Luxury retailing adheres to a distinct business model. This book takes us through its major elements.
(...) What makes luxury brands unique (as we discuss in Chapter 1) is that their longevity and growth is built on the very special relationship they create with their customers. It is fundamentally emotional; bringing together the name of the brand, its heritage, and the design and quality of its products. This relationship, which traditionally had been built in a top-down manner (the brand talks to the customer; the customer accepts the brand as it is), is now changing. Twenty-first century customers are of a different essence than their predecessors.
Twenty-first century customers respect both the luxury brand and to the emotional link they have with it, but also ask to be recognized, addressed as important individuals and given best-in-class service. The new customer wants personalization - both in the product (can I get my initials on this bag?) and in the service (I was greeted by name!). Luxury brands now have new questions on their agenda: How can we give our customers a memorable experience? (...)
This book’s objective is therefore to provide readers with answers to the five critical questions a luxury brand manager has to address when setting up such a strategy. (...)
Question 1: What Distribution Channel Do I Choose?
The choice is quite simple: There are four major channels to be explored. We will take you through the essentials of each (Chapter 3: The Different Systems of Luxury Distribution and Chapter 4: Internet as a Channel of Distribution) (...)
As this is ultimately a book about retail management, we then shift our focus squarely on the luxury store. This will lead us to the next questions.
Question 2: Where Do I Set Up My Store(s)?
We will explore countries and cities, and discuss flagship stores, megastores, secondary stores, and pop-up stores. We will select the streets where luxury stores simply must be. This will lead to trade area analysis and its application to luxury (Chapter 5: Luxury Store location).
We will then step inside the store and answer two further critical questions:
Question 3: What Is My Store Concept?
The store, being the place where the brand meets the customer, needs to have a strong and differentiating design, a specific merchandising strategy, and unique windows that will convey the brand vision to its customers. We will look at the role of the artistic director in designing the store concept and how visual merchandisers will help implement it (Chapter 6: Luxury Store Concept and Design).
Question 4: How Do I Manage the Store?
A luxury brand store - not very different from other stores - is a mix of a product offer (what products in which store?), a pricing strategy (do I sell my products at the same price in all stores worldwide? how do I price them compared to my competitors?), a set of metrics (what critical indicators should I include in my business plan?) and sales staff (who do I hire? what are their critical competencies? which compensation system should be set up?). This will take us into the details of store management, where we will examine both the commonalities that luxury brands share with all other retail brands and their differences. Since “retail” as a discipline is a completely new competence for luxury brands, we have included a Retail Toolbox that can be found in the Appendix. (Chapter 7: Luxury Store Economics and Chapter 8: Luxury Retail Pricing).
Luxury brands have discovered with time that customers are not necessarily loyal, given the growing competition between brands. The Internet and other major consumer mega-trends have empowered customers. Customers now ask the luxury brands to respect them, to engage them in conversation with them and to re-enchant their world. Luxury brands, therefore, are being asked to shift their erstwhile inward focus to their customers instead. This opens new questions for luxury brand managers, one of which is key - the loyalty issue. The luxury store has a major role to play here, because this is a major battleground of the brand experience.
Question 5: How Can I Build Customer Loyalty and Provide a Memorable Brand Experience?
Luxury brands have understood that they should not just wait for customers to enter their stores, but must build a long-lasting relationship with them. They also know that the store - and now the Internet - are where they meet their customers. This gives new importance to what happens on the floor and to how customer journeys are to be designed. This leads brands to design specific customer relationship strategies that encompass both the development of important communication strategies and the excellence in customer experience that their customers are looking for (Chapter 10: The Importance of Stores in Customer Relationship Building , Chapter 11: Building Loyalty in Luxury Brands, and Chapter 12: Advertising and Communication).
We will end our luxury retail journey by suggesting luxury brands should also look into three future issues:
Future Issue 1: Inventing new store formats to develop the emotional bond with the customers.
Future Issues 2: Dealing with the China Retail Footprint, which may be growing too fast.
Future Issue 3: Inventing twenty-first century luxury retail, by making each store visit a new experience for customers (Chapter 13, The Future of Luxury Retail).