Should Data be a Luxury for the Fashion Industry?

The luxury buyers of today are tech-savvy high spenders who know what they want and go online for exclusive labels. And they’re getting younger — Gen Y and Gen Z continue to drive growth and will account for 70% of the luxury market by 2025. They’re changing the concept of engagement with luxury brands, expecting them to set up co-creation environments, seamlessly interact with digital content and operate at their highest standard, all while remaining authentic and becoming more sustainable.

“To win in the uber-competitive luxury game, companies need more than just recognizable brand names and fashionable seasonal lines,” said Stefano Galassi, an open innovation adviser for luxury brands. “Customer centricity and elevated personalization add a layer to the products themselves that can help a brand stand out in a sea of players.”

Growth Driven by Higher Customer Expectations That are Not Always Met

According to a study by Bain & Co, luxury growth is expected to reach 6%-8% per annum until 2025, though these expectations may change due to the Ukraine crisis effect and increasing inflation potential impacts on luxury key regions. In this “initially” sweet context, many brands argue that they have “world-class” service, but service experiences are barely differentiated from one another. And in the digital space, few brands are standing out from others, and even fewer have created superior end-to-end experiences. Why? Surely not for lack of concern, focus or investment.

The diagnosis is not related to one specific cause, but to a combination. Luxury (like many other industries) is suffering from widening expectations, from products and locations to service and attention, and even more subtle aspects such as the feeling of “am I really special to this brand?” That´s a difficult angle to cope with. VIP programs of luxury companies tend to work reasonably well, but there’s a huge gap between that and making every customer feel truly exclusive.


Where should a brand start? A few hints:

  • Capture purpose-oriented, relevant and differentiating data for the experience. Luxury brands have less opportunity to impact their customers than other brands, as visit and purchase frequency is significantly lower while service expectations are higher. Therefore, being able to capture relevant and specific-for-each-brand customer data, and use it effectively when customers visit the store or digital channels, is absolutely crucial. Up-to-date customer information and appropriate customer preferences prove to be golden data for store and virtual associates.
  • Set up store processes at the service of the customer. This may sound naïve or ironic as the store is the “place” for the customer, but the reality is that store processes are not always customer-oriented by design. In the case of luxury boutiques, where service expectations are well above average, details are of great importance, enabling appointment services, using data-as-a-service capabilities to discover additional product information (materials, suppliers, sustainability, etc.) in the store, simplifying checkout, facilitating product reservations and more. All these will contribute to raising the bar for service.
  • Approach technology wisely. Technology options are countless (immersive fitting rooms, interactive fashion digital displays, 3D shoe configurators, interactive checkouts, virtual personal shoppers, NFTs, metaverse possibilities, etc.), but luxury brands need to understand which help them better connect with their customer or access new segments, which reinforce their brand positioning and which simplify and optimize their processes.

Stores Remain the Local Brand Temple – and Need an Appropriate Data Management Environment

Brick-and-mortar boutiques still wear the crown in luxury, and COVID-19 travel restrictions still in place in certain key markets are making local stores and local flavor more critical in translating and conveying brand message. But the in-store brand message is not just what can be seen, but also many non-visible details. This can be background music, store services information, product reservation options, payment methods offered, physical or digital appointment capabilities and more.

Store data usually exists in disconnected sets, dispersed in multiple and varied-purpose applications (commercial, IT, merchandising, design, etc.). Many luxury retailers face costly processes to ensure data accuracy and a lack of easy-to-use interface for store staff.

“Though brick-and-mortar stores and boutiques are still the ‘temples of the brand,’ we don’t see nearly enough global, connected and integrated store data management solutions,” said Galassi.

By governing location data, for instance, brands create a single, flexible data structure able to support disparate sets of data, such as opening and closure hours, events calendars, specific store assets or devices to be controlled, store services and store associate schedules. This kind of structure also supports brands with role access model and intelligent workflows to govern the flow of data (collection, validation, enrichment, approval, sharing, etc.) It can also offer data-as-a-service capabilities to facilitate access to booking from customers and other tasks.

Luxury has New Meaning, New Sustainable Capabilities

Today’s millionaires are mainly concentrated in the 18-to-44 age bracket, a mixed troop of millennials and a growing Gen Z population. Luxury takes on a new meaning for this group — being more environmentally friendly and socially conscious. Concepts such as circularity, rental services and second life are gaining presence in the luxury market. Brands will need to put in place additional data capabilities to support and own these new services.

Luxury is a selective club whose members need to secure control over brand positioning, and therefore actions common in other industries (such as discounting) don’t fit well with luxury brand schemes. However, rental services and second life programs allow brands to maintain the necessary control over price positioning and to build and communicate values that are highly appreciated, especially by younger generations, like conscious consumption, reusability, use vs. possession and the sharing economy concept.

There are two key challenges for the luxury companies of today and tomorrow. The first is ensuring brand cohesion and protecting exclusivity or, even more difficult, extending exclusivity to other customer segments without losing the brand’s essence. The second is to build in the capabilities needed to operationalize these new service models without moving backwards in the already-gained ground toward omnichannel.

Miriam Molino Sánchez is Head of Global Retail Practice at Stibo Systems. She brings with her deep expertise in retail, with more than 25 years in the industry as a consultant serving retail corporations in multiple strategic and operational initiatives, including working for one of the biggest retail companies in Spain as it underwent a massive digital transformation. At Stibo Systems, Molino Sánchez is reinforcing the company focus and value orientation toward retail clients.

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