Thoughts on Redefining the Luxury Experience in 2020 — Part 1: Luxury Goods
The great stake of this new decade is sustainability. In an interview to French Vogue last november, François-Henri Pinault, president of Kering and in charge of mobilizing the French luxury industry for sustainability, declared that the luxury industry could become an example for the whole fashion industry. But luxury has long ignored questions about climate change. Transforming its whole customer experience while preserving its exceptional quality is a challenge. One might see it as an opportunity.
Another major stake is to attract the foreign and especially Chinese clientele, expected to spend a trillion renminbi in luxury purchases by 2025 (according to McKinsey). Also, as the practice of daigou (‘purchasing on behalf’) seen in the last years is now better regulated, more and more affluent customers will likely come in person to experience shopping abroad. How to offer them a different experience from the one they already have in their home country?
Other challenges for this decade include the second-hand market, made even easier by the growth of reputable online platforms across the world. For now, this second-hand market is being deliberately ignored by luxury brands, but that stance might soon be perceived as incoherent with a sustainable approach.
Rethinking the luxury shopping experience in this new light implies some exciting challenges. How to rethink the unboxing experience in an eco-friendly approach? How to offer a truly unique local experience while maintaining brand consistency? How to leverage the concept of circular economy to create a durable relationship?
I will first list some of the most relevant ingredients of a luxury shopping experience that can still be leveraged today, then detail 3 steps of this experience where potential opportunities can be found.
I) What ingredients of a luxury shopping experience can still be leveraged, and how?
Some ingredients that were quintessential to the idea of luxury in the past now need to be discarded. First of all, the use of rare materials. For many brands, real fur is not an option anymore. Rare leathers are also questionable, and more and more jewelry brands are considering the use of created diamonds instead of real ones.
In addition, a famous brand name or logo are not as attractive now as they used to be: the number of customers wearing luxury items for that ‘Veblen effect’ we learnt about during our economy classes is decreasing. Elizabeth Currid-Halkett described this in her essay The Sum of Small Things, a Theory of the Aspirational Class. This aspirational class has shifted its expenditures from overt materialism to more subtle choices, such as buying less conspicuous items in a quality ‘that will last a lifetime’, not always from famous luxury brands but also from unknown local craftsmen selling high quality products through word of mouth.
So, what elements of luxury can still be leveraged, and how?
a) Durability
Quality of materials, design and craftmanship, but also ability to be repaired. This is quintessential to a luxury item: the quality is good enough for the item to be repaired instead of being thrown away, and the brand offers this service as part of the experience. This is an excellent opportunity to create a circular economy in luxury, and also to foster loyalty to the brand, as discussed in the second part of this article.
b) Exclusivity
- Limited stocks: there is no excuse for burning unsold items, as the luxury industry is the one where limited stocks are the most easily accepted by the customers. Frustration is even part of a true luxury experience: being unable to obtain what you want reinforces the perception of rarity. For example, one of the most famous French luxury leather goods brand has such limited stocks (their handbags are hand crafted by highly skilled craftsmen) that the customer experience is very strange and especially remarkable from a designer’s point of view: it seems terrible and often unsuccessful, yet customers are hooked! Let me describe it from customer testimonies. Several customers described how they organized their trips to Paris especially to get these handbags, without even knowing what type and color of bags they would be able to get, if any. They started by applying for an appointment, and being rejected several times. They were then given a timeslot after trying their luck in different ways, using the app or directly in store: they went there to buy smaller items such as scarves (still costing hundreds of euros), using these small purchases as a strategy to hunt for a nice sales associate that would grant them an appointment to purchase a bag. Because, yes, sales associates can afford to be cold or even rude: they receive about 1500 applications a day and can only grant access for 10% of them. Then the customer arrives for the appointment, asks for the desired bag or bags, and prays for the best while waiting: it is quite rare to be presented with the exact bag(s) you asked for, even being an excellent client. Also, you can’t ask for the most popular bag designs in the rarest leathers up front: there is no chance you would get them. Having the money to pay for them isn’t relevant here. You need a history of enough previous purchases (a ‘quota’) to even be allowed to ask for these bags. And so the customer often leaves with empty hands, or with another bag entirely, and comes back another time to try their luck again. To them, it adds to the magic of the experience when they finally lay their hands on the coveted item. They even look down on other customers expecting to get the exact bag they want: to them, it means they are not properly enjoying the brand’s experience of patience, magic and durable relationship. ‘It is like entering a family’, one said. Of course not every brand could afford to do the same, but the point is, exclusivity and even frustration are accepted as parts of the luxury experience. It is typically a pain point that is expected and shouldn’t completely be solved as it would make the experience less luxurious. That is a good thing when your goal is sustainability.
- Uniqueness: globalization is reassuring but extremely boring for travelers. Why travel the world to find the exact same shopping experience as in your home country? This is a challenge and an opportunity: while ensuring brand consistency, each local experience should be unique. This implies unique venues with an architecture and furniture matching local history and trends, but also unique products, or at least products with a unique local personalization that can’t be found anywhere else. Think about it like souvenirs: personally, I’m not buying souvenirs anymore when traveling, because every item sold in a Marrakech souk is manufactured in the same place as tiny eiffel towers bought in Paris or keyholders bought in Rome. It is not local anymore. Uniqueness can be found in small things: for example, in New Delhi you can have your Louis Vuitton bag hot stamped with a stamp that exists only there. In 2011, at a time when nail polishes only came in neutrals and reds, Chanel released 3 different shades of blue called ‘Les Jeans’. They were available in the USA only, for one month only. Loyal customers from all over the globe tried to obtain them in every possible way.
- Rules? What rules? Many customers try to understand the rules of the brands they love, only to discover that there are no rules. Is it possible to buy a luggage tag separately at Louis Vuitton? How many bags per month can you buy at Chanel? Why do some customers receive a little Chanel branded snow globe for Christmas and not others? For many things, there is no precise rule. An extent of freedom is left to the different stores and sales associates to manage client relationship in their own way within a set frame. Whether this is intentional or not, it participates in making luxury brands elusive and, well, desirable. While the first move in a growing, global company is always to standardize products and experiences through formalized processes, in the luxury industry it appears crucial to maintain room for creativity and local specificities. Ensuring this is still done with processes, just especially smart ones based on the right insights, with a design thinking approach for example!
c) Relationship
Of course the best clients are invited to cocktails, exhibitions or private lunches, but the quality of a durable relationship in luxury is mostly about developing a personal relationship with a sales associate. Some customers say they ‘work with’ their sales associates, who hunt down rare items for them and give them personal advice based on their own taste. Sales associates have special attentions for their best clients, on top of calling them first when a specific item is available: they send flowers for Christmas or a birthday, or gift them exclusive branded items, which may not be much but the perceived value is very high. But the most interesting part is that the relationship also works the other way round: several customers declared they also bring small gifts to their sales associates and maintain the contact for years. The human factor is crucial here, and the sales associate’s human qualities become more important than the brand image. The more automated the world is, the more human qualities and relationship are deemed important. A brand image is no longer the smooth and monolithic set of values it used to be around the world, or the designer’s name, but the face of the person who stands in front of you.
d) Storytelling
Buying a luxury item should always feel like a first time. The good news is, there is no need to hurt furry animals or overdo the packaging to achieve this. A great experience is a storytelling that starts before purchase and ends well after, while appealing to as many of the 5 senses as possible in an artistic way. Just a thought based on the above paragraph about relationship: if knowing the person who sells luxury goods to you is so much appreciated by customers, why not include a little more in this experience the person who creates the goods? Craftsmen (and women) are being increasingly featured in behind-the-scenes video, e.g. Dior dressmaking videos, and this is a good thing. Human labor, passion and skills are at the core of luxury storytelling. A little bio of the person who created your bag could be included when purchasing a bag, for example. Or we could imagine going so far as to letting them personalize the item in some way, to add a very unique touch.
II) 3 specific steps of a luxury shopping experience and associated opportunities
1) Information
Before purchasing, many customers will research a lot of information on the desired item, even if they sometimes end up getting something different once in store. Customers interested in handbags will research the different types of leathers, their durability, the size of the bags, how much they can contain, how big they will look on their frame. Customers interested in jewelry will look at countless pictures worn by their peers or will try the items on in store. According to travel agencies, a majority of Chinese customers know everything about the items they are interested in before boarding for their trip. A lot has already been done to help customers getting information online, often relying on 360 view or videos. But pictures often lack context: this is why customers turn to Instagram to search for pictures of peers wearing the items in context. The now well-known behavior called ‘showrooming’, i.e. visiting a store just to try something on without intention to buy on the spot, can also be leveraged. Lastly, in store, fitting is a particularly crucial point: the customer needs to assess whether the items looks good on them, and whether it fits their style. A great deal more could be done to improve this.
Opportunities:
- Make customers feel welcome in your stores, with no pressure to purchase. Create dedicated showrooming venues for your showrooming persona, and private venues for your VIP persona for whom quiet is the ultimate luxury. Why not differentiate the roles of physical venues? Maybe not all of them should be aiming at doing the same amount of sales. Some could serve as showrooms, and some could just be relationship touchpoints, with different target audiences. Some could be kept secret, reserved for the VIP.
- If a customer type needs to take pictures, make them feel it is ok. It is normal to hesitate when buying a luxury item and to ask relatives or Instagram followers about their opinion. Make sure your fitting rooms are ‘instagrammable’: beautiful design but also good lighting. Why not even turn your cabins into photocalls/photo booths, and print right away the result of a shopping trip with friends?
- Improve the fitting experience itself. For example, allow the customer to change the lighting to try different modes: night time, office light, daylight: how annoying is it to ask permission to go in the street to check the real color? Or allow customers to see themselves from a distance, to see how others would perceive them.
2) Unboxing
The unboxing experience is so important in luxury that you will find countless unboxing videos on the Internet. A good unboxing experience appeals to as many as possible of the five senses. Sight comes first of course: Messika goes as far as to integrate light bulbs in their jewelry boxes to make diamonds sparkle when opening the box. But also hearing, with subtle sounds such as the click of an opening lid or the rustling of paper. Touch, with appealing textures. And last but not least, smell, which is mentioned by customers as one of the main reasons for buying something new!
An approach to sustainable packaging is to make it reusable. This is already the case of fabric dust bags for example, or travel pouches: when having a piece of jewelry or watch serviced at Chopard or Cartier for example, you get it back in a travel pouch that is much more convenient for travel than the original box given at purchase. It is well conceived, practical and durable, meant to be reused for all your travels.
Opportunities:
- Improve the unboxing experience BUT use only sustainable materials and minimal packaging. This is quite a challenge, and an exciting one!
- Stop the obvious. When brands start copying each other, small attentions become a standard. We no longer pay attention to pretty post cards included in packagings, and rather frown upon them for not being good for the environment.
3) After sales services / cross-sell
The life of a luxury item only begins after purchase, the goal being to preserve its beauty for as long as possible.
Most brands already leverage this as an opportunity of sell-on and strengthening the relationship. Having your watch repaired at Cartier is an experience in itself: after waiting in a gorgeous venue while drinking champagne, a dedicated sales associate welcomes you in a private salon, discusses your options and takes all the time needed to develop a relationship. But many more services could be developed at this step.
Also, as mentioned above, the general position of luxury brands so far is to ignore the whole second-hand market. Most brands are reluctant to authenticate second-hand items, and customers are not sure if they can ask for vintage items to be serviced.
Opportunities:
- Develop new after sales services/cross sell opportunities. Example: invite watch purchasers to come discover new straps options for the season. Offer a calendar notification to remind them of recommended servicing dates. Offer personalization options such as hot stamping, engraving, fitting…
- Offer to authenticate goods for a specified price, not necessarily at your main store but at a dedicated place.
- Welcome vintage items to be serviced, as part of a circular economy. For example, Hermès craftsmen and sales associates are happy to see vintage handbags from the 1960s, commenting on their beauty, uniqueness and good preservation.
I didn’t really talk about technology here. That is not to say tech is dead in 2020 — it definitely is not. But after all the hype, we can clearly see that tech is not luxury per se. It is not rare anymore, not expensive anymore, and a smart watch is nowhere near as valuable as a ‘real’ watch. Why? Maybe because a technological item can be flawlessly replicated into an infinite number of copies by a machine: it is not unique. And it is not as durable as a luxury item, soon outdated and replaced by a new version. Human labour, skill and passion are not present enough in technology, it seems too ‘easy’: the storytelling isn’t compelling enough. Tech facilitates and standardizes, which is excellent for many industries, but not for luxury. So, while tech is now a part of our whole lives, including luxury, it is just a mean. It should blend seamlessly in the experience, while not detracting the strong DNA of luxury. Blockchain, for example, has already been identified as a great solution to fight against counterfeits, but it should not be visible. It is just an added, invisible feature.
Conclusion
While the luxury experience needs to evolve to adapt to this challenging new decade, its essence will remain the same. Refocusing on its core values is even an opportunity to reinforce its singularity. The challenge of the beginning of the 21th century was still globalization: conquering the world, scaling up fast and maintaining brand consistency as well as quality standards. This was done with discipline and good processes. But the context has changed: the frame that has been established will now need to be refined. The new challenges ahead in terms of experience are to tell a compelling story with less but better ingredients, and to reinject uniqueness in the standardized global context. The best way to do this is through creativity, qualitative insights and a true design approach.
At the Experience Center, we design unique experiences with a Design Thinking approach to build long-lasting relationships with your customers.
