when they return to their websites and tailoring the experience as if they just arrived in-store.
The full article was originally published on Digital Commerce 360. Click here to read it.