Innovation That Delivers Results for Luxury Brands – Dan Hodges, Consumers in Motion

The mobile wave is affecting all aspects of shopping, including the luxury segment. Innovation is arriving in the luxury industry with new ways to service customers on both mobile and tablets. We are seeing powerful new tools that empower sales associates, helping them provide a higher level of customer service. The sales associate plays an important role in the $1.8 trillion luxury marketplace. It is estimated that 20% of all revenue is coming directly from sales associates. Growing the sales associate contribution from 20% to 30% would increase luxury sales by $180 billion dollars on an annual basis. It is no wonder we are seeing innovation in this category.

Today's luxury shopper uses technology differently from just five years ago. The luxury shopper uses smartphones (65%) and tablets (40%) with over 50% buying for convenience. Boston Consulting estimates that e-commerce brings 18% of the US luxury sales and that e-commerce is growing twice as fast as the overall US luxury market. Mobile is quickly impacting both in-store and e-commerce sales. How does the luxury segment adapt to consumers who themselves have changed their shopping behaviors?

Here are some important questions to ask when we think of using smartphones and tablets for the luxury category:

How should you rethink traditional ways of engaging luxury consumers to make the experience richer and more enveloping from start to finish? Is the luxury shopping experience as seamless as it can be in the world of smartphones and tablets? How can you harness new technologies to better draw consumers into an experience and engage more senses? How do luxury retailers harness technology, design, context, and real-time intelligence in a way that delights luxury shoppers? (Design and usability are keys to success, and, as Steve Jobs said, “Design is not just what it looks like and feels like. Design is how it works.”)

The answers to these questions come from unconventional sources.

Genevieve Bell, Intel's top anthropologist, says, “In this digital world, the story we're telling about the future is a story driven by what the technology wants and not what we as humans need." Bell’s role is to look at how humans use technology and to find ways to make technology better for humans. “Technology just offers new ways to tap into those old trends,” she notes. “For millennia we've picked our clothes as a statement about ourselves, but now we do the same with mobile phones and wearable computing devices.”

The approach for mass may not work in the world of class, where the personal touch makes all the difference. Bell says, “It doesn't really tap into the pleasurable feeling of surprise. Algorithms on eBay, Netflix, iTunes and Amazon are geared to recommend purchases based on what our own earlier behavior or that of people like us, but that's not all we need.... [W]hat the tech business hasn't yet grasped about human nature is that connecting to people is at the core of our lives. If you can tap into this one, you can always succeed."

Tapping into the “right” consumer experience is critical today, especially for the luxury consumer. One of the byproducts of the always-on mobile shopping experience is the rise of the “intolerant consumer.” “We always have this need for instant gratification, but now ‘instant’ has taken on a whole new meaning. ‘Instant’ almost means that you get it before you ask for it,” says Bianca Bosker, executive tech editor at The Huffington Post.

Where do we go from here and are there any companies leading the way?

Frank Rose, the author of “The Art of Immersion,” says “there are two different types of immersive experiences, or two different ways of looking at it. The first is when you are so involved with whatever you’re doing, that you really lose track of everything else. There is another kind as well, which is the idea that we can go deeper and deeper into something.” There is a growing desire and appreciation for immersive experiences. According to a 2013 McCann survey, more than 7 in 10 American and British adults say they like it when brands, products or entertainment producers actively attempt to capture their imagination.

Luxury shopping is a high-touch and service-oriented process. The experience needs to be as familiar as having your sales associate standing right next to you. “The more people have to think about what they’re doing, the less immersive an experience is or becomes,” says Carl S. Marshall, senior software architect at Intel’s Immersive Computing Lab.

One example of a company that “connects to people,” as Genevieve Bell suggests, and pairs immersive experiences as outlined by Frank Rose with a compelling design that works as Steve Jobs pointed out is New York City-based LiveLux , which combines design and technology to connect the luxury store associate with the luxury shopper. The company describes itself as “an enterprise SaaS solution delivered on smartphones and tablets, providing luxury retailers with tools to increase sales by providing deeper levels of customer engagement designed to enhance client relationships and deliver real-time service for clients anywhere, anytime.”

Applying the principles of Bell, Rose and Jobs has yielded results for the company and the luxury marketplace. Chief Strategy Officer and co-founder Debbie Kiederer says, "We began to see a shift in luxury consumer behavior with consumers spending more time on their smartphones and tablets. We spent the last year perfecting the shopping experience working with luxury shoppers, sales associates and brands.”

Innovating, listening to your customers and anticipating their needs are the keys to success. The Futures Agency estimates that the majority of a company's 2018 revenues will likely come from products and services that don't exist today. As Jobs said, innovation is a business imperative because “innovation distinguishes between a leader and a follower.”

Note: Consumers in Motion is releasing “Using Context to Reach Tomorrow Shoppers” in May 2014.

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Dan Hodges is Managing Director of Consumers in Motion, LLC. Dan can be reachedat dan@consumersinmotion.com.

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