Does Luxury Retail need a Reset?

Does luxury retail need a reset?

It’s been well reported that luxury retailing has enjoyed an historic boom since the pandemic. But in recent months it seems that the global consumer slowdown is finally starting to impact previously impervious companies like LVMH, Kering and Watches of Switzerland.

So, what’s going on? At face value, this appears counter intuitive. Evidence of recent years shows that the concentration of global wealth in the hands of the top 1% just keeps on increasing. So surely that should mean that these brands will keep going from strength to strength? I’d suggest that it's important to look more closely at who actually shops with these brands. For sure, the mega rich are still there; hoovering up their stealth wealth symbols of success, but an important part of the sales mix has always been aspirational, more ordinary folks. The people who save up for months or max a card to buy one small item from their favorite brand, and it looks like this is where sales are under pressure.

Can anything be done in the short term?

From my recent experiences in luxury stores in London, I would say yes. There’s evidence that the years of easy sales have made even some of the best luxury brands in the world take their customers for granted. My friend Martin Newman talks all the time about putting the customer at the centre of your thinking – and it looks like luxury retail has temporarily forgotten this. Maybe it was too easy during the COVID years and their aftermath. The brand mindset was just a variation on that old Field of Dreams classic: design and make beautiful products, charge the earth for them and ‘they will come’.

The fact is that right now, they aren’t coming. My visits over the last months are showing evidence of complacency across the Bond Street ‘usual suspects’. What do I mean by complacency? Well – how about the greeter in one of the most expensive stores in London who chews gum and ‘searches for the dot’, eyes down on the screen of her iPad while you stand there for minutes waiting to be acknowledged. Or the member of staff who tells you that they can’t help you (even tho’ they are just standing there) because you have to check-in first before they can help you. What about the floor manager who tells you with a big smile that a repaired bracelet has been despatched from Paris already, but he has no idea when it will arrive, and he certainly can’t promise it will be before Christmas (in the last week of November). And the customer service agent who tells you that you should call back in six months(!) to get a replacement for a missing button on a coat. Also, endless examples of names, or the reason for the visit, being taken down incorrectly, because the conversation with the staff member that they were enjoying before you arrived was much more interesting than listening to you.

These are all small things by themselves. And in an ordinary store we wouldn’t mind. But we expect luxury to do better. To sweat the details. To treat the customer who buys a t-shirt with the same consideration as the one who buys a $5000 bag. It always used to be that when you entered the brand’s universe, everything was designed to create a sense of well-being, and of being treated to a genuinely special occasion. Today’s sloppy service just builds resentment – ‘why am I spending so much here just to be ignored?’

The current economic pressures are affecting every retailer – but for luxury to ride it out – there might just need to be a Luxury Retail Reset. Leaders’ time would be well spent focused on rebuilding a truly customer-centric culture; to strengthen the in-store experience and deepen the sense of connection to the brand, before those aspirational customers are lost for good…

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