Luxury brands try virtual shopping, with mixed results
For luxury brands resisting the COVID-19 pandemic, the outright refusal to allow discounts could prove to be a luxury they cannot afford.
The luxury segment of retail – fashion clothing, jewelry, even high-end cars – often survives economic downturns better than mid-range products. The rich, it seems, always have money to spend. This time around, however, things could be different.
A glut of unsold product forces luxury merchants to make tough decisions about how to move inventory that is inherently highly perishable. (Fashionistas wouldn’t have died wearing last season’s collection.) In some cases, that has meant allowing deep discounts, especially for online sales – something big luxury brands wouldn’t have considered. these last years. The very idea of selling on the internet was unthinkable for many traditional designers and retailers.
Innovative solutions are needed. But the challenge is trying to sell big ticket items without the customer getting to see them live and in person. The European luxury market has struggled to sell during the lockdown, said Hadar Paz, co-founder and CEO of Powerfront, Inc.
Powerfront is well aware of the problem. It sells a technology platform that provides an online customer experience for brands such as Gucci, Valentino and Neiman Marcus. Buyers can view the product and receive personalized attention from sellers via video. Paz says the trend is accelerating in the luxury space, with brands creating “mini-studios” in their boutiques that “walk” customers down the aisles of virtual stores and showcase product features.
Or not. Powerfront took to video as a substitute for store visits, only to find that it wasn’t popular with potential buyers that way. What has worked is the use of video for customer service and ultimately sales. “If you’re a customer talking to someone in-store via video chat, you’re twice as likely to buy from them than if you’re talking to someone in a contact center,” says Paz.
For luxury brands, the entire shopping environment is as important as the items on offer. “They provide an experience,” Paz explains. “You dress, you’re treated well – it’s a fun thing to do. Stores are a big reason people spend money. Now that they are not easily accessible and the elderly are not going anywhere, why buy anything? They really hurt.
The concept of an online mini-studio consists of dedicating part of the store to objects shown on the camera. One of Powerfront’s largest luxury clients offers a 360-degree view of the room, which can be explored by buyers with a few clicks of a keyboard or mouse, or via a smartphone. Yet when it comes to staging a compelling experience that actually drives purchases, technology doesn’t always measure up. And many customers are still not ready to trade the physical shopping environment for a virtual one.
Additional technological advances could change this dynamic. Despite their difficult beginnings as a consumer product, augmented reality glasses could prove to be a more attractive way to visit virtual stores, says Paz. Apple is rumored to be developing glasses that will dramatically advance the state of wearable computing. “It’s going to change the world,” Paz says, noting that at least one of Powerfront’s luxury customers has already learned about the technology. “Everyone wants it. “
The big question hanging over all of this breakthrough technology is whether it will remain attractive to consumers when the pandemic finally subsides. Luxury shoppers in particular could hurriedly dispose of their devices and return to physical stores. And given the recent lifting of restrictions on gatherings in public spaces nationwide, it could happen sooner rather than later.
Paz doesn’t see the luxury retail world as completely rejecting recent advances in creating a virtual shopping experience. “Of course, things will change,” he says. “People who have never enjoyed shopping online are finding they can do it. You will still have stores, but you are considering much lower foot traffic.
It beats the indignity of the discount. “The race right now for retailers is to prepare for it,” Paz said. “I don’t think it will ever go back to what it was before.”