To survive Covid-19, luxury retailers are being forced to master something they’ve always avoided: impersonal transactions.
The pandemic has driven high-end U.S. retailers far from their roots of engaging shoppers with stylized, personal—and unfortunately, high-touch—service. Think makeup and jewelry counters, personal shoppers and in-house tailors. Now, with consumers staying away from public spaces, retailers like Bloomingdale’s Inc. and Neiman Marcus Group Inc. are coming to terms with selling products via FaceTime and curbside pickup. But translating this into a lavish shopping experience sounds about as natural as turning a TV dinner into five-star dining.
“This is a transformative moment” for an industry that resists change, said Christophe Cais, chief executive officer of the Customer Experience Group, a consultancy for luxury companies.
Retail’s new reality means that around 10% of physical luxury stores may close worldwide in the next three years, said Deborah Aitken, a luxury analyst for Bloomberg Intelligence. On the other hand, increased web sales could lead to wider marketing reach and more opportunities to target likely buyers using consumer data, she said. Aitken projects online sales could rise to 17% of the total for luxury at the end of 2020 — up from 12.5% at the end of 2019.
Now, companies must figure out how to conjure up their signature atmospheres, from iconic color palettes to warm smiles, when patrons aren’t actually in the building. Upping the ante is the fact that these companies’ customers expect perfection—a Birkin shopper in one of Cais’s focus groups, for example, thought her bag was cheaply made when it arrived in six months instead of nine. This attitude stands in stark contrast to the rest of retail, where companies like Amazon.com Inc. and Walmart Inc. have built up their shipping to get goods to customers as fast as possible.
Depending on the customer, speed may also be important for luxury shoppers. But overall, brands that have long prized personalized service must now learn how to control the user experience from shoppers’ first click to when the product is unwrapped.
First off, luxury stores must nail down how and where their customers actually prefer to interact, Cais said. Patrons don’t want the experience to feel too transactional or cheap. Calling customers to suggest products, for example, comes dangerously close to telemarketing. Drive-thrus and online shopping, meanwhile, move away from luxury’s signature immersive experience.
In the short term, companies are betting on video chat, which can let sales associates connect with longtime customers who may be staying away from stores. Bloomingdale’s has started letting customers shop by FaceTime, or even by phone call or instant message. And around 20 other luxury shops, including standalone brands like Gucci and Valentino, are making room for digital hand-holding via video software that lets sales associates track what customers are browsing online in real time. Shoppers can then opt into a video call with a store-based employee to get suggestions, ask questions or see merchandise first-hand.
One benefit of this strategy is that video calls could also attract or help retain older customers who don’t know how to shop online, like one man who showed up recently at a Bloomingdale's curb, before patrons were allowed inside amid the lockdown, with a handwritten shopping list and a credit card.
Both Neiman Marcus and Bloomingdale’s, as well as boutiques like Tiffany & Co., also have curbside pickup—the same service offered by the likes of grocery stores and pizza chains. The wealthy aren’t turning up their noses at it. A recent Morning Consult survey showed that people who make six figures or more are using curbside pickup more than ever. In fact, Bloomingdale’s employees were surprised by how many customers parked and requested a stylist or shopper before reopening.