Luxury Trends for 2011: The Latest From The Luxury Institute
The Institute states, " As the luxury industry enters the last quarter of 2010 and prepares for 2011, executives are grateful for what could have been a worse year considering the state of the world's economy. The truly global top-tier luxury brands are surging in China, while holding their own in the US, Japan, and Europe. Leading public companies have done much better than privately-owned brands by using their heritage, innovation, and resources to gain market share. Many family-owned European brands, rich with history but lacking innovation, have suffered and are desperately looking for capital. Overall, the industry has seen tepid growth; this trend is likely to continue for the next three years unless some unforeseen, and highly unlikely, positive event occurs and saves the global economy."
1. A Deepening Focus on Brand Values and Service Values
In his recent book on luxury strategy, Jean-Noel Kapferer stated that unlike mass consumer brands, luxury firms don't need a brand positioning (e.g. Hertz: #1 in Rent-a- Car , Avis: We try Harder), but they do need an identity. The Luxury Institute states, "Brands must create their identities not only by the name, personality and style of the founder, but also through values by which they should be known and publicly judged. They can be one comprehensive set of brand values that establish the company personality while also acting as service values which define the customer experience." Brands can also choose to develop two distinct but related sets of brand values and service values. In a recent Luxury Institute LCRMA (Luxury CRM Association) survey, 90% of luxury executives agreed that luxury culture and values are directly linked to positive financial results. .
2. Luxury Brands Purge its Out-of-Touch, Arrogant Staffs
"As top-tier luxury CEOs and their Boards discover the importance of a benevolent culture and values," the Luxury Alliance states, " they are also beginning to realize that the people who manage and deliver customer experiences must fit the new customer culture In the sales and customer-facing ranks, people will soon be selected on their abilities to be brand and product experts, earn trust and build lasting customer relationships. Lone Ranger, toxic sales professionals who are currently tolerated will soon be out of fashion. Ritz-Carlton, Mandarin Oriental, Four Seasons, Lexus and Nordstrom have been doing this for years, but even they will have to move to a higher level of cultural relevance and practice, as companies like Zappos prove that there is far higher ground to reach in terms of selecting customer-centric people, living the values and transparency."
One senior luxury executive recently told the Luxury Institute that "It's a dark day for luxury when Zappos delivers a far better luxury experience than any luxury brand". As luxury retailers learn to leverage the Internet for e-commerce, they are also learning that one thing affluent consumers expect from their online experience, if the need arises, is the availability and opportunity for quick, easy and immediate direct communication. In a recent Luxury Institute WealthSurvey, 62% of affluent consumers stated that when shopping online they feel more comfortable if they can call someone directly for assistance, and 60% said they are likely to abandon their online purchase if they cannot find quick answers to their questions on the website. In addition, 45% expect an obvious phone number to speak with a live sales or customer service representative. While luxury struggles with the answer, Zappos has beat them to it and gained the high ground. The secret that Zappos has learned is that only a small percentage of people need this call service very often. Look for most luxury brands to understand the connection between the call center and online channels and create a far better experience for customers in 2011.
4. Clienteling Goes from a Hobby to a Discipline
In a recent Luxury CRM Association Clienteling survey, only 25% of affluent consumers reported that they have a relationship with a sales associate at a luxury brand. That was actually a high water mark, as other surveys that Luxury Institute partners have conducted indicate that only 8-15% of customers report having a relationship with a sales associate at top luxury retailers. Why is this important? Because this small group of luxury consumers give a retailer almost twice as much in wallet share. They also are likely to continue buying more over time if they have a relationship with a dedicated sales professional.
5. Luxury Mobile Applications Come of Age
Top luxury brands now well into a few years of e-commerce, and having finally ventured into social media, are determined not to miss the soon-to-explode mobile device shopping party. Luxury Institute research on the wealthy consumer use of mobile devices shows that 76% compare prices via mobile devices, while a rapidly growing 27% have purchased via a mobile device. In addition, 21% report that they use mobile devices to look up respective product information while shopping in stores. We are near a tipping point where mobile devices will replace the laptop for many activities and transactions and luxury brands are racing to be a step ahead for a change. Tiffany's recently-launched mobile application for finding your perfect engagement ring is a good example of a simple and practical innovation that seeks to serve its customers.
6.Luxury Equips Sales Professionals with In-Store Mobile Devices
Luxury is about to begin testing equipping its sales professionals with mobile devices such as iPads and iPhones in its stores. They can also be used to take customers through rich sales presentations that include video and audio enhancers. They can be used to search out-of-stock inventory anywhere in the retail system, conduct an online transaction, and arrange for delivery in real time. As customers opt in to having their own mobile devices announce their arrival at the store, sales professionals can be alerted to greet customers by name with custom offers ready, or at minimum be aware of what offers have already been sent to them. These applications are only the beginning of the use of mobile in stores as a customer experience enhancer for the sales professional as well as the customer. Mobile devices combine personalization efficiency and effectiveness with an unprecedented touch of caring and nurturing that are the Holy Grail of a true luxury experience.