Why luxury brands are investing in online Retail

February 23, 2022
14 minute(s)

Luxury is a term used to describe the high end of the market. It is often associated with high price, high quality, and high perceived value. They are often associated with the idea of being exclusive, difficult to obtain or even extremely difficult to purchase. Therefore, luxury brands have taken a long time to penetrate the e-commerce market and they have been loyal to brick-and-mortar to distribute their products.

However, it seems that luxury brands are finally waking up to the e-commerce idea. The store format has not disappeared, but online sales is emerging as an important complement to the retail format. It is therefore important to understand the secret behind this change.

*30% of luxury shopping will be online by 2025 vs 22% in 2020.

Covid-19 and behavior change : take stock

The health crisis generated by the spread of Covid-19 has led to changes in all consumers behavior, including luxury brands’ lovers. Online shopping has become so popular today that it is seen as a faster and more convenient way to shop.

To remain relevant and meet the demands of today’s consumer, luxury brands must therefore evolve. Thus, several brands have changed their marketing strategy. More luxury brands have invested in online retail to improve the customer experience, drive sales and boost their business, especially following the quarantine and measures brought about by the pandemic.

Among the companies that have turned to digital: the luxury brand Chanel, which has bet on e-shops and personalized digital services. Chanel has opened e-commerce stores in more than thirteen countries around the world and modernized the in-store customer experience through digitalization. This is also the case for the French beauty brand Sephora, which has brought innovations to the digital customer experience thanks to daring and unconventional ideas.

The brand now offers the possibility of discovering the latest products and tutorials on animation tablets available in the store. Sephora also offers connected mirrors to access a virtual look book that helps customers find inspiration and test looks.

Omnichannel for an optimal customer experience

The post-Covid has prompted that some brands and retailers have been forced to abandon their physical stores in favor of online shopping. The retail landscape has changed rapidly again to favor phygital, or the combination of digital and physical.

Indeed, one of the biggest challenges facing luxury retailers today is the proliferation of shopping options, whether it is online shopping or brick and mortar stores. Today, more and more stores are taking advantage of omnichannel strategies by offering a mix of traditional retail and omnichannel capabilities, using a combination of physical stores, online stores and e-commerce.

Omnichannel is a strategy to evolve the brand towards a customer-centric model, using multiple channels, including web, mobile and physical stores. The goal of this strategy is to improve the customer experience and loyalty.

ERP solutions to better manage your luxury brand

Currently, luxury brands are required to invest more and more in digital technologies to improve the efficiency of their activity and their customer service. Creating a digital ecosystem is a complex challenge, but an integrated ERP solution is a powerful ally in this regard. Thanks to an innovative digital solution, luxury brands can manage the entire product lifecycle and the customer’s purchasing process to ensure the continuity of the production chain and the acquisition of new markets.

An ERP software can streamline the design and development process of luxury brands and save them time and money on various administrative tasks (such as handling VAT and taxes on materials and labor). workflow, processes and management of employees and their payroll, monitoring of sales and stock levels…

For further information: The importance of integrated ERP in the textile sector

Online retail is catching up with its offline counterpart, especially in the luxury sector.  Luxury brands are realizing that their offline presence is not enough to capture the attention of young consumers who shop online, especially millennials and Generation Z. However, setting up a digital solution that lives up to your brand reputation requires the intervention of experts in the field. With this in mind, Timsoft provides you with experts and specialists in the luxury sector to assist you and guide you towards the best digital solutions.

*Source Bain & Company