Drapers’ latest roundtable debated how luxury retailers are negotiating the increasingly complex consumer journey from online to in-store.
Tech savvy, time poor but cash rich, today’s luxury consumer wants the best and they want it now. Online they’re demanding a personalised offer, whereas in-store they’re looking for a lifestyle experience that mixes fashion with food, art and technology. Like never before retailers must anticipate changing consumer demand or miss out in a competitive global market where brand loyalty is difficult to attain.
Organised in association with design consultancy Gpstudio, Drapers invited retailers from the likes of Burberry, Net-a-Porter and Rupert Sanderson to a roundtable event at London’s Sketch last month to debate what luxury looks like in 2015 and what the focus should be for the sector in 2016.
The discussion opened with an analysis of the current market, which Charlotte Keesing, director of public affairs and international at luxury brand alliance Walpole, says contributes £32.3bn to the UK economy: “Luxury is really performing strongly. The industry represents 2.2% of UK GDP and employs 113,000 people. By 2019 the luxury market is expected to grow to £51.1bn.”
By 2019 the luxury market is expected to grow to £51.1bn
Charlotte Keesing, Walpole
The strength of competition in the online sector is a challenge for luxury retailers, argued director of premium scarf brand Lily & Lionel, Angela Stone: “The level of competition means it’s harder now than it was a few years ago. There needs to be a special reason for customers to go to your brand and so we need to keep to thinking of new ideas.”
Competition is also being driven by wholesale partners, noted The Cambridge Satchel Company’s head of special projects Max Karie. “Wholesale is always tricky, especially online where your wholesale partners are potentially bidding against you for business. So, you’ve got to ask yourselves why you’re wholesaling. Is it marketing, revenue or to get your brand out there?”
Despite the challenges of competition in the online market, financial controller at luxury footwear brand Rupert Sanderson Chris Fentiman believes selling luxury online can work: “When you’re spending £1,000 on a pair of shoes, you think you’d want to go in store and try them on. But we don’t get high returns [returns rate in season of 5% and 15% in Sale. 42% of sales are online]. As a small company, if there’s a tweak or something to explain on the fit, we can email and advise the customer to go a size up.”
This sentiment was echoed by Lily & Lionel digital content co-ordinator Sabina Siemicka: “We’re on a first-name basis with our clients and, as soon as the new season comes in, we contact them on phone or by email.”
Net-a-Porter head of merchandising Lea Cranfield believes the best way to create a personalised service for a loyal customer base online is to be as personal as possible – the etailer sends staff to its top customer’s houses. “It’s about having someone at the end of the phone or travelling to the home of our best clients to make sure every detail is covered.
”At first they might have thought they can’t shop online because I can’t touch and feel the product, once they’ve done it once or twice it becomes second nature. Online is especially good for the cash-rich, time-poor luxury consumer.”
The consumer journey is also changing, noted Karen Millen chief creative officer Gemma Metheringham: “The customer journey is much more circular. You may have tried on a garment in one place, looked at it online, showed your friends and then bought it elsewhere.
”As a consumer you want something now and where you get it from has become less relevant, so as a brand we need to focus on being that destination.”
As a consumer you want something now and where you get it from has become less relevant
Gemma Metheringham, Karen Millen
In light of this, attributing a sale to a particular part of the consumer journey is becoming ever-more complex, agreed Partners in Retail consultant Teresa White: “Where we actually buy is not necessarily where we made that decision. The luxury shopper might have seen the garment in a shop, but bought it online, so you can’t separate online and store sales.”
One way to capture customer spend in the luxury space is to offer limited-edition collaborations with other high-profile brands. But while the marketing rewards are high, developing limited edition collections is time consuming, explained Karie: “Take our collaboration with Vivienne Westwood for autumn 15. It looks like we just put a print on the satchel, but it’s not that simple.
”There are distribution issues, legal, marketing etc. In the wider industry collaborations have been quite played out and lost some of their special kudos. So, if you’re going to do a special, you have to really think about why you’re doing it.”
Partner at Gpstudio Chris Poulton agreed that it can feel like collaborations have been done to death, advising retailers to make the product or experience personalised to the individual.
For Metheringham a successful special collection lies in the strength of the story. “Our limited edition Atelier collections are inspired by our amazing atelier in Shoreditch, where we have about 40 people from pattern makers to machinists genuinely making clothes. Focused on denim, leather and ‘Made in London’, each capsule Atelier collection is limited to between 50 and 250 pieces. Demand for each collection is huge because people want something not everybody can have.”
At Burberry, product development assistant Grace Bovis said the focus is on how to communicate the quality of a product to the consumer: “Take our down-filled outerwear. We got fixated on the type of filling to use, but then we realised that the fabric wasn’t allowing the customers to feel the down, so how would they understand the inflation in price?”
Even if the product message can be effectively communicated, the UK visa system can provide a barrier to getting the customers to Britain in the first place, explained Keesing. “With the Schengen visa I can go to 26 countries with one visa, but then I have to apply for a second visa to come to the UK. Last year 390,000 Chinese visitors came to the UK, versus the 1.4 million who visited the 26 Schengen visa countries.
“As part of the UK China Visa Alliance, Walpole is working with the government to simplify the process – for example, sharing application forms with the Schengen visas. We’re also working on a 10-year visa offering multiple entry, which the US implemented in December 2014. During the first two months the US saw a 68% rise in Chinese visitors compared with the same period last year.”
We are an affordable luxury brand and we would not be in that category if we made in the UK
Sabina Siemicka, Lily & Lionel
Karie acknowledged that being able to promote a ‘Made in the UK’ product is a big attraction to Chinese and American consumers. “UK production is a differentiator in luxury, but it’s not about being virtuous, it’s a selling point.”
Metheringham agreed that the UK provenance story translated better in international markets, citing the success of an exclusive ‘Made in London’ coat developed for US department store Bloomingdale’s for autumn 14.
Burberry gains great traction from its ‘Made in the UK’ status, confirmed Bovis. “We’re thinking of running a new duffle programme with a ‘Made in England’ label, as we’re fortunate to have a factory in Barnsley where the employees have been working for the company for 50 years. Their product knowledge is second to none.”
UK manufacturing does not, however, work for Lily & Lionel, says Siemicka: “We would love to make in the UK but the product isn’t right for us, so we make a lot in Italy. We are an affordable luxury brand and we would not be in that category if we made in the UK.”
Next the discussion turned to the growth of luxury beyond London’s glittering flagships, with chief executive of retail shopfit company Portview, Simon Campbell, referencing his company’s recent work on Harvey Nichols in Birmingham: “They invested heavily in the luxury offering in Birmingham, because they think the numbers are there to support it. All the regions have markets for luxury brands, especially brands that are boutique and niche, so can fit in any city.”
Thinking about the in-store experience, Gpstudio director Gregor Jackson identified the changing purpose of the luxury flagship – for example, the merger of food and fashion at Burberry with the opening of Thomas’s cafe in June. “Today stores have a different function. It’s not about direct selling, that’s what online is for. It’s about creating an experience and being a social hub. The cash desk is disappearing and retailers are opting for less product in order to create space for increased dwell time. More than ever we’re seeing the weaving of food and fashion.”
The luxury shopping experience is developing at a lightning-fast rate to keep pace with the demands of today’s consumer. Retailers in this sector are proving that a personal approach to ecommerce works, while the ability to create a true lifestyle experience in-store is the benchmark against which all luxury players will be measured.
Download our Luxury Report
In our latest report Drapers analyses the key issues in luxury retail:
- Market overview and new luxury hotspots
- How is the slowdown in the Chinese economy affecting retail?
- Luxury retailing today and the rise of the lifestyle experience
- Digital – the ultimate luxury experience?
Download the latest Drapers luxury report for free here at drapersonline/com/luxuryreport2015.
List of attendees
Burberry: Grace Bovis, product development assistant
Karen Millen: Gemma Metheringham, chief creative officer
Lily & Lionel: Angela Stone, director; Sabina Siemicka, digital content coordinator
Net-a-Porter: Anna Gardner, merchandising manager; Lea Cranfield, head of merchandising
Partners in Retail: Teresa White, consultant
Portview: Simon Campbell, managing director
Rupert Sanderson: Chris Fentiman, financial controller
The Cambridge Satchel Company: Max Karie, head of special projects
Walpole: Charlotte Keesing, director of public affairs & international
Gpstudio: Chris Poulton, director; Gregor Jackson, director
Jo Marshall, head of brand
James Knowles, online content editor
Charlotte Rogers, features and special reports writer