‘An estimated 40 percent of luxury brands still don’t sell online,’ says a recent report from Bain Consultants in a Bloomberg Businessweek article.
Luxury retail – two words that together evoke images of high fashion, top models strutting on runways, sports cars and Italian marble. No pretenders to the business of high chic, luxury brands have understandably been late entrants to e-commerce and technologically enabled retail. Until now, there has always been the dogma of providing sensory stimulation through sight, touch and in-person experiences. There are exceptions to the rule, though. Burberry and Estee Lauder are, by now, veritable natives of the digital fashion world, and luxury megabrand Chanel has just ventured into e-commerce. But what about the others? With many tech savvy millennials now being prominent customers, elite labels are rethinking their cautious approach to online retailing. Dozens of luxury fashion brands are beginning to dip their toes into the waters of online sales, and v-commerce is their game changer.
V-commerce is a term describing the usage of virtual and augmented reality to enhance e-commerce. Customers are lapping it up and thirsting for more. Over a quarter of e-commerce shoppers have purchased a luxury item online in the past year. That’s rapid growth from 10% in 2015 and a measly 6% in 2014. One-third of those consumers were millennials in the age group of 18 to 25. Compare that to only 6% of purchasers who were 61 and older, and it’s clear where consumer desires are headed. To top it, 38% of all luxury e-commerce shoppers have indicated a desire to use VR to purchase luxury products. In a market that boasts 70% profit margins, that’s huge untapped potential for luxury brands.
VR is still considered an expensive indulgence by many so it’s not surprising that luxury shoppers have been found far more likely to use VR devices than the average customer. Two out of every five, to be precise. They’ve also rated the technology more likely to impact their purchase decisions. 2% of those that have bought luxury items online in the past year already own VR devices, and a whopping 28% intend to buy one this year.
But gimmicks are not going to cut it for these high-fashion brands. While AR/VR alone may boost sales in the short term, they need to strategically tie into overall brand experiences in the longer term. VR and AR are poised to become integral parts of such experiences – easing customers’ apprehensions about size and fit, and stimulating their imaginations with unique ways to test new products, see how they’re made, and engage virtually in memorable experiences like fashion shows. The greatest potential of virtual reality for luxury brands, though, is to increase business from those who don’t have the time, opportunity, or inclination, to visit a real world store.
We’ve written about how it all began and some of the major emerging trends that brands are adopting to improve how they interact with their customers. Such strategies are of paramount importance for luxury brands, and if used holistically, are capable of wooing new customers and delighting existing ones – effectively creating repeat purchase cycles that add tremendous value to both retailers and their customers.