3 trends shaping the future of e-commerce
How FARFETCH and Harrods are building a personalized luxury experience
Every year the National Retail Federation (NRF) Retail’s Big Show convention brings together 40,000 retail executives from some of the most renowned retailers in the world. This year Kelly Kowal, Chief Platform Officer at FARFETCH Platform Solutions (FPS) was joined on stage by Michael Ward, Managing Director at Harrods, the iconic London-based department store and valued partner of FPS.
Having launched with FARFETCH Platform Solutions in early 2020, just months before Covid-19 spread around the globe, Harrods saw phenomenal online growth in their e-commerce, with luxury consumers having to move their shopping from in-store to online.
Three years on, like many retailers in the industry, the department store is now adjusting to the post-pandemic world. At NRF Michael Ward and Kelly Kowal shared their thoughts on what will shape the future of luxury from both a retailer and technology provider perspective. If you missed this exciting session, here are the key takeaways you need to know.
1. Physical retail is BACK
The pandemic had a momentous impact on the way consumers buy luxury, driving demand in e-commerce for many brands that relied heavily on in-store purchases. As we saw the rise in digitization not only in retail but in almost everything we do, we all assumed that this shift to online was the way of the future.
But now as we move back to normality, Harrods, a heritage brand that is known for their iconic department store experience, is claiming customers are back in-store more so than ever. ‘It’s come back in a vengeance that nobody has really seen’, says Ward, ‘And we should never forget, we are in an experiential industry.’
He uses the example of a consumer standing in the Hermès section buying their own Birkin for the first time. ‘They’re opening the bag and the only person who’s touched it before them is the one that has made it. And everybody in that department wants to be them. You can’t recreate that feeling.’
Ward thinks that brands and retailers should invest in e-commerce as the industry evolves, but they should also know how to create magnificent experiences. Customers crave human interaction, they want magic. And in luxury, the expectations are even higher.
So as physical retail claims its place back in the industry, along with the rise in the ever-evolving demands of luxury spenders, brands and retailers with brick-and-mortar need to understand that an exceptional store, with an even more elevated experience still plays a key role in the future.
2. Traditional wholesale is on its way out
In recent years we’ve seen the retail industry evolve beyond the traditional wholesale model, with some of the largest brands and retailers now adopting the digital concession model, e-concessions.
Traditional wholesale requires brands to sell large amounts of inventory to a retailer, retaining little control over pricing, merchandising, and ultimately, their strategy.
With e-concessions, these issues are resolved. By integrating directly with the retailer through a digital platform, brands maintain control over their physical inventory and ship orders directly from their store or warehouse. So there’s no surprise this has led brands to prioritize this model as their way of working with retailers.
But for this new model to work, retailers need to adapt to the new demand which requires integrating with multiple brand partners, something that can be complex and requires technical capabilities, expertise and network.
‘As a single store, it’s really hard to do’ says Ward, ‘we don’t have the technology or the resources and that’s why the partnership with FARFETCH Platform Solutions has been so important. FARFETCH already has relationships with those brands and therefore we can build the interfaces much more smoothly’.
With an innovative approach and aligned goals, FARFETCH Platform Solutions was able to bring FPS E-Concessions to life for Harrods, pioneering this new sales model. Now Harrods has direct integrations with several global brands including Burberry, Gucci and Zegna.
So how can retailers ensure they’re adapting to this change? As the industry shifts, both brands and retailers alike should be thinking about investing in the technology that’s fit to support the new sales model, and inevitably, will help them to scale.
Interested in learning more about FPS E-Concessions? Read our FAQ here.
3. The future is one seamless, connected customer journey
‘Covid didn’t actually bring new consumer trends, it just accelerated them’ says Kowal, ‘customers want to shop in any way that they want to shop, no matter where that may be’.
Kowal then went on to explain that brands and retailers should be thinking about how to holistically blend the online with the offline, the worlds are not separate, but they work in a connected thread. If a customer starts their journey online for example, a brand needs to make sure that when they go into the store, their journey is connected and the customer feels recognized.
‘It all comes back to that omnichannel approach’, Ward explains, ‘every touchpoint has to be a total experience’. Kowal then agreed that from the moment consumers browse online, to when they go into the store and meet with a stylist, it needs to feel completely personalized, ‘because if we don’t build those experiences for the customer, they won’t want to come back’.
Michael Ward also explained that Harrods has invested millions in ‘single customer view’ technology and algorithms, giving the retailer a view of each and every customer based on their trends and behavior. If you’re able to see all of the trends and data from one customer, in one place, imagine all of the experiences that can be created.
What’s the payoff? Again, it all comes back to personalization. If data can tell you that a customer who’s made a $20,000 purchase is actually a customer with potential to make a $200,000 purchase, think of the opportunities that come from that.
Consumers no longer think online and offline, they want everything to be connected, and not only do they want it, they expect it. By integrating omnichannel technology with e-commerce, be it in the fitting room, the shopfloor or online, brands and retailers alike can deliver the connected experience that customers desire.
By offering a truly personalized and seamless experience, customer interactions can happen at every stage of the purchase journey, opening up more ways for brands to communicate with them and of course, convert sales.
Interested in learning more about our Connected Retail technology? Discover more here.
The themes discussed in Kelly Kowal and Michael Ward’s session confirm that although we may be experiencing volatility due to the current climate, there are several opportunities as we look forward to 2023. With consumers returning back to stores and expecting an experience unlike no other, and as the industry moves to a more digital way of working, brands and retailers should understand how they can seize the opportunities that this change in technology provides.
FARFETCH Platform Solutions acts as the technology partner for the luxury industry. Contact us to find out how we can solve your challenges together.
EXPERIENCE THE FUTURE OF LUXURY NEW RETAIL
Partner with luxury commerce experts to increase customer loyalty, engagement and expand your territories.