CBRE & Walpole Insight | Luxury and Technology
Yesterday saw the launch of our latest insight report with CBRE: ‘Luxury & Technology’, which focuses on the role of technology in supporting, advocating and reinforcing the luxury experience. Hosted at YOOX NET-A-PORTER’s Tech Hub, guests at the event discussed omni-channel and the importance of tailoring in-store retail technology and online presence to align with the in-store experience and the brand strategy.
To read this report for yourself, which includes insights from the Future Laboratory and Walpole members including Harrods, Farfetch and YNAP, please click here.
Walpole is delighted to work with CBRE, our Strategic Partner, to bring you our latest report into luxury and technology. This report marries CBRE’s expertise and experience of the global property market with Walpole’s unique insight into Britain’s high-end sector, as the official body for over 250 of the UK’s most exquisite luxury brands.
Although the UK retail market has faced uncertainty over the past year as a result of the EU referendum, the luxury sector’s performance remained strong. According to Euromonitor, UK ‘Luxury Retailing’ has grown 33% from £3.4bn in 2012 to £4.5bn in 2017. The UK’s high-end creative and cultural industries also account for over 2.2% of the UK GDP (Walpole, 2015). While the result of the referendum hit consumer confidence and spending power in the UK, the favourable pound has sparked an influx of tourism and has contributed to an increase in luxury spend. Deloitte also noted in Global Powers of Luxury Goods (2017) that although almost half of the luxury purchases are carried out in foreign markets or while at the airport, the appetite for purchasing luxury goods in the domestic market increases with age. This would imply that in part purchasing behaviour is also linked to age or a specific generation
The report explores the generational differences in the use of retail technology and how luxury retail is using technology in-store and online to enhance exemplary service provision. Catering for generation-specific customer behaviour, many luxury retailers take advantage of the breadth of retail technology to enhance the existing, exceptional in-store services for their customers. One important element of this is e-commerce. A survey by McKinsey and Walpole (2016) found that 42% of Walpole’s members saw the expansion into e-commerce as an important driver for growth between 2010 and 2015 and 57% believed they had suffered from an under-investment in e-commerce.
While the advancement of retail technology is a fantastic opportunity for luxury retailers and the wider industry to enhance their existing service provision in-store, retailers need to strike the right balance between complying with the desires of each customer and staying true to what the brand stands for. It is important to tailor in-store retail technology and online presence to align with the in-store experience and the brand strategy.
E-commerce and the in-store experience should not be considered as separate entities, but collectively. Some retailers embrace the breadth of retail technology to increase their reach. However, other luxury retailers have consciously made the decision not to sell their products online and remain solely in the physical store. For the majority of luxury retailers, e-commerce is gaining importance as a channel that complements the in-store experience. And though the customer cannot touch the products, many brands and multibrand retailers have found significant success selling online.
The analysis conducted for this report aimed to identify the role of technology in supporting, advocating and reinforcing the luxury experience. It becomes clear that we are only at the beginning of exploring and understanding how technology can be utilised best to enhance the customer experience and it will take time for luxury retailers to find the right balance of traditional in-store experience and the implementation of technology. And while some luxury retailers include retail technology and e-commerce in their store operation, others see them merely as a separate way of purchasing the product or refrain from selling their product online at all.