DIGITAL TECHNOLOGY + USER EXPERIENCE = GROWTH?

Recently a number of luxury goods retailers have announced positive sales results for 2016. For example, Fortnum & Mason posted a substantial boost in full-year profit as its online business drove sales beyond those in its bricks and mortar stores. This week, Retail Consigliere looks at three quintessential British brands that are embracing digital technologies to drive sales and supplement the in-store experience.

Fortnum & Mason

On 12 December 2016, Fortnum & Mason’s online sales surpassed revenues from its bricks and mortar stores for the first time in the retailer’s 310-year history. Fortnum also recorded consistent online sales performance in the five weeks leading up to 1 January 2017, with 34% of all sales attributed to digital purchases.

Fortnum’s website was redesigned in February 2015 which resulted in a significant uptick in digital purchasing. The design was aimed at improving user experience across multiple devices while reducing drop out during the check-out process. At launch, Fortnum’s customer experience director Zia Zareem-Slade commented that the changes are “about Fortnum & Mason being innovative and putting that back at the heart of the business, we are now…investing in digital properly”. Two years on, this strategy seems to be paying off.

Never one to take things at face value, this Retail Consigliere writer decided to test the website first hand. Aside from inciting dreams of everyday luxury, the user experience and range of delivery options was a pleasant surprise.

It will be interesting to see whether the balance continues to shift towards online sales, or whether customers continue to favour the luxurious store environment to do their shopping.

Burberry

 In 2016, luxury fashion house Burberry initiated a three year plan to drive revenue growth, including significant investment in conversion technologies, a re-vamped website and a new mobile app.

Burberry continues to recognise that digital technology can create a competitive advantage in the global market, having introduced concepts such as Click & Collect ahead of other fashion retailers in 2013. While the growth plan is still in the early stages, Burberry has already reported a 1% increase in retail revenues to £603 million in the three months to December 2016, with mobile platforms delivering the majority of the growth. Of particular interest is the improved conversion rate bolstered by the introduction of Apple Pay.

Burberry successfully combines a luxury in-store experience with the ease that digital technology brings to the shopping process. This approach is particularly apparent in Burberry’s Regent Street store, where digital technology is integrated with all aspects of the shopping experience. Staff use iPads that display each customer’s purchase history and preferences; customers can use portable checkout systems; and the fitting room mirrors double as screens that display product details. Customers also enjoy live streams of fashion shows in-store and access to fashion show footage through Burberry’s mobile app.

A new mobile app (expected by the end of 2017) will further support mobile conversion and aims to “build a good connection with customers“, in line with Burberry’s ongoing focus on customer experience.

Selfridges

Selfridges posted a drop in full-year profits for the year ended 30 January 2016 as a result of increased capital investment (in particular, a £300 million investment programme that includes an overhaul of the Oxford Street store and ongoing upgrades to its online platform). In October 2016 however, it was reported that the retailer’s online business is delivering growth of over 38% year on year.

To support this shift in customer preferences towards digital platforms, Selfridges launched its ‘shoppable’ app in mid-2016. The new app complements the website (which was updated in 2014), and syncs customer accounts to ensure that users can access and update their wish lists and shopping bag on any device. The app is an interesting development in the retail market, being the first transactional app launched by a fashion retailer that allows users to shop for items featured on the retailer’s Instagram feed via an integrated “Shop-by-Instagram” function.

Priorities for luxury goods consumers are changing

In general, luxury retailers have been slower to embrace digital technologies than their fast-fashion counterparts – although there are some obvious exceptions such as Net-A-Porter. One of the biggest challenges luxury retailers had in the past with respect to online selling is recreating the sense of exclusivity and luxury that customers experience in stores. But as luxury goods consumers are increasingly dictating when, where and how they engage with luxury brands, retailers such as Fortnum & Mason, Burberry and Selfridges are increasingly investing in digital technology.

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