THE BRAND MANUFACTURERS VS. THE RETAILERS
Why Luxury? Why Now?
Today’s demanding consumer expects conveniences, craves connecting and has greater access than at any other time. She embraces an A-to-Z of buying options that include Amazon, Gilt and Net-A-Porter on the pureplay front while still relishing retail stalwarts that include Nordstrom, Neiman’s and Tiffany’s. Brands have played their hand in a multitude of ways where early web adopters included Ralph Lauren and Coach while others have only recently embraced the digital world. It is no longer optional to participate in the digital world where branding and selling are part of today’s marketing equation.
There are a number of factors that have recently converged to elevate the role luxury retailing can deliver online and across an array of channels. Affluent consumers have strongly embraced technology and associated devices where tablets and social access via Facebook are part and parcel to daily media consumption.
These same tools have enabled luxury brands to create customer experiences through new marketing methodologies that were never available in early commerce endeavors. The ability to bring their brands to life via video and shoppable lookbooks positions these companies to create experiences that compel shoppers to connect with those whose products they own or aspire to purchase.
Social elements have added a new dynamic that further encourages merchants to connect and communicate with one’s customers and prospects. From fanning one’s favorites to seeing the newest runway fashions or simply sharing with peers around the world it takes community and connectivity to new heights.
The E-Tailing Group Embraces Luxury
For the e-tailing group, it was clear that now was the time for us to take a closer look at such an important sector as Luxury. The goal of our Inaugural Luxury Mystery Shopping Study was to assess a core group of retailers and brand manufacturers from the vantage point of the affluent customer, who according to Luxury Institute News, “rated sites based on visual appeal, navigability, product selection, use of images and text in helping them to better understand product features, security of personal data, ease of purchasing and access to customer service.”
As believers that “retail is in the details” it was time to leverage our 14-year mystery shopping track record and bring that same level of diligence to understanding how luxury retailers and brand manufacturers are making their mark on ecommerce, social networks and mobile channels to effectively connect with customers in today’s global selling environment.
In 3Q11 we benchmarked the high-end, luxury consumer experience from information gathering through purchasing. We wanted to select 20 prestige companies that would reflect the brand manufacturers currently going direct-to-consumer and their retail counterparts who have long been e-commerce enabled. In order to find a strong mix, we began by looking at over 200 companies. We had long tracked many of the luxury retailers as part of our Annual Mystery Shopping Study but knew a strong representation of brand manufacturers would be important to round out our list.
We chose to focus on apparel, home and accessories including jewelry as those categories dominate the luxury sector. Initially, sites at a minimum had to offer satisfactory ecommerce and from there we gravitated to those that embraced the channel with some degree of sophistication. It is interesting to point out that many of those reviewed would never have been in a position to be part of the EG100 for our annual study because their orientation centered more on branding than selling. This wasn’t a surprise to us but something we simply factored into the overall index weighting.
The Eg20 Luxury Merchants
Based on our study of the initial group of 20 sellers and the subsequent results, we decided that, rather than take a category-centric approach, a brand manufacturer versus retailer comparison would provide the greatest insights. It will be this comparison that guides our thinking and will resonate throughout.
The E-Tailing Group Inaugural Luxury Customer Experience Index
In conjunction with our Inaugural Luxury Mystery Shopping Study, we have created the Luxury Customer Experience Index, which leverages quantitative analysis to uniquely understand how each luxury merchant ranks against the aggregated 20 luxury sellers in the e-tailing group study (EG20), as well as brand manufacturers (12) and their retail counterparts (8). Luxury sellers are scored on a 100-point scale based on an assessment of metrics on five key pages, presence and execution of vital merchandising tactics, along with customer service execution and accessibility.
Despite the encouraging results for those at the top of our index, it is interesting to note, that only two sellers in our study achieved a score of 80+, with the high score being 83, on our 100-point scale. These results are relatively modest compared to our more established EG100 index where 10 sites achieved a score of 80+, with 88 points attained by the highest scoring merchant.
We look forward to our next study when we would hope this bar will be raised higher by striking a better balance between branding, merchandising, shopping efficiencies and service. Additionally, we would expect that brand manufacturers will continue to elevate their experiences, putting themselves in a more competitive position.
As emphasized in the introduction, the e-tailing group Luxury Customer Experience Index was also segmented in regard to brand manufacturer versus retailer performance where retailers outperformed the brands by quite a large margin.
This we believe is due to the late entrée of many of the brand manufacturers in contrast to their retail counterparts. The level of sophistication that consumers have come to expect particularly for these demanding consumers represents a growing opportunity and one they must conquer to bridge this gap.
BRAND MANUFACTURERS VS. RETAILERS: TOP 10 KEY FINDINGS
- Brand manufacturers placed more emphasis on the “brand experience” by creating a central hub which combines salient company information and, more often, rich media elements like ad campaigns and fashion shows which are core to their orientation.
- Brand manufacturers often delivered more of a “wow” visual experience but were less likely to integrate efficiencies for a total shopping experience.
- Retailers were more apt to get the “conversation” started by encouraging shoppers to “email” a friend, click the “like” button or by engaging them with a content-driven blog.
- While somewhat fewer brand manufacturers had a Facebook presence, they’ve clearly done a superior marketing job of attracting followers to their pages (an average of 1,982,166 vs. 466,589 for retailers).
- Retailers realized the requirements for a comprehensive onsite selling environment and are diligently elevating the experience while brand manufacturers currently face a steeper learning and selling curve.
- Brand manufacturers did not offer many incentives or customer perks; there were even fewer promotional opportunities than their retailer counterparts and they did not invest in loyalty programs for their customers.
- Product was the star for both brand manufacturers and retailers, but retailers made greater strides elevating the product page experience. They effectively utilized the product page as a selling tool, highlighting and enhancing the product with creative merchandising via shop by outfit, video and more product recommendations.
- Presenting a well-merchandised gift center and offering gift cards with free shipping and gift packaging was a fairly low priority for brand manufacturers though seasonality may be playing a role.
- Overall, retailers made themselves more available to their customers with 800 numbers that were better displayed on home pages, site-wide contact information access and the showcasing of customer service hours and FAQs of commonly asked questions.
- Brand manufacturers gave customers more limited access to customer service agents for service and product support, a likely frustration for shoppers spending at this level.
Stay tuned for Part II of our Global Look at Luxury series where we explore how luxury merchants create digital customer experiences by leveraging the brand.