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Lessons in New Luxury: Part 3

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Lessons in New Luxury: Part 3

Delivering Exquisite Execution

So far, we’ve put great emphasis on how luxury brands are embracing innovation to be seen, literally, by younger and more diverse, digital-native shoppers. And while it’s fascinating to see how technology, in combination with creativity, is also helping drive brand loyalty and delight consumers in new ways, a more timely concern is the need to deliver exquisite execution at every touchpoint.

Luxury, by nature encapsulating the best of the best, should also be top for product and service. And this final point, which often takes place behind the scenes, is perhaps the most important to maintaining a level of distinction for luxury brands above all others.

In this third and final installment of our “Lessons in New Luxury” series, we’ll give you examples of what luxury brands are doing at an operational level to ensure that their products are of a superior quality, and the shopping experience is flawless for consumers who expect nothing less.

Guaranteeing Worth: Combating knockoffs and determining origin

Copyright has become a big pain point for luxury ever since runways started gaining a global audience online and in real time. With today’s fast fashion cycles and agile factories set up to deliver goods in just three weeks plus the growth of online resale sites, copycats can be in stores far faster than the real deal. And not only can fakes be sold, they can also be returned fraudulently.

Thankfully, technology is coming to luxury’s rescue. The big name these days is Blockchain which creates a tamper-proof, digital paper trail of all types of transactions. Blockchain’s potential, and that of similar technology offered by the likes of Red Points, is only starting to be realized and will be a game-changer when it comes to provenance.

Luxury brands are using Blockchain to keep it real.

Luxury conglomerate, LVMH, is also embracing Blockchain to track goods and to prove their authenticity through the “Aura” platform. British diamond retailer, De Beers is also using blockchain platform Tracr to give its products mine-to-consumer traceability.

These platforms allow for management, control, and tracking from raw materials all the way through a product’s lifecycle. That way, consumers can trust in product authenticity, not to mention lower their “diamond guilt”. And this is exactly the type of accountability that appeals to the sensibilities of younger luxury shoppers.

The Right Items, at the Right Time, at the Right Place

Imagine this: a 25-year-old Japanese male is browsing the Instagram of a top Italian influencer and is immediately drawn to the luxury jacket he sees in the image. He has to have it. He visits the brand’s official page, does a bit more research, and heads off to the brick-and-mortar location in Tokyo. Excited to make this big-ticket purchase, he learns that it isn’t available in his region.

Not a great look for the brand.

Luxury shoppers have higher expectations and demands than other types of consumers. Thus, luxury brands have to be even more agile with merchandise in order to deliver a seamless experience. This agility also allows them to transmit a unified brand offering across store networks and geographies despite the slower sell-through rate of a high price point. These are the fundamentals that new tech should address, and an area in which Versace excels.

Versace uses tech to excel at offering seamless customer experience. | Photo: Bal Harbour Shops

This cements the brand’s renewed focus on consumer experience, ensuring that merchandise is in the correct place when the customer expects it to be there. Using tech, Versace is able to move product between stores in a way that maintains the essence of the brand in each location, while maximizing the probability of a customer finding what they want. It balances out the traditional trade-off between sales and visual merchandising.

Additionally, Versace is able to better address the issue of surges in luxury good demand due to shopping tourism, which is complex to predict. Deloitte estimates that 47% of luxury good purchases are made by travelling consumers.

Versace copes with this new reality in different ways. For one, predictive analytics improve store transfers because items go not only where there’s a gap, but also where they’re most likely to sell. Sales data also allows Versace to capture each store’s demographics in order to gain insights on the impact of tourist shoppers on the local size curve.

Versace has chosen Nextail to empower its merchandising decisions and automate processes. This translates into minimized lost sales in the store network and the ability to anticipate increasingly complex consumer demands. The brand has adopted Nextail’s smart platform and prescriptive analytics across its 120-store network and online. Here at Nextail, we’re thrilled to be helping the iconic brand become more agile.

Going the Distance, Faster than Ever: Last Mile Delivery

From standard delivery times, to packages at your door in less than 24 hours. It’s time to address the digital elephant in the room. Amazon. The king of e-commerce has created an expectation of delivery that is so fast that consumers are more impatient than ever, and retailers are scrambling to adapt.

Familiar sight and expectation-setter for many. | Photo: Shutterstock

What this means for luxury is inherently no different than what it means for all retailers: it’s time to step it up. Luckily, tech, as tech does, is also helping retailers step up their game to meet this dizzying feat. Staple luxury e-tailers are leading the pack in terms of fast delivery: Net-A-Porter and Farfetch offer 24-hour shipping to major cities around the world, while MatchesFashion can deliver to some areas of London in under 90 minutes, thanks to a sophisticated logistics operation.

Farfetch, for one, is teaming up with Chinese e-commerce giant (and Amazon rival), JD.com. This partnership will give the online luxury house access to the platform’s 300 million customers — not a small challenge considering Chinese consumers make up one third of luxury goods purchases worldwide. Already logistics partners, this is great news for Farfetch: the recently announced JD Express service will deliver products within 30 minutes within 3km in several Chinese cities.

JD.com’s delivery service is just divine. | Photo: JD.com

JD Logistics (the logistics unit of the e-commerce site) has announced the creation of an underground network in Xiong’an that will connect buildings and tunnels to further speed up delivery. And the company, that has already employed drone delivery in China, is planning to roll out into other geographies.

Sidenote: If that all sounds futuristic to you, get ready, because Chinese companies aren’t stopping there. In fact, infrastructure is already being put into place for a future with self-driving cars. Sites are opening up to test autonomous driving in highway conditions, and is prepping for the ultimate smart city designed around self-driving cars. There is no doubt that China will stay ahead of the game as their luxury market booms and the need for quick delivery solutions will continue to grow. For a deep dive into just how far ahead China is in this regard, check out “AI Superpowers: China, Silicon Valley, and the New World Order” by Kai-Fu Lee.

It’s a bird, it’s a plane, it’s your luxury goods. | Photo: JD.com

Nextail’s Store Transfers module already provides the intelligence behind understanding which stores are over or under-stocked in an item according to expected demand. That way, retailers can rebalance this stock among stores. Not only can retailers align store supply with physical demand, they can also balance store stock with online demand in order to use physical locations as fulfillment centers. That way, they can better serve same-day orders at a reasonable cost, and even with drones if necessary…

Retailers can instantly see the calculated value of a transfer and can automate it from head office. Nextail can also plan out optimal routes so that every step of the transfer is primed for speed and maximum sales capture. This type of agility will allow luxury retailers to achieve both a high speed to market, reduced risk, and the dynamism needed to adapt to new market realities.

TL; DR: The Lesson

Part of luxury’s value proposition is the ultimate sense of ease and perfect service. And why shouldn’t it be? Customers are certainly paying a high price for it.

While it’s true that the luxury market is facing some unique challenges, meaningful tech now exists to get brands to the next frontier in delivering service excellence. Luxury houses need to leverage the best of that tech in order to deliver compelling experiences in both service and product.

We hope you’ve found this series insightful and we’d love to hear from you. If you’ve seen exemplary innovations in luxury, let us know by dropping us a line below!

And if you missed Part 1 or Part 2, you can find them here!

Nextail is a smart platform for retail merchandising. Developed by retail experts, it delivers agile data-driven decisions to meet increasing consumer demands.

Want to see how Nextail can help transform the luxury experience? Visit our website to learn more!

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