LONDON — As big e-commerce players step up the competition and continuously seek new growth avenues, an alternative retail model is emerging, and it’s powered by social media.
Suited to the needs of the digitally savvy, fast-moving Millennials and Generation Z, the new approach uses platforms such as WhatsApp and Instagram to share content and product, connect with customers and complete transactions via one-on-one chats.
Threads Styling, a London-based fashion concierge firm that started as a personal shopping service dedicated to inbound luxury tourism from Asia in the U.K., has been a key player in this new arena.
“This is a new frontier. Fundamentally, we see it as third-wave retail,” said Rachel Reavley, Threads’ president of brand strategy, in an interview at the company’s futuristic London headquarters, complete with glass pods and bright-colored ceilings.
While the company remains focused on servicing its high net-worth clients and attracting new ones on a global scale, its growing influence on platforms such as Instagram has also allowed the service to offer an alternative take on what luxury retail means today.
Thanks to its highly curated Instagram feed and daily stories of stylized looks spotlighting the latest in-season designer product, the company has attracted a wide social following that includes private clients, as well as regular users who follow its account for inspiration.
“Social commerce or shoppable Instagram is a natural move for a social retailer like ourselves. But that doesn’t mean we won’t maintain the level of service for those ultra high net-worth individuals. They form the largest part of luxury commerce revenue for any big retailer,” said Sophie Hill, the company’s founder.
Anyone with a mobile phone can reach out to a Threads personal shopper via Whatsapp or Instagram Stories and order a product they spotted in a story with no additional fee — all they have to do is press “Swipe Up” on Instagram Stories to be redirected to a Whatsapp chat with the Threads shopping team who will then process their request on the messaging platform. It’s a much more democratic approach to personal shopping: Traditional retailers usually reserve such one-on-one services for their highest-spending clients.
“It’s the definition of see-now-buy-now,” added Reavley, pointing to the need to answer to the new generation’s desire for immediacy and seamless service, enabled by their phones. “Millennials are opening their mobile phones 150 times a day. It’s how they live, it’s a sort of extension of their own body now. They are spending at least 30 percent of their day on it.
“We’ve become the personal shopper they can keep in their pocket and we’re doing it in a way that suits their lifestyle. They don’t have to come to us, we go to them. That, fundamentally, is the huge change in retail. You can’t force the customer to find you. It’s not what they want to do anymore and their loyalty gets eroded if you make them do that.”
Natalie Hughes, director at the social media agency The Fashion Digital, said that social media lends itself to this level of service and can often enable a better shopping experience: “Buying directly via social makes for a more streamlined customer experience for digital natives. It allows for a more open dialogue between customer and retailer. The customer influences the buy, reducing overheads and making for a more bespoke experience.” She also pointed to the need for “serious manpower when it comes to customer care” as a missed Direct Message on Instagram can mean a missed sales opportunity.
Luxury brands, which have been rigorously trying to shift their strategies to address the new generation, were also quick to jump on board to gain access to this much sought-after demographic which is less likely to visit their stores.
“When you have a qualified customer and an authentic audience, then the conversation with the brands becomes very engaged from the beginning,” said Reavley. “It also goes hand in hand with the fact that fewer customers are shopping in bricks-and-mortar stores, but they are still looking for a level of service. The demographic that we speak to is really between the ages of 25 and 35, so their new ways of behavior are probably very different from that woman in her Forties.”
Luca Solca, head of luxury goods research at Exane BNP Paribas, also highlighted that “luxury players are hitting the brakes on physical retail network expansion,” as they can no longer bank on opening new retail spaces to connect with customers. “Soft luxury mega-brands — including Hermès — have all wisely chosen to put physical retail network expansion on ice, while enjoying any positive organic sales growth trend as a boost to space productivity,” he added.
Hill sees Threads as the intermediary between the brands and young luxury consumers to help them navigate the changing retail landscape: “There really needs to be a way for the brands to reach out to these clients and connect with them in an authentic way. That is something we are experts in. We’ve grown up with these clients and understand how to communicate with them.”
A “less invasive” way of communication, authentic connections and an insider’s look into a brand’s world is what the younger luxury consumer is looking for, according to Hill: “Customers want to be connected with the brand, they want to hear its story, understand the inspiration, see what is going on behind-the-scenes. They still have a love for the fashion houses, but it’s often about the communication rather than the product. Over the last 18 months, brands have really opened up to understanding the power of social media and accepting that social media is probably the most influential way to connect with consumers.”
Case in point: one of the most e-commerce-shy luxury labels, Chanel, announced last month that it is joining forces with Farfetch to develop digital initiatives that will create an “unparalleled shopping experience” and make its stores attractive to the perma-connected Millennials.
Threads considers itself “a media company as well as a retail company,” and sees the content it produces on Instagram as fundamental to connecting with its influential customer base, enabling transactions and the building of loyal relationships.
“Creative content is a big part of our growth plan: Imagery, video, communication are all part of the digital experience. It’s about bringing the brands to life,” added Hill, adding that offering an editorial curation on the social platforms allows Threads to keep up with the latest trends, set trends themselves and move product quickly.
“Brands have told us they have seen a surge in sales on their own web sites from our content, on top of the orders we place with our customers following a post.”
Sponsored content is another opportunity for the brand to tap into as it seeks further growth.
As the company seeks to scale, it is focusing on expanding its team and services to new markets such as Asia and the U.S. and has recently taken investment from Horizon Ventures to facilitate its expansion in Asia.
It is also staying committed to its current model of holding no stock and using existing social platforms to connect with its audience rather than investing capital to build its own, in order to remain agile.
“The reality is that in this day and age, when you look at Airbnb or any of those 21st-century brands, it’s not about inventory. In fact, it’s almost the opposite of that,” said Reavley. “The retail landscape is changing so much and the model of how you buy and when doesn’t mean much anymore — those timelines are becoming shorter and shorter. We are still able to work with brands at wholesale regardless of when we are putting in an order or how we are working with them.”
As part of its model, Threads negotiates individual terms with the brands it works with and can receive stock directly from their stores at wholesale prices or at a discount. It’s then able to sell products at standard retail prices, without any additional fees, while maintaining a margin. By not having to sit on its own stock, the company also gains flexibility to support emerging labels without any big financial investment, takes risks with the trends it stands behind and maintains a fresh perspective by never having to resurface old or discounted product.
The company identifies major labels such as Gucci, Fendi and Chloé, as well as more niche ones, including Emilia Wickstead, Johanna Ortiz and Fiorucci as fundamental to its business. It’s also placing more and more focus on fine jewelry — all personal shoppers are now GIA-trained — and works closely with buzzy new names such as Foundrae.
“Our model caters to a different consumer with a different mind-set. Convenience and accessibility is at the heart of it all and the world is our customer’s oyster,” added Hill, explaining that in addition to the product they feature on Instagram, customers can ask their personal shoppers to source any other product for them by simply sending a picture of the item on Whatsapp.
Not being tied to one platform also gives them the agility to keep up with the fast-changing habits of Millennial and Generation Z consumers: “The Millennial generation is moving at a much faster pace than any other generation in terms of expectations and the ways they consume. They are modifying their behavior all the time and it’s almost impossible for brands and companies to evolve at this pace, because they are built with certain hierarchies and certain silos. We are able to migrate and mirror their behavior because of how they communicate with us,” said Reavley.
Artificial intelligence and image recognition are two developing technologies that Hill highlights as key to how social and chat-based platforms will evolve in the future.
Having one-on-one conversations with customers on WhatsApp also allows the company to gather more insightful data on consumer behavior: “In this space that people now call ‘conversational commerce,’ or ‘chat-based media’ we have a lot of data, not just about what customers bought, which is what you would be able to ascertain if you were an e-commerce platform, but about what made them buy it, what were the tipping points. That’s going to be really powerful in the future.”
According to Positive Luxury, the London-based platform that promotes brands with strong ethical and environmental standards, analyzing customers’ full spectrum of emotions is becoming increasingly important for brands and retailers, and new technologies are being brought to the forefront to add a new dimension to data analytics. New developments include analyzing the tone of a consumer’s voice when using Amazon’s Alexa or gathering data from the animated characters a user chooses on their iPhone X.
As chat-based platforms offer new opportunities to connect with the customer — and gather valuable data — brands and e-commerce platforms are also looking to renew the means they communicate with their audiences.
Hughes, said that social commerce is a natural progression to the industry’s shift to ‘see-now-buy-now’ and to the need for regular retail drops. “It’s not a question of if, but a matter of when” brands will embrace this new medium, she added.
The Yoox Net-a-porter Group, which has been utilizing WhatsApp to communicate with its highest-spending clients so far, said that it’s working towards opening up the service to its wider customer base in order to respond to their preference to receive information via personal messaging services rather than email. It is also in the process of building technology that will enable a smooth sales transaction, being one of the first official partners of Whatsapp for Business.
Last month, Net-a-porter also launched the much-awaited sale of Anna Dello Russo’s closet via its Instagram Stories. The company said that by choosing a new platform “it wanted to make the collection available to the next generation of consumers” given its accessible price points. The launch had a 98 percent sell-through on its first day.
Matthew Woolsey, Net’s managing director, said that messaging platforms represent the company’s “fastest-growing transaction type” and that customers who shop on mobile tend to place higher-value orders — and double the amount of merchandise — than shoppers who only use desktop.
“Mobile is the primary touch point for digital culture. This is a user who proactively goes to a destination for a shopping experience and her relationship with the brand is deeper and more meaningful than anything we have seen before,” added Woolsey.
“This is how we are seeing the future of the luxury experience developing, and to encourage this relationship with commerce, we are launching iMessage and WeChat, as well as WhatsApp. Ultimately, the conversation via platforms such as WhatsApp is instant, faster than e-mail and more personal. It allows shopping on-the-go, which in turn is perfect for our customers who are always on the move and enables us to respond immediately, providing the fastest and most efficient type of service 24/7, anywhere in the world.”