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StrategyFeature

New retail: the ultimate human-centered narrative

The pandemic has been a boon for online sales. But according to Bain & Company, 75% of sales will still happen in stores. As the phygital age dawns, brands must focus on storyliving to avoid falling into the multitech trap.

Fabio Bonavita

By Fabio Bonavita07 juillet 2020

In recent months, an emerging term has been on everyone’s lips: phygital. It embodies a brand’s strategy to break the barrier between the physical and the digital worlds. That might sound pretty sexy in theory, but in practice it seems to be prone to one particular pitfall based on a fundamental misunderstanding. Olivier Müller, founder of LuxeConsult, describes it like this: “Many brands want to jump on the technology rather than focus on the storytelling. And I'm not convinced that a hologram is more appealing than a beautiful window display at Hermès or Louis Vuitton.” Meanwhile, Maximilian Büsser, the man behind watchmaking laboratory MB&F, shares the same view. "I have to wonder, what's the point of introducing a digital product when you have the real thing in your hand? The store allows you to experience the real piece, to touch it and see it, and no digital platform can do that today. Then there is the human element, the interaction with the store assistant to guide your journey into the world of the brand. For the time being, no artificial intelligence can replace a flesh-and-bone brand representative.” When asked about the tech tools he uses to innovate in his stores, he replies without hesitation. “None. The display and our personnel are the key. Our M.A.D. Galleries are like a wunderkammer taking visitors on a journey into unsuspected worlds. Of course, we invest in putting together the right team, who will tell the story of the artists and their creations. They are not there to simply sell, they are there to tell the story, to help our visitors escape the routine of everyday life when they step into our stores.”

In its New York store, Hublot is banking on a phygital experience. (DR)

Intense interaction

The M.A.D Gallery in Taipei is guaranteed to be free of technological gimmicks. (DR)

For years, the biggest industry players have been working on finessing a harmonious balance between technology and points of sale. British label Burberry was the first to bring hi-tech experiences to its stores in 2012: three-dimensional body scans, digital fitting rooms and RFID chips. The results were mixed, as was the reception. But Müller believes this approach is still in its infancy. “Technology should showcase the brand and its products, not the other way around. Augmented reality will certainly take on a whole new dimension with the new Samsung and Apple phones, that will enable customers in the store to live an engaging virtual experience.” In its latest report, Transition phygitale, mode d'emploi, Parisian consultancy Diamart Group sounds a note of caution: “Retail has now entered a new era where the development of online sales capabilities remains crucial, but where the digital transition is bringing about profound changes in the management of operations (range, price, logistics, etc.).” The report underscores the crucial role of in-store staff: "For all brick-and-mortar customers, the relationship with in-store teams is essential. It is here that a real interaction with the customer can be built, offering a much more intense experience than the one pure technology could ever provide.”

Customer Integration

This kind of intensity makes storytelling possible by integrating the customer into the brand experience - the same experience that can boost in-store sales by 5-15%, according to the latest study by the international consulting firm Boston Consulting Group, Scaling the Store of the Future. “The aim is to turn what was primarily a purchasing transaction into an enjoyable experience that boosts foot traffic and the brand while also enhancing retail productivity. Companies are using digital technologies to improve three parts of the in-store retail journey: exploration, selection, and checkout.” Manuela Burki, head of the marketing division at leading Digital Transformation Agency Integrated Management Systems (IMS), agrees. “For Western luxury brands, New Retail is an ideal environment to leverage cross-channel storytelling to engage consumers and deliver compelling online and offline experiences.”

Digital add-ons can be used to personalize customer in-store experience. (DR)

On the other hand, Camille Yvinec, co-director of Parisian branding agency Superunion, says, “Saying too much can possibly mean losing the thrill and excitement. Embodying the mystery of the future, using synesthesia, playing with the ephemeral or creating fantasy worlds are just some of the available levers, to be used sparingly.” The necessity of putting the customer back at the center of the boutique experience is self-evident to Olivier Müller. “I think we, in the world of luxury, have made the mistake of thinking too much about staging the brand and too little about customer perception. In the 21st century, when a customer - and I am thinking especially of the new generations - takes the trouble to walk into a store, there should be a bonus for that! And the bonus can take the form of an enriching experience of the world to which that brand belongs. For example, you can allow the customer to visit a museum thousands of miles away in a virtual tour of the key pieces of the brand's history. You can also take them inside a watch mechanism, but without the theatrics of a Hollywood 3D movie with hard rock soundtrack blasting away in the background. The watchmaker can be there as a hologram to explain his craft in an educational way.”

In the future, purchases are expected to happen mainly online. (DR)

A very human story

In ten years’ time, there will be far fewer luxury boutiques

Olivier Müller, founder of LuxeConsult

What will a luxury boutique look like ten years from now? The possibilities are too many to contemplate. Some are sure that physical spaces will no longer be about selling, but entirely devoted to the brand experience instead. Most industry experts believe that the number of points of sale will decline dramatically - and LuxeConsult’s founder Müller is one of them. “There will be far fewer shops,” he says, “and they will be dedicated to brand universes. They will be the embassies of luxury houses rather than actual points of sale. The boutiques will be the physical connection for a phygital experience. This is going to happen very quickly, and irreversibly!” Büsser imagines a similar scenario. “Luxury boutiques will probably be part of the brand's marketing budget, and many of the multi-brand retailers may well disappear.” La révolution du retail, a study by Centre du luxe et de la création in Paris puts forward a number of ideas: “We not only have to make the stores more profitable, but we may have to scale back to smaller ones. The future will be made of site-specific concepts, targeting customers with more frequent pop-up stores. This diversification, which in fact corresponds to a greater adaptation of luxury goods to the diversity of its customers, will have to extend across the board: to products, customer journey, services. Personalization will be everywhere, offering everyone the tailor-made service they expect.” Delphine Vitry, co-founder of consulting firm MAD Network, goes even further, and reminds us of the need to focus on staff training. “Customer experience is not just a gimmick, a matter to entrust to a junior project manager in a marketing or retail team. It is the whole organization that is impacted by this experience - it will change layouts, product merchandising, architectural concepts, recruitment criteria, digital content... the list is endless. All the brand actors will have no choice but to get to work on offering new emotions to thousands of people in hundreds of spaces every day. This kind of organization relies on people, who are mobilized to cater to other people - the customers. It’s all about human beings. And that's where it gets complicated, or rather, where it gets exciting.”

Three questions to Christoph Grainger-Herr, CEO of IWC

At the end of July, you will open a new boutique in Zurich inspired by new retail. What will make it different?

The idea is to highlight specific areas of the IWC universe by bringing the customer experience to a new dimension. The theme of the new flagship store on Zurich's Bahnhofstrasse focuses on the IWC Racing team that we founded in 2017. The new store is designed as a lively motor racing workshop with a rich mix of memorabilia, engineering artifacts and unique watches that tell the story of motor racing. The team car, the iconic Mercedes-Benz 300 SL "Gullwing", is the centerpiece of the expanded and renovated store.

How will digital technology figure into the new space?

Digital technology is the cornerstone of the new concept. We want to offer our customers exciting and memorable experiences that they can't find anywhere else. For example, they can buckle up in the cockpit of our Mercedes-Benz 300 SL "Gullwing" and put their racing skills to the test in a virtual reality (VR) driving experience. They are also invited to develop their engineering and watchmaking expertise by watching choreographed multimedia presentations on IWC's internal movements and innovative housing materials. In the entrance area, an interactive book tells the story of the brand and its watch families. In addition, customers can control the interactive showcases from the outside using their smartphones, and there is even a video link to our manufacturing center in Schaffhausen.

What is the future of physical stores?

I believe that stores will continue to play an essential role in our distribution network, especially in terms of brand creation and customer experience. The new IWC Racing Works Zurich store is the first in a series of themed flagship stores that we are currently planning. In other parts of the world, we will focus on different aspects of the IWC engineering and adventure story, one chapter at a time.

The new IWC store in Zurich will be inaugurated at the end of July. (DR)

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