This has been a year of whiplash for luxury retail, with growth projections replaced by dire forecasts of double-digit decreases. Will the holiday season be any better? There’s evidence that depressed luxury categories like fashion may be poised to turn around; consider Amazon’s new partnership with Oscar de la Renta to launch its new luxury offerings.
But even without Amazon’s high-profile foray into designer fashion, there’s plenty of reason to expect more luxury sales during the peak holiday season, based on past years’ numbers and customer behavior. During Cyber Week 2019, shoppers spent 14.5% more on Thanksgiving Day than in 2018, and the average Black Friday order value rose by 6%.
All of that was before consumers were quarantined, with no reason to splurge on clothing and limited access to leisure travel destinations. This holiday season, we may see pent-up demand from earlier in the year channeled into even more ecommerce purchases and larger order values. Luxury retailers can take a few steps now to make sure they’re positioned to meet this demand.
Offer What Luxury Shoppers Want This Holiday Season
Industry watchers expect spending to be up, but they also expect the most popular luxury categories to be different this holiday season from years past. Over the course of this year, luxury shoppers have shifted spending away from fashion and cars toward items to enjoy at home (and show off on social media). For example, upscale exercise bike maker Peloton’s revenue grew 172% in Q4 2020 as well-heeled fitness fans sought alternatives to the gym.
Merchants who cater to these interests by promoting healthy living and home items stand to do well this holiday shopping season. So do luxury retailers that promote holiday gift exclusives. For example, Louis Vuitton launched its 2020 line of exclusive holiday small leather goods early, in line with the expectation of earlier holiday shopping that’s spread out.
Focus on Mobile Site and App Capabilities
Mobile commerce gains more ground each holiday season, and that trend will continue in 2020. Consider that during the 2019 holiday season, retail app installations rose 106% and mobile shoppers spent 17% more per order, according to mobile tech platform Button. And that was before the pandemic moved more shoppers to digital channels.
Those are general statistics, though. How important is the mobile channel for luxury ecommerce? Consider that Amazon’s new by-invitation-only Luxury Stores category is only available to Prime members via its mobile app.
Pre-pandemic, luxury shoppers expected an excellent in-store experience. Now, they expect a great mobile shopping experience, one that Amazon seems intent on delivering. For other luxury retailers, now is the time to make sure your website is optimized for mobile, including:
- Accurate, current personalization
- A seamless experience across all channels
- Easy-to-use navigation and product search tools
- Responsive customer service through chat or voice call
- A low-friction, secure checkout process
Luxury consumers, like all consumers, are more likely to stay on mobile sites that make it easy for them to browse, buy and get answers.
Provide BOPIS As A Checkout Option
It’s unlikely that many shoppers will want to spend time browsing stores this holiday season, which continues a trend that was already accelerating. In 2019, BOPIS orders increased by 35% during the holiday season, with a 55% increase in BOPIS revenue the week before Christmas. Now, after months of using curbside pickup, it’s likely that consumers will shop the same way during the holidays.
Many luxury retailers have already adopted curbside pickup. For those who haven’t, now is the time to add the option for customers who’d rather get them in person than wait for them to ship.
Make Sure Fraud Prevention Tools Are Fine-Tuned
One way to lose orders and drive away luxury consumers is to decline their orders by mistake. Thirty-three percent of U.S. ecommerce shoppers say they will never shop again with a merchant that rejects their order, according to Sapio Research from March 2020. And 25% say they’re likely to say something negative about the merchant on social media.
Despite the fact that false declines cause merchants to lose revenue, alienate customers and cause brand damage, they happen frequently in ecommerce. Fraud experts estimate that anywhere from 30% to 65% of all rejected online orders are actually good ones. That’s a lot of revenue and customer loyalty to lose.
Your ecommerce store is at risk for false declines if your fraud rules don’t account for the way high-net-worth individuals often shop. For example, they may place high-ticket orders from outside their home countries and request rush delivery to new locations. If your rules assume all such orders are fraud, you may be turning away wealthy shoppers ordering while traveling for work or vacation, or who are living at second homes during the pandemic.
The key to avoiding these rejections is to manually review flagged orders instead of rejecting them all automatically. That allows you to accept orders from good customers, maintaining their goodwill and loyalty, and to teach your AI fraud controls how to separate good orders from fraud more accurately.
Give Luxury Customers a Great Holiday Ecommerce Experience
Now’s the time to make sure your store features the items luxury shoppers will look for this winter, and maybe start rolling out promotions and exclusives now. A good mobile shopping experience, coupled with the option to pick up purchases at curbside, can help you earn more sales. And reviewing your fraud screening program to ensure you recognize good orders is the key to earning customer loyalty during the holiday season and beyond.
Rafael Lourenco is an EVP and Partner with ClearSale