August 13, 2019
The luxury retail segment is experiencing a transformation and with that comes a slew of myths, according to research conducted by the Luxury Institute and its Global Luxury Expert Network.
The organization has identified 12 myths — what it it also views as top obstacles — to high performance retail this year:
1. Time is the ultimate luxury. The reality is that a high return on invested time is the true ultimate luxury. Most luxury brands today are trying to emulate Amazon in efficiency, and fast delivery tactics are important. However, those are expected commodities. What luxury clients require is an extraordinary experience when they invest their precious time, whether online, in a store, at a spa, or restaurant.
2: The luxury client is excessively private and is not approachable. The reality is that the luxury client is, in fact, excessively private. However, the reality is that they are extremely selective vs. unapproachable. In luxury, delivering the best products and services, to a large degree, is assumed. The true luxury client is seeking a relationship with an honest, expert and trustworthy individual within a brand to provide insights and guidance.
3:Luxury leads in exceptional client experiences because of its best-in-class training programs. In fact, the luxury industry is excellent at product knowledge training and excels in training for etiquette. Sales associates should be taught, required to use, and compensated for conducting their own outreach to cultivate and grow long-term client relationships.
4: The luxury e-commerce experience is primarily about UX, automation and chat. Actually, digital marketing has done some good but has also damaged the online luxury experience via pure automation. A growing number of smart luxury goods brands recognize that providing a human connection can dramatically enhance the online experience.
5: The sales associate has been rendered irrelevant by digital technology. The reality is the luxury sales associates have every opportunity to be hyper-relevant by transforming themselves into emotionally intelligent, trusted, expert advisers. Ultimately, this only works when the sales associate and the appropriate digital technology can work together to optimize, not compromise, what each does in building value for clients.
6: Chinese clients are willing to buy everything with a luxury logo. In actuality, Chinese clients have become highly educated, discerning and sophisticated luxury clients in record time. The Chinese luxury consumer is on the leading edge of luxury trends and may soon become the most sophisticated in the world.
7: The economic bifurcation is between the luxury industry vs. mass market. In fact, while all "boats" in luxury were once lifted by a rising economic tide, today the luxury industry is divided into a very few big winners and many mediocre and poor performers. Luxury brands that want to be successful must differentiate themselves from the luxury pack to a much greater degree than ever before. It starts with products and services that are unique and it builds through time with a human relationship.
8: Customer loyalty is dead in the luxury industry. In fact, luxury used to be populated by a very select group of brands. True luxury brands continue to prove that they can retain their clients, and their offspring, over several generations. Loyalty requires a far greater, better, effort today, but is completely attainable.
9: The only way to protect a luxury brand's equity is to maintain complete control of all ideas and activities. The reality is that brands can maintain their DNA and identity and still use open innovation methods to disrupt, reinvent and transform themselves to remain highly relevant in today's evolving luxury industry. Brands don't have to compromise their values and DNA to thrive.
10: Only the top 20% of clients really matter to a luxury brand. The reality of things is that for most luxury brands, the top 20% of clients drive 70% of sales. Brands have huge opportunities to cultivate short and long-term relationships with the remaining 80% of clients, many of whom are high income, high net worth individuals who buy luxury from competitors.
11: If you want to grow substantially as a luxury brand, you must have the largest marketing budget. Actually, although big marketing budgets generate awareness and trial, they have limitations beyond those two opportunities. The way to grow large and profitable in luxury is to deliver the highest value products and services via extraordinary experiences that make clients feel special.
12: Luxury brands should only hire executives and front-line people who have luxury experience. In reality, many luxury brands today are so inbred exclusively in luxury that they have locked themselves into vicious cycles of ineffective "group-think" and obsolete behaviors. Cross-pollination with talented individuals who are emotionally intelligent from all industries and industry segments is the way to drive open innovation and long-term success.
