Luxury Fashion Retailers Embrace Digital Transformation to Boost Customer Engagement and Revenue
The luxury fashion industry has long been associated with the latest fashion trends and stylish looks. In a world that has been drastically impacted by the COVID-19 pandemic, the retail industry, especially luxury fashion brands, is making a significant shift towards digital technologies to boost customer engagement, optimize omnichannel efforts, and increase revenue.
As emerging digital technologies continue to make a significant impact in luxury fashion retail, brands are discovering that integrating technology solutions into their strategies can help create personalized customer experiences resulting in stronger connections with their customers.
From big data and new apps to powerful platforms and sleek solutions, technology is becoming the new chic in luxury fashion retail. At Stefanini, we specialize in servicing luxury fashion brands, equipping them with solutions to digitally transform their business and customer experience.
Considering the importance of emerging digital trends in luxury fashion retail, here are some of the top digital trends that retailers should keep an eye on in 2023 and beyond.
1. AI: You Can’t Spell Fashion Without It
In luxury fashion retail, customer analytics, hyper-personalization, micro-targeting, inventory management, and customer service all require AI technology to effectively scale and deliver the level of experience expected by luxury customers.
AI-powered technology solutions like chatbots and personal styling apps are proliferating, providing opportunities for luxury fashion retailers to track customer journeys, match customers with the right products, monitor inventory, forecast trends through data, and predict customer behaviors and preferences.
2. Transparency and Authenticity – Keeping It Real
In a world where authenticity and brand cachet are everything, new digital tech advances are game-changers. Tech that records and preserves digital identity has a myriad of applications as a transparent, traceable, and efficient tool in the retail supply chain.
This provides the possibility to follow products and supply chains by creating a physical-digital link that records every stage of production, leading to improved sustainability and increased brand sentiment. Consequently, organizations can prevent counterfeit goods, identify the last party to gain custody of the product, track new merchandise shipments and advertise exclusivity to consumers by capitalizing on a transparently finite supply.
3. Know Your Audience: Microtargeting and Hyperpersonalization
The rule in retail is 80% of your revenue comes from 20% of your customers. That ratio is more disproportionate in luxury fashion, making it notably critical to maintain strong connections with customers – and have a nuanced understanding of their priorities and preferences.
Social media and mobile applications play an important role, driving a diverse range of new apps to connect with consumers in new ways. Luxury fashion retailers can inspire micro-targeting and hyper-personalization for limited releases and exclusive offers, identify when customers are in specific stores, and deliver targeted offers based on history and preferences.
4. Intelligent Automation and Omnichannel Optimization
Intelligent automation (also known as cognitive or hyper-automation) uses bots with decision-making capabilities to increase scheduling productivity and accuracy, evaluate the connectedness of task management, and automate end-to-end processes.
Luxury retailers who adopt intelligent automation equip sales associates to serve customers more effectively by informing them about the location and availability of products (both in-store and online) and when limited supply items or exclusive releases are expected. With details about individual customer preferences, sales associates can provide elevated and personalized service—a defining characteristic of high-end service in the luxury space.
5. The Data Dimension
Data is the lifeblood of any business, and the most sophisticated tech tools are only as good as the quality of the data collected. High-end items (and the accompanying shopping experience) are so important in the luxury space that the in-store experience remains a key piece of the data collection and utilization puzzle.
In-store data collection and customer experience are crucial because brick-and-mortar retail is part of a connected retail ecosystem. Brands are increasingly turning to social media to track sentiment, provide incentives to third-party partners to share collected data, and using sensors, computer vision, and RFID technology to measure foot traffic inside and outside of stores.
6. A Fashionable Future
Luxury retailers are finding it increasingly important to create a seamless experience across mobile, social media, web, and in-store. Investing in a diverse technology stack benefits customers as well as retailers and allows luxury brands to cater to individual customer profiles and purchasing habits with tailored products and store experiences designed just for them.
In conclusion, digital transformation is the new normal in luxury fashion retail. Retailers must prioritize education about the tech innovations available to them and evaluate which tools make operational and financial sense for their brand. Luxury retailers should consider consulting with an experienced technology partner to assist them in selecting and integrating new technology in a thoughtful and strategic manner – or even create a digital retail solution designed with their business objectives in mind.
By embracing digital transformation, luxury fashion retailers can position themselves for success in the ever-evolving world of retail by enhancing their customer engagement, driving revenue growth, and staying ahead of the competition.
