Selling Luxury: Going Beyond In-Store Experiences to Inner Experience

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\"RRLuxury Retailers Alert: The Aspirant Shopper Is Back, and Ready for School.

Five years ago, the luxury sector took a nasty hit.The prevailing message at the onset of the Great Recession to high-net-worth consumers was, “just because you can flaunt it doesn’t mean you should.” And the message to the aspirant luxury buyer was, “you shouldn’t have been buying this in the first place.” So we tightened our belts, made do with less, and witnessed unprecedented levels of discounting – up to 70% – which became the luxury retailer’s main tactic for getting customers back into the store.

The post-crash disappearance of aspiring luxury shoppers has been well documented, but now there’s evidence that this segment of consumers is back – both because of increasing demand and because of what retailers are doing to attract them. The most attuned marketers are discovering there’s a new, younger face to the aspirant shopper – Millennials (those born in the 1980s and ’90s) who love high-end goods. And one of the most effective ways to reach this capricious audience is by schooling them on how to live the luxurious life.

Getting Luxury Shoppers Back In-Store

Luxury, excluding jewelry spending, finally started to see year-over-year growth each month from October 2010 through October 2012, according to MasterCard SpendingPulseTM; and dollar spending levels inched their way back to pre-recession levels during the same period. However, since then performance has been inconsistent. In high-tier jewelry, growth has been even more unpredictable, with nine out of 12 months in 2012 registering negative year-over-year growth. It seems performance has been subject to the rollercoaster of daily financial news, from Europe’s financial crisis to Washington budget talks, from taxes to the Fed’s latest take on economic recovery.

Online shopping has also proven a double-edged sword for luxury brands. According to estimates by consulting firm Enora, 4 to 6% of the 200 billion euros (USD 261 billion) shelled out globally for luxury goods is spent on the web.  But while luxury sales are increasing in the e-commerce channel, online shoppers tend to be mission-specific – they know what they want and what they’re willing to pay for it – so they’re unlikely to pick up impulse items or shop more broadly.  The challenge for luxury retailers, therefore, is to get consumers back into the store.

\"SONYAccording to the 2012 IPSOS Mendelsohn Affluent Survey, there are 11.8 million Millennials aged 18 to 30 living in U.S. households where the annual income exceeds $100,000. And according to Unity Marketing, by around 2018 to 2020, this demographic will take over as the largest generational segment in the luxury consumer market. Not long out of college or graduate school, the new aspiring shopper is young, unencumbered, and earning enough money to buy nice things. But in their tech savvy, constantly connected world, pulling them into brick-and-mortar stores has proven to be a much bigger challenge than reaching them online.

How can luxury retailers better reach out to this group – and in particular, how can they make the aspiring young luxury buyer feel comfortable coming to shop in the store?

Making the Connection With Millennials: Lifestyle and Education

Embracing this demographic shift, some retailers have tried new ways to get these new aspirant shoppers into the store through events like Meet-the-Designer, celebrity sightings, and charity tie-ins. Recently, Apple hosted fashion designer and filmmaker Tom Ford and interior/industrial designer Kelly Hoppen to discuss their work and their processes. Actor Michael J. Fox hosted a charity event at a Ralph Lauren store.

That’s all very well, but whatever their in-the-moment success, the problem with these high-adrenaline events is that most of them don’t have a lasting or inclusive quality. Can retailers really keep replicating the same level of excitement by repeatedly generating such events, or is there a limit past which “celebrity fatigue” occurs? And even if their favorite pop singer is visiting the store for a couple of hours, once the star is gone, the consumer’s motive for going into the store, or revisiting that brand, is largely gone too.

One major task of retailers is to find the intersection between their customers’ unique interests and what will motivate them to come into the store. Behavioral insights are critical to identifying the right audience, but equally essential is a broader understanding of their lifestyle. Where do aspirant Millennials shop when they’re not in your store? What are the interests or passions of this segment? In other words, can you figure out what will draw them in? And if you get them into the store, given that luxury can be intimidating, is there a sustainable way to engage them?

Lots of people – 10 million, in fact – have been fascinated by the TV series Downton Abbey, for example. Between the show’s rich interiors, design sense and stunning costuming, this would seem a perfect tie-in for luxury. But would the Millennial shopper be responsive to that connection? Apparently so, because this kind of tie-in seems to be happening with increasing frequency.

Recently, Brooks Brothers launched a campaign pegged to The Great Gatsby, starring Leonardo DiCaprio, complete with in-store displays of period costumes designed by the retailer for the movie, and worthy of the Metropolitan Museum of Art’s Costume Institute. Beautiful windows, graphics that tell a story, and of course, the connection to their own new collection of clothing that projects the Gatsby “aura,” are all part of this gesture. It is brilliantly conceived, beautiful to look at, and gives shoppers a huge reason to go into the store.

\"SONYIn a similar but separate initiative, Brooks Brothers also correlated Wynton Marsalis, a key figure in today’s jazz world, with the “cool suit,” (re)dubbed BrooksCool.  And if those examples aren’t enough, Brooks Brothers just finished celebrating “Tartan Week,” hosting a made-to-measure occasion with Kilt-maker Kinloch Anderson, who was on site to take custom measurements for special order kilts, tapping into the growing trend of people getting married in traditional costume.

Through these literary, musical, and otherwise aspirational lures, retailers are finding better ways of reaching the new luxury customer by connecting with their cultural interests and preferences. So, it should not come as a surprise that the aspirant Millennial shopper – many fresh or soon-to-be out of school – is also very receptive to educational experiences. How better to reach this customer, and in the process bring her (or him) into your luxury brand, than by teaching connoisseurship? Very likely the aspirational shopper has never had a chance to observe or understand what goes into the making of these fine luxury products. Luxury uber-company LVMH has begun educating its younger market on the craftsmanship behind its brands, which include Louis Vuitton, Moët and Dior. For the Millennial shopper, who is only recently out of the classroom, learning about the provenance of rare materials and exclusive, time-tested processes that go into the making of a luxury product seems a fine way to build not only discernment, but trust in the brand.

To that end, Burberry, which New York University research group Luxury Lab has named “the world’s most digitally competent luxury brand,” now has an interactive educational app that allows a customer to find out about certain designer outfits or accessories in the store. By scanning a barcode on a smartphone, the customer can watch a video explaining everything from the designer’s background to how the item is sketched, crafted, and finished.

Allen Edmonds, the footwear company that calls itself “The Great American Shoe Company,” has started to publish more detailed information in their seasonal catalogues about the sourcing of their leathers, the tanning of hides, stitching and the use of contoured lasts. Customers are much more likely to make repeat visits when they know what went into the making of that shoe or that bag, a fine perfume or a gentleman’s hat. Knowledge of craftsmanship and other aspects of a luxury product’s rarity might even get them wearing a quality and style of clothing they never would have worn before.

The Retailing-as-Education Model

Some retailers, like Macy’s, have had success making a yearly institution of the same community oriented events – the Thanksgiving Day Parade and the Annual Flower Show are synonymous with Macy’s name and brand. But do these large-scale (and extra-retail) events show an understanding of the new demographic of consumers? And how sustainable
is this model – can retailers keep refreshing their audience base, or are they just reaching the same people? If jittery economic circumstances have shown retailers nothing else, it’s that they need to be constantly trying to capture new audiences.

In light of this, it is interesting to note that several luxury retailers have fallen back on brick-and-mortar discounting, believing this is the only way they’re going to lure shoppers in. Perhaps with the idea of being a training ground for Millennials to learn about their products, Saks, Nordstrom, Bloomingdale\’s, and Neiman Marcus have plans to open nearly twice as many outlet stores, with no new full price stores planned. However, this strategy falls short of achieving the double goal of getting luxury shoppers back into the stores and reconditioning them to pay full price.

Luxury retailers could take a lesson from sectors like grocery, that classically see more in-store shopping, to create value by finding new ways of cross-selling and educating customers in the appreciation and use of products, as well as in connoisseurship. The grocery retailer Wegmans has made its in-store experience a movable educational feast, with nutrition classes, cooking demos, and product sampling stations throughout the store on a continuous basis. Their customers are not only likely to buy that wild-caught Alaskan salmon, along with the specialty sauce, scallions and other necessary ingredients, so they can go home and cook that marvelous dish – they are also likely to come back to the store again and again for new information and new inspiration.

Once luxury retailers get inside the knowledge-hungry minds of their new aspirational shoppers, they will see that teaching is value creation. Once you’ve learned how a really good pair of shoes is made, and how it feels to wear them, why would you settle for anything less? And how better for the customer to gain this understanding than by going into a beautifully curated luxury store, itself a lesson in museum-quality design and architecture? Retailers will build a new generation of brand loyalists who will not only return to their store, but will bring in their friends to show off their knowledge. Friends who will in time become your customers too.

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