The demand for physical retail remains a crucial part of the shopping experience among luxury shoppers, according to insights from The Evolving Art of Luxury Experiential Retail, a new report from BoF Insights and Royalmount.
Key findings from the report include:
- 77 per cent of shoppers expect to visit a luxury store as or more often in the year ahead;
- Sustainability narratives should be reflected in the composition of physical spaces, as 61 per cent of luxury shoppers agree stores should meet higher environmental standards;
- 49 per cent of shoppers believe a store should be more than a space to simply buy luxury products, presenting opportunities for brands to build deeper connections with customers.
“It’s clear from this report that luxury players in the industry must continue to invest in physical spaces, and the three pillars around sustainability, inclusivity and connectivity are essential to creating a place where people want to spend their time. At Royalmount, years of research and thought have gone into creating a space where people feel happy and fulfilled – it’s not just about transactions but developing a destination that creates connections and an emotional journey,” said Andrew Lutfy, CEO of Carbonleo.
“At the end of the day, we are as humans social creatures and regardless of what nature of retail you’re looking for, people basically want a physical experience. I know that the best experience is one where you can marry a physical and a digital experience. Call it an omni experience.
“At one point the pendulum was if you go back let’s say 20 years ago, 15 years ago, it was entirely physical, physical, physical. And then we went through a period where the pendulum kept moving towards digital, digital, digital at the expense of physical to the point where everyone said hey the malls are dead. And then I think we’ve come to appreciate maybe that is not exactly true and maybe the truth is somewhere in the middle and really this is where you bring a fusion of the two and at the end of the day customers end up interacting with brands, brands are emotional relationships, and to me the best way of leveraging that emotional relationship is through digital medium and physical premises.”
Royalmount is a new Montreal destination located in the heart of midtown, where connectivity, creativity and sustainability meet and thrive. The district will be the first 100 per cent carbon-neutral mixed-use development in North America, as well as the largest LEED Gold retail project in Canada. The project is under construction with opening slated for 2024.
It will feature more than 170 retailers, including 60 restaurants as well as experiential attractions. Conceived by real estate development and management company Carbonleo, Royalmount’s aims to bring the best brands, experiences and offerings to the Quebec market. The first phase will consist of an 824,000-square-foot., two-level retail and lifestyle complex. The district will also house a three-kilometre elevated linear park, Le Champ LibreTM, as well as a 1.8-acre urban park.
Confirmed luxury retail tenants include Louis Vuitton, Gucci, and Tiffany & Co., with others said to be on the way. Home concept RH will also have a location at Royalmount.
“In a time when fashion brands and retailers are increasing their digital presence and technology from the likes of AI to the metaverse is becoming more sophisticated – it is clear the importance of physical stores cannot be ignored. For brands wanting to attract luxury shoppers, the report highlights the key factors this valuable audience is looking for and how to implement strategies necessary to appeal to them,” said Rahul Malik, Managing Director, North America, at The Business of Fashion.
BoF Insights, the data and analysis think tank at The Business of Fashion (BoF), partnered with Royalmount to examine the shopping preferences of luxury consumers in North America.
The report said it draws on Royalmount as a key case study by highlighting the need for a holistic approach to retail concepts, drawing insights from a survey of over 1,500 US and Canadian shoppers.
The report said nearly one third of luxury shoppers cite green spaces as being important to them when shopping, and a similar proportion (37 per cent) report feelings of happiness when they shop in-store.
“Despite operating in an increasingly digitally focussed world, where brands are investing in digital methods to engage customers – from AI to the metaverse – it is clear that stores still play a pivotal role. The physical store is still a major draw for shoppers, with 77 per cent of consumers expecting to visit luxury stores as or more often in the year ahead. The report found the desire to shop in-person remains strong in the luxury sector, and consumers are increasingly demanding more from a shopping experience, meaning brands must continue to evolve to create an experience that satisfies these valuable shoppers,” said the report.
“BoF Insights reveal nearly a third (31 per cent) of luxury shoppers visit a physical store at least monthly. Drivers of this behaviour are often based around the tangible benefits of face-to-face interactions; for example, 68% of shoppers prefer to involve a physical store when it comes to customer service.”
It said three key pillars create dynamic retail experiences for luxury consumers: connectivity, sustainability and inclusive luxury:
Supercharged connectivity
“The value of technology lies in its ability to enable deeper human connections, rather than replace them altogether. For luxury shoppers, the benefit lies in being rewarded for their loyalty and access to services they can only enjoy in person. More than half (51 per cent) say tech-enabled loyalty programmes are the most important offering when visiting a luxury shopping destination, closely followed by complimentary amenities (50 per cent) like free WIFI that enhance their customer journey.”
Sustainable Retail
“61 per cent of consumers agreed that retail stores should meet higher environmental standards, which is why more brands are utilizing their physical stores as a way of representing their values. From Nike recycling old apparel and footwear in order to create building materials to Reformation encouraging customers to recycle by paying customers to drop off pre-loved items, sustainability is now an imperative for brands to actively demonstrate how they are taking a responsible approach to the environment.
“In tandem, it is clear consumers in urban areas are looking for destinations that convey elements of nature within them. Nearly one third of shoppers rated an abundance of green spaces as one of the most important factors to a retail destination.”
Inclusive Luxury
“Mixed-use facilities appeal greatly to shoppers. The defining factors that attract people to these spaces include dining options (58 per cent), entertainment (31 per cent) and green spaces (27 per cent). The data also reveals these curated physical retail experiences invoke an emotional reaction in the shopper, with feelings of happiness (37 per cent), curiosity (35 per cent) and inspiration (34 per cent) being some of the most common emotional reactions.
“Harnessing inclusive luxury to attract a wider demographic to stores, rather than allowing it to alienate certain customers, means brands can speak to a wider cohort of individuals. Shopping destinations that appeal to the wider community, from retail and entertainment to leisure and public spaces that everyone can enjoy, will create greater long-term engagement and loyalty compared to short-term sales.”
“We’re building a project that’s a very long-term project. There’s nothing short term about this project. We always have a long-term view,” said Lutfy.
“Right now we’re most certainly dealing with issues of inflation and its impact on consumer spending and what not. But over time everything reverts back to a mean. Everything reverts back to the average. Eventually wages will catch up to the inflation and prices and supply chains will improve. There’s always a reversion back to the mean. Short term there’s most certainly some heavy constraints but ultimately I think everyone will find their place and there will be an equilibrium. Not that I think things are so out of whack right now. I’m not concerned about it.
“Consumers have loved their brands. I don’t anticipate that abating anytime soon. I think as a matter of fact the consumer’s relationship with brands will only escalate over the next five, 10, 20 years as it has over the last five, 10, 20 years. Brands are emotional relationships. They’re variable and the consumer’s relationship with it is emotional. With all these mediums of communication, social media, physical, digital, CRM, Artificial Intelligence and personalization, these relationships will only intensify over time. The tools are there for them to intensify. That’s ultimately what matters.”
