A confluence of factors is reshaping much of retail and consumer behavior, which includes the evolution of e-commerce, shifts in how and where shoppers spend their money and macroeconomic factors such as a strong U.S. dollar and its impact on tourism.
And the luxury segment is impacted by these changes.
Chris Paradysz, chief executive officer of PM Digital, which is noted for publishing an annual report on brands in the luxury sector, said changes in the market involve how consumers perceive brands not only in stores, but online as well. For luxury brands, there are differences that need to be considered to make the experience a positive one for consumers.
Here, Paradysz discusses some of these changes, and how the luxury segment is being transformed as a result.
WWD: How has consumer behavior changed in regard to luxury and fashion brands, and how are companies responding?
Chris Paradysz: Today, we see that luxury, and retail more broadly, are becoming more similar in the eyes of the consumer. While luxury, and luxury fashion in particular, is still unique because of how the brands are positioned — and because of the tactics used to create that sense of exclusivity and mystique for those brands — while still special, there’s somewhat of a recognition that the consumer is the same consumer.
Someone who buys from neimanmarcus.com, or Amazon.com, or Chanel in the store — that consumer is the same person in all of these forms. A challenge for the brand is to not lose what’s special about their experience, not water-down the brand or alter product perception.
A luxury brand in a more transactional type of format will tend to wash out what’s special about the brand. The context really matters. And so the platform will always be a challenge. What the brands need to do in this form is to create it in a way that maintains the uniqueness, and has value that carries that mystery and what really captivates that luxury buyer. You have to evaluate the context for the content you’re going to present. Digital context is really important, and so if you’re looking for that direct relationship with a consumer as a brand, you have to keep in mind what it is that you’re trying to express, and have the environment feed into that.
While the luxury and luxury fashion space, in particular, is still very much defined by the in-store experience, digital has activated a new way to excite and intrigue the luxury customer. And there are brands who’ve somewhat harmoniously integrated digital strategies to grow in-store sales. Brands like Gucci, Chanel and Burberry come to mind. The couture, the edginess — they’ve really opened the imagination of the Millennial mind, the mind that is very sensitized to digital and tends to experience a brand first there.
WWD: When it comes to e-commerce, do consumers shop differently, say, at neimanmarcus.com than at Amazon.com or nike.com? Why or why not?
C.P.: The browsing and shopping experience online has become somewhat more seductive, because of the ease of accessibility today. When you think of these three environments, the consumer is going there for different purposes. As an example, you [the shopper] have to have some awareness of the brand you’re shopping for when you browse something like an Amazon Fashion — you’re not necessarily going there to become educated about the brands. Amazon is an environment where someone can interact with a brand and make a transaction, as opposed to a rich, immersive environment where you can experience and learn about the brand — more of the luxury experience when executed well.
Amazon Fashion has an amazing amount of brands, but the experience all feels somewhat similar — it’s more of an experience to browse and shop, than it is to buy. The lines of distinction between these behaviors — browsing, shopping and buying — are much sharper today, and so the marketer must more carefully distinguish the experiences. If you were going to buy Tory Burch or Louis Vuitton glasses, for example, it’s more of a “considered” buy that takes time, and so these experiences are elongated in luxury.
WWD: How are luxury brands creating a digital experience and how does it connect to their physical store?
C.P.: Digital is really an accelerator for the in-store luxury experience — the digital and store conversation must be connected. The luxury brands’ ability to shift to digital is perhaps more stifled than other industries, because they’re challenged to maintain the same special, intimate experience that comes from being in the store. It comes down to losing the cachet. And so the luxury brands that are successful in digital are the ones able to carry the illusion of exclusivity — the emotion, the product, the texture — it all needs to carry over to online.
Even more than just the store experience, we see brands like Burberry closing the gap between runway, the store and digital by making product available straight from the runway. Incrementally, what it’s going to do is open up more of the digital natives and the Millennials in the luxury income bracket, because that’s the way they’re accustomed to living their lives — patching real-time Instagrams from the fashion show, to seeing the product and engaging with social and e-commerce, and yet still having that very exclusive luxury experience in-store to buy.
WWD: You once described the question of “why” as being the most provocative from a behavioral perspective. When applied to e-commerce or the digital experience, what do you mean?
C.P.: Let’s put this in the context of “why” versus “what.” For consumers, the “what” being, “what am I going to click, what event am I going to experience, what music am I going to listen to, what action am I going to take?” The “what” is the content that I’m being exposed to, whether that’s a digital experience or whatever it may be.
The “why” is much more challenging, and much more critical to tap into, especially for luxury and luxury fashion. “Why does someone choose one piece versus another? Why is someone passionate about that particular thing?” It has to do with the way we want to project ourselves. All of us have something that we consider luxury — something that we consider really special that we’ve bought or acquired in some way.
And the buying part is a much more considered “why.” The behavioral decision about something that’s luxurious — the “why” is tied to something that’s very provocative. The brand connection, in any format, but particularly in a successful digital or e-commerce environment, needs to start with that “why.” It’s what really allows the brand and consumer to be drawn together. It’s about captivating passions, and connecting to a level of need — if they don’t hit the “why,” that piece will always stay in the shopping cart.