Home Thinking Aloud What The Future Of Luxury Retail Has In Store

What The Future Of Luxury Retail Has In Store


by Florine Eppe Beauloye, Co-Founder and CEO of mOOnshot digital

Online shopping has long been considered by luxury brands to be a channel only appropriate for selling low to mid-range luxury goods. High-end goods were reserved for boutiques (allowing for a personalised customer service and a tactile shopping experience). Luxury brands indeed believed that affluent consumers wouldn’t spend more than a certain amount for high-end goods online.

That assumption is now being challenged.

The success of luxury online fashion retailer Net-A-Porter and its merger with Yoox, as well as the increased visibility of platforms like Farfetch and the like, have proved them wrong. But the rise of e-commerce does not foretell the end of the luxury physical store. Brick and mortar retail is rather shifting to cater to the evolving preferences, expectations, and shopping behaviours of the modern affluent customers.

Millennials and Generation Z consumers drive 85% of luxury growth and shape the industry.

The growing importance of digital for luxury is driven mostly by a generational shift. While older shoppers have traditionally been the growth engine of luxury sales, affluent buyers born after 1980 – the Millennials and Generation Z consumers – are now making up over 30 percent of all luxury spending. More importantly, Millennials and Generation Z consumers generated 85 percent of the global luxury growth in 2017.

If some luxury brands are still hesitant to fully embrace e-retail as part of their distribution strategy —  fearful of losing a feeling of exclusivity — most luxury brands have finally understood that they must offer some level of digital experience to stay relevant.

Four main retail models are currently leveraged by luxury brands, namely:

  1. In-house, fully-owned platforms
    1. Traditional luxury brands embark on a digital transformation of their retail model;
    2. Digital-first luxury e-commerce brands open physical stores.
  2. Selected third-party resellers
    1. Monobrand online retail provides tight control of the sales funnel;
    2. Multibrand online retail is currently dominating online luxury sales.

Luxury brands pivot their strategy to sell online as one-fifth of luxury sales will take place online by 2025.

Digital is increasingly influencing how consumers make their purchase decisions. Research by McKinsey found that at least 40 percent of all luxury purchases are in some way influenced by a consumer online experience.

Digital native retailers such as Net-A-Porter and Farfetch have successfully demonstrated that luxury consumers are willing to purchase high-end goods online at an undiscounted price.

A study by McKinsey identified the role that online multibrand retail stores play in the overall consumer purchase funnel. Surprisingly, online multibrand high-end retail plays a critical role at the initial engagement stage of product research — acting as as a brand awareness channel. 48 percent of affluent consumers declare searching online for a luxury product before making a purchase, and 73 percent of those will visit at least once a multibrand site.

Larger groups, such as LVMH (which launched 24 Sèvres in June 2017) may have the resources and scale to launch their own in-house online luxury retail websites, but boutique high-end brands will often decide to partner with a technology platform to outsource most of the digital legwork.

While multibrand luxury retail currently dominate not only the digital luxury growth, but also the overall luxury sales growth worldwide, luxury brands tend to favour the level of control that a monobrand solution can provide.

Luxury brands embrace big data to drive growth.

Big data, a notion that refers to the technology used to collect, manage, and generate insights from large amount of customer information, is transforming the business of luxury.

While 85% of luxury sales comes from customers registered in their database, traditional companies have been slow to adopt big data. Data analytics can indeed help a brand identify and connect with its most valuable consumers, but it wasn’t a focus area for traditional brands until now.

Luxury brands have plenty of information on their customers’ behavioural habits through purchase records, customer profiles, and exclusive memberships. The sheer size of their physical retail presence also provides traditional brands with a significant competitive advantage to collect consumer data.

Brands such as Montblanc and Burberry are operating at the forefront of the industry’s digital transformation by embracing big data to grow. They understand the valuable impact that big data could have on their business and are willing to focus on the opportunity.

As traditional luxury brands start to take advantage of big data to engage with their consumers, digital-first brands start to open physical stores to touch new customer segments and collect more sales insights.

Successful luxury e-tailers are reimagining the purpose of physical stores by taking cues from digital experiences. The concept stores become experiential spaces where customers can be immersed in the luxury brand’s culture. They are places for exploration that create an immersive and unique experience for consumers.

Beyond the retail strategy, technological innovations are also opening the door to new opportunities for luxury brands. Three major retail technology trends are particularly important for luxury leaders: augmented reality (AR), artificial intelligence (AI), and voice-controlled. Learning to master them will become increasingly critical for luxury brands to gain market shares.

Scrolling and strolling: luxury brands convergence towards an omnichannel model.

New opportunities to bridge the digital-physical gap are emerging. Traditional luxury retail brands and digital-first retailers are converging towards online and offline integrations and omnichannel purchase journeys – allowing affluent consumers to move seamlessly between e-commerce and brick-and-mortar shopping.

After all, the customer experience is the sum of all interactions with a luxury brand… regardless of the consumer’s touchpoint.


Florine Eppe Beauloye is the Co-Founder and CEO of mOOnshot digital, a marketing agency for lifestyle and luxury brands. She is also the Editor in Chief of Luxe Digital, an online magazine for professionals of the luxury industry. Florine has over 10 years of experience in marketing and luxury across Europe and Asia and is an award-winning digital entrepreneur and author.


Please enter your comment!
Please enter your name here