Multichannel integration drives sales for luxury brands

A new study, “Digital and Physical Integration: Luxury Retail’s Holy Grail,” which was produced by ContactLab in conjunction with Exane BNP Paribas, found that luxury brands need to be better at combining online and offline sales.

Some brands, like Britain’s Burberry, have succesfully integrated their online and offline worlds. But according to the research, luxury retailers are lagging behind when it comes to utilising digital. ContactLab made 61 store visits in New York and looked at three areas:

1) The basic: technology in-store;
2) The developed: how digital clients are received and services in-store;
3) The advanced: how digital is leveraged to make the most of traffic in-store.

Ralph Lauren was best in class when it came to bringing digital innovations into stores and connecting online and offline environments. Lauren was followed by Bergdorf Goodman and Burberry, while Ferragamo, Saint Laurent and Céline performed the worst. In general, department stores scored higher than high-end brands.

Digital is one of the profitable “growth pockets” available to luxury goods players today, ContactLab said. It also found that consumers buying luxury goods both online and in-store spend 50% more per year than in-store only customers. Being able to offer consumers the opportunity to order online in-store and receive their purchases at home when goods are out of stock increases conversion rates and – ultimately – sales.

The study also showed that giving customers the option to order online and pick-up in-store opens cross-selling opportunities – similar to order online and return/exchange in-store. Both ultimately support space productivity.

Massimo Fubini, CEO of ContactLab, said: “It is surprising to see that not many luxury brands are optimising the relationships they can have with their customers. Luxury brands are faced with competition with online retailers and so need to up their game in order to take advantage of the online sphere.”

“Modern consumers cannot be categorised as online or offline as they expect multi-channels as a paradigm to engage with a brand.  Brands need to not run their online and in-store business activity as separate but need to bridge the gap and offer a seamless shopping experience.”

Ralph Lauren Denim Supply Spring Summer 2016