Those of us in the Luxury Track of the ESSEC GMBA are starting the week energized, having just concluded a 5-day virtual trip to New York. It gave us unique insight into businesses operating in one of the world’s largest luxury markets, through private conferences with leaders of both European and American luxury houses. We were privileged to meet with executives from L’Oréal, Tory Burch, Christina Louboutin, Cartier, Louis Vuitton, Tiffany, Estée Lauder, Givenchy Beauty & Kenzo Parfums, Bergdorf Goodman, Janou LLC, and Albatross CX.
The issues discussed were too numerous to be listed here, but they included sales, sustainability and savoir-faire, as well as organizational structure and, inevitably, technological disruption, amongst many others. Three themes, however, echoed through all conversations: the importance of omni-channel retail, CRM in a bifurcating market, and the delicate equilibrium between global and local offices.
For anyone in doubt of the power of omnichannel retail, one senior leader shared that customers who shop his brand both online and offline spend on average 250% of those customers who shop exclusively online, or exclusively in store. The more a brand can insert itself into customers’ special moments, creating points of connection, the more it builds relationships, and ultimately, relationships make the sales.
This is easier said than done, however, especially for department stores, whose model, biased toward brick-and-mortar, has made pivoting towards an omni-channel model difficult. The operational challenges have caused venerable names like Macy’s, JC Penney and the Neiman Marcus Group to succumb to bankruptcy within the last 24 months.
Overall, of all categories, luxury beauty has pushed the boundaries furthest on omnichannel distribution and innovation. Despite still selling a dream, its relatively accessible price point makes it available through premium as well as mass distribution channels, such as Amazon.com or Walmart, ensuring plentiful supply, and the logistics quality of these retail giants. Hard luxury has an innate challenge here due to the preciousness of the pieces, but they too have been innovating around novel ways of using digital to improve the quality of e-commerce interactions, including private video-conferencing and HD 3D recordings of key products.
CRM in the age of COVID
Omnichannel retail is part of a larger conversation about data—not just the operational data needed to make it work, but also the customer data it can generate when properly implemented. Knowing the customer is more important than ever in a post-COVID socio-economic environment is divided, with the rich getting richer, and the rest are being more prudent with their discretionary spending.
Data from digital as well as in-store activity, if properly harnessed and processed, can help brands more intelligently segment their clientele, from VIPs to luxury debutantes, and serve them according to their needs. Of course, intimate knowledge of one’s top clients is crucial to ensuring repeat sales of big-ticket items, but it is an open secret that the accessible luxury clients drive volumes and revenue. Data can help build a more holistic view of these people, and inform future product development and marketing campaigns aimed at them.
Global vs. local
As future MBA graduates, we are all of us thinking about our next global adventure. For a career at a European luxury maison, Paris is ground zero. But it was nonetheless interesting to see the many advantages that their local offices can offer, especially when they’re as important as the United States.
Often more leanly run than HQ, US offices are much more oriented towards the nuts and bolts of the luxury business, providing an excellent training ground for aspiring executives whose decisions will influence on-the-ground operations. Many functions including design, CSR, business strategy and marketing communications are centralized in Pairs, but for the entrepreneurial and proactive professional, building sales volumes in local markets, getting a handle on distribution logistic, and learning to manage CRM all represent very solid, if sometimes unglamorous, foundations to a career in luxury.
If there is one adage that captures the learning of the week it is this: the appetite for luxury is timeless, though the way it is consumed may change. As MBA students, it is a reminder that adaptability and practicality are good qualities to cultivate in professional life, and that ultimately, it is the client who counts.