Despite our increasingly digital world, where most brands are largely investing in digital methods to engage customers, it’s clear that physical stores still play a pivotal role in the customer journey for luxury shoppers, according to new Business of Fashion (BoF) research.
The newly released Evolving Art of Luxury Experiential Retail report from BoF data and analysis think tank BoF Insights, in partnership with upcoming Montreal shopping district Royalmount, examines the shopping preferences of luxury consumers in North America, and finds that luxury shoppers—77 percent of which expect to visit luxury stores as or more often in the year ahead—are increasingly demanding more from their shopping experience, and luxury brands must continue to evolve to create an experience that satisfies these valuable shoppers.
The research reveals that nearly a third (31 percent) of luxury shoppers visit a physical store at least monthly, preferring the tangible benefits of face-to-face interactions, and 68 percent prefer to involve a physical store when it comes to customer service. More than a third (37 percent) report feelings of happiness when they shop in-store.
“In a time when fashion brands and retailers are increasing their digital presence and technology from the likes of AI to the metaverse is becoming more sophisticated, it is clear the importance of physical stores cannot be ignored,” said Rahul Malik, Managing Director, North America, at The Business of Fashion, in a news release. “For brands wanting to attract luxury shoppers, the report highlights the key factors this valuable audience is looking for and how to implement strategies necessary to appeal to them.”
The study identifies three key pillars that create dynamic retail experiences for luxury consumers:
The value of technology lies in its ability to enable deeper human connections, rather than replace them altogether. For luxury shoppers, the benefit lies in being rewarded for their loyalty and access to services they can only enjoy in person. More than half (51 percent) say tech-enabled loyalty programs are the most important offering when visiting a luxury shopping destination, closely followed by complimentary amenities (50 percent) like free WIFI that enhance their customer journey.
Six in 10 (61 percent) consumers surveyed agreed that retail stores should meet higher environmental standards, which is why more brands are utilizing their physical stores as a way of representing their values. From Nike recycling old apparel and footwear in order to create building materials to Reformation encouraging customers to recycle by paying customers to drop off pre-loved items, sustainability is now an imperative for brands to actively demonstrate how they are taking a responsible approach to the environment.
In tandem, it is clear consumers in urban areas are looking for destinations that convey elements of nature within them. Nearly one third of shoppers rated an abundance of green spaces as one of the most important factors to a retail destination.
Mixed-use facilities appeal greatly to shoppers. The defining factors that attract people to these spaces include dining options (58 percent), entertainment (31 percent) and green spaces (27 percent). The data also reveals these curated physical retail experiences invoke an emotional reaction in the shopper, with feelings of happiness (37 percent), curiosity (35 percent) and inspiration (34 percent) being some of the most common emotional reactions.
Harnessing inclusive luxury to attract a wider demographic to stores, rather than allowing it to alienate certain customers, means brands can speak to a wider cohort of individuals. Shopping destinations that appeal to the wider community—from retail and entertainment to leisure and public spaces that everyone can enjoy—will create greater long-term engagement and loyalty compared to short-term sales.
“It’s clear from this report that luxury players in the industry must continue to invest in physical spaces, and the three pillars around sustainability, inclusivity and connectivity are essential to creating a place where people want to spend their time,” said Andrew Lufty, CEO of real estate developer Carbonleo, which designed the new Royalmount shopping district. “At Royalmount, years of research and thought have gone into creating a space where people feel happy and fulfilled—it’s not just about transactions, but developing a destination that creates connections and an emotional journey.”
Download the full report here.
The report draws on Royalmount as a key case study by highlighting the need for a holistic approach to retail concepts, drawing insights from a survey of over 1,500 US and Canadian shoppers.