Luxury goods retailers in Europe are finding new ways to navigate the challenges brought on by the pandemic. With travel restrictions and physical stores either closed or limited, brands are turning to social media and virtual platforms to engage with their affluent clientele.
Gismondi 1754, an Italian jeweler, utilized WhatsApp to successfully sell a €300,000 diamond ring to a Swiss client during the lockdown. Similarly, Moncler, a luxury puffer jacket brand, organized gourmet dinner deliveries to customers’ homes, allowing them to enjoy a stylish meal while watching a video streaming of the brand’s latest collection.
While some countries have eased restrictions, luxury retailers are recognizing the potential of selling beyond their traditional brick-and-mortar stores. This shift towards remote selling is not meant to replace physical stores, but rather to establish a new frontier between e-commerce and traditional retail.
The lockdown measures and limited travel options have left wealthy Europeans with disposable income that would have otherwise been spent on luxury experiences. Designer brands are eager to capture this spending power and have embraced e-commerce, even high-end labels like Hermes who were previously hesitant to do so. Analysts estimate that online revenues now make up nearly 20% of luxury industry sales and project that it will rise to 25% by 2023.
Luxury brands have also transformed their store assistants into personal shoppers, sending products directly to customers’ homes and maintaining regular contact. Furthermore, social media platforms have become a primary avenue for showcasing products and engaging with customers through product videos.
The pandemic has expedited the adoption of virtual methods for luxury retailers. Gismondi, for example, would not have previously sold high-value items like diamond rings without an in-person consultation. However, tools like WhatsApp and video calls have enabled brands to work with customers remotely, designing and delivering perfect pieces right to their homes.
Louis Vuitton has taken a unique approach by launching the “LV by Appointment” campaign in the United States. This initiative brings a tailor-made shop on wheels directly to wealthy clients, offering handpicked selections of products from leather goods to watches and perfumes.
LVMH, the luxury conglomerate that owns Louis Vuitton, has already reported strong results for the first quarter, exceeding analysts’ expectations in its fashion and leather goods division. Although sales in Europe and the United States remain in negative territory, the decline is significantly smaller compared to the previous quarter.
China has experienced a strong recovery in luxury brand sales due to the early reopening of shops. However, innovative ways of connecting with customers have helped mitigate the impact of last year’s sales declines in Europe and the United States, and analysts predict that improving sales in these regions will contribute to revenue growth this year.
Building and nurturing customer relationships have become priorities for luxury brands. Companies like Kering, which owns Gucci, have seen an increase in revenues from “distant sales,” referring to sales made outside their traditional store networks. Sales assistants are now trained to reach out to customers via video chat, showcasing the latest products and sending items for them to try on at home. This personalized approach fosters strong relationships and upholds a high level of customer service.
Luxury brands understand the importance of balancing outreach efforts with respecting boundaries. Some customers appreciate frequent contact and stimulation, while others prefer a more subtle approach.
Overall, the pandemic has presented challenges for luxury goods retailers. However, it has also accelerated the adoption of digital solutions and innovative methods of engaging with customers. Moving forward, these remote selling strategies are expected to remain a significant part of the luxury retail landscape.
Useful Links:
1. https://www.voguebusiness.com/technology/how-covid-19-has-reshaped-luxury-retail
2. https://www.retail-detail.eu/en/news/General/remote-selling-remains-a-possibility-for-the-luxury-industry
