The retail industry as a whole has been hit hard by COVID-19, with the luxury sector feeling some of the harshest effects. However, we’ve seen spending rebound post-lockdown in China across all industries, including luxury. When Hermès reopened their second-largest store in Guangzhou they took £2.7million in one day.
While an increase in digital sales and online presence is expected to stick in the long-term, in-store experiences will certainly not stop altogether. The brands emerging from this not only surviving, but thriving will be the ones who can corner the online market and then successfully convert new digital customers into their retail spaces. Offering a seamless and attractive service in store will be crucial to survival when competition is so high. Take this time to work out how to use your space to its fullest potential, and how to get people through the doors via your online channels.
It’s not all doom and gloom
The luxury industry is forecast to shrink by 15-35% this year and the impacts will be felt beyond 2020. However, current estimates see the industry regaining positive growth next year of 2-4%. While this may not be hugely encouraging, it shows that luxury will regain some of its prominence - the losses we’ve felt these past few months don’t have to be perpetual. The key now is making sure that you attract the consumers who are seeking to make purchases.
People won’t stop getting engaged or having successes to celebrate: jewellery will still be bought. But customers will be more scrupulous about where they spend their money. Depending on how long we stay under lockdown for, general spending power will be weaker for some time to come (30-40% of Brits think their disposable income will be impacted by the crisis). Purchases will feel more significant and consumers will be seeking the best possible experience if they’re going to make the effort to go into a store. More research will be conducted online, so make sure you’re selling yourselves in the best way.
There’s been a clear accelerated shift to online shopping but it’s also likely that there will be a renewed passion for in-real-life experiences when we come out of lockdown. Following most crises or periods of emotional upheaval, there’s a sharp rebound in spending based around building ‘normality’ in experiences. Identity-reinforcing purchases often follow, and luxury is the pinnacle of these.
Once the crisis ends, luxury consumers are expected to come back in a backlash against the tough period we’re coming through -- as happened after World War II, 9/11 and the 2008 financial crash. Ensuring your store is the most attractive option in your field will be vital if you want to sell to these customers. Make your plans now if you can to get ahead of your competitors when stores are allowed to reopen.
Don’t expect a surge to come overnight, though. As China is returning to ‘normal’ post-lockdown, 75% of people still want to avoid shopping centres and discretionary spending is still low after gradual reopening. The first signs of significant recovery in Asia are expected from May, so it may take a few months for businesses in Europe to re-emerge, particularly as we went into lockdown at a later stage. You have time to get a good plan in place to improve your in-store experience as long as you can weather the current downturn.
Use digital to your advantage
Your digital presence will be critical to survival amongst consumers who are more wary of public spaces and are leaving the house less as working from home becomes the norm, but online channels can be less profitable than physical retail. Make sure you’ve worked out a business model that prioritises digital growth and integrates this with optimised customer experience. Ask yourself what your USPs are -- they could be anything from the types of gems you specialise in to the generations and heritage of your business -- and make sure these are clearly advertised online.
Social distancing and lockdowns have proved that e-commerce and brands’ online presence are more important than ever. Patek Philippe, for example, is now allowing certain online partners to sell selected models, having avoided e-commerce entirely until now. Elevated digital capabilities are an urgent priority for most brands, with consumers demanding more in this space than ever before. But this doesn’t mean all transactions will be made online when lockdown is lifted.
Use your digital platforms to offer the reason people should come to your store. Consider using your physical space online in videos to showcase your collections. Many brands are now adapting by making more online, digital experiences, rather than pushing a hard sell. They’re using social media to keep consumers engaged, busy and creative during isolation. Connecting on another level will help improve the trust and preference customers will have of you. Using this time to talk to your customers will encourage them to return to you once it’s safe to do so.
Be clear about how your store will keep customers safe
As we’ve seen with China, lockdown being over does not mean there will be a huge, immediate flood of customers through your doors. It may take some time for the majority of people to feel comfortable with public spaces, transport and shops. It’s key that you take this into account in the way that you welcome and look after your clients in store, and how you share that information.
Ask yourself what social distancing practices you need to follow in the upcoming months. How can you adapt a face-to-face consultation? Are larger tables a good solution? How many people should be in your store at any time? Once you’ve established safer ways of operating, make sure you make this clear online. You can dedicate a page to the in-store experience and precautions you’ll be taking. It’s critical to encourage trust and confidence right now.
How can you decide what changes to make?
They say there are no original ideas, so look at what your successful competitors are doing and work out how you can adapt your set up to improve on that. How much refurbishment or redecoration can you afford right now? The new generation of consumers wants their retail experiences to be outstanding, so work to meet their expectations.
Talk to your existing customers. Send out an email survey to see what people who’ve bought from you before and who value your brand like about what you offer, and find out what they’d like to see. There is less brand loyalty nowadays, so not listening to you customers and what appeals to them may mean you lose them for good.
Talk to your team! The people who make, sell and market your jewellery know your brand better than anyone. Get creative and encourage their feedback too. Think about what you’ve done in the past to get people in and how successful these measures have been. There are no bad ideas - you may just unlock a winning strategy. And be honest: how long has it been since you last updated your display?
Culture is king
Consumers are placing more emphasis on culture and less on products. Events and promotions that attract customers in store will be more important than ever. Building and sharing the USPs of your brand cannot be underestimated.
The promotions or activations you run online, either on your website or on social media, will be critical in boosting profits in store. How much can you afford to spend on activities that will bring people into your store - whether virtually or in person? What events, promotions or activations could you run in store once lockdown is over and how will changed behaviours and expectations influence them?
The impacts of this crisis will be sustained
Many of the changes to consumer behaviour that we are seeing in this moment represent a rapid acceleration of existing trends. The shift to digital will undoubtedly be sustained and new behaviours are being forged throughout lockdown. There is increased pressure on the economics of physical space, but you can this time as a moment to create positive transformation in reaction. Your in-store experience will be more important than ever if you are to tap into future markets.
Whilst in the short-term we’re experiencing significant impacts in the jewellery industry, thinking about the future cannot be deferred. Brands who will emerge as winners are planning for a ‘new normal’ and making bold decisions now.
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