CX Experience: The Future Is Phygital For Luxury Retail

For luxury retailers and brands with a direct relationship with the consumer, it’s undeniable that digital commerce is more than “trending.”

Nearly 80% of luxury purchases today are digitally influenced, meaning buyers use one or more digital touchpoints in their purchase journey (up to 15 for the Chinese luxury buyer). And with growing demand from digitally native Millennials and Gen Z, together anticipated to drive 75% of luxury sales by 2026 with 76% of transactions occurring online, luxury brands can no longer afford to push digital transformation to next season.

To keep their cachet in 2024 and beyond, luxury brands are responding with digital transformation investments that are hyper-channel, hyper-personalized and hyper-experiential.

In this POV:

• Social commerce that captures culture and community
• Bringing digital experiences in-store
• Closing the loop with commerce technology

Social commerce that captures culture and community

Where ‘old’ luxury was about exclusivity, ‘new’ luxury is about access, culture and community. Instagram and TikTok are proving powerful platforms for luxury brand reach, engagement and transactions, enabling consumers to live in the universe brands create and enjoy conspicuous (and vicarious) consumption through influencers.

TikTok makes them buy it

For many luxury buyers, social networks serve as the first touchpoint in their research and discovery process. Since joining TikTok, 57% of luxury buyers say they purchase luxury items more often, and 68% are more likely to buy a luxury item they saw on TikTok.

Hashtags connect consumers with a wealth of media from brands and users, from behind-the-scenes and how-its-made storytelling to unboxings and entertaining videos following viral trends.

Great examples include Loewe’s viral-style content, Versace’s point-of-view style comedy and influencer collabs. For example, both Burberry and Coach have commissioned time-lapsed product paintings from iconic artist Andrew Cadim.

Influencer collabs are a big piece of the strategy. 45% of TikTokers follow luxury brands because for their ‘personal approach’ on TikTok, and 1 in 3 say they were inspired to buy something from a creator recommendation.

The super app ecosystem

For peer-to-peer social commerce, Gucci, Chanel, Louis Vuitton, Dior and Hermès are among the luxury brands that use mini programs to sell through platforms like TaoBao and WeChat, China’s no.1 super app (with well over a billion users). Mini-programs are lightweight apps (maximum 2MB) that are on-track to drive $1.8T USD gross merchandise value in 2023.

WeChat users can browse products, share them with friends, communicate with brands and participate in gamified experiences. Popular campaigns include refer-a-friend, group buying events, digital gifting and KOL (key opinion leader, or influencer) marketing. Bringing commerce to WeChat enables brands to engage customers directly where they spend their digital time and leverage the native social features of the platform.

Bringing digital experiences in-stores

With digital so native to customer journeys, luxury buyers are already influenced and engaged by the time they enter physical stores – and they want to keep digital as part of the physical shopping experience.

A brand’s digital presence helps prime the physical visit with rich content, merchandising and immersive experiences, while in-store capabilities like AR/VR, digital clienteling and endless aisle close the loop on phygital luxury.

Together, all shopping touchpoints weave together to enable stronger relationships with buyers and build emotional connections that strengthen brand affinity.

Branding in the metaverse

While luxury brands may have been late to the ecommerce party, they’re first movers in the metaverse. Today, most luxury brands host a virtual store on Decentraland, Roblox, or launched NFT-versions of their creations.

Although the metaverse is not a primary transactional channel, it’s an important part of a brand-first marketing strategy. Metaverse experiences can be used to replicate fashion shows, host social events, story-tell, celebrate product drops and gamify customer loyalty – all of which can include basket building and checkout. Reusing commerce capabilities from the digital channel in the metaverse ensures a seamless digital-physical-virtual customer journey.

Augmented and virtual reality

According to Google, 66% of consumers enjoy using augmented reality (AR) to shop, and brands like Tiffany & Co, Gucci, Dior and Cartier all offering AR and virtual reality features, such as:

• Virtual try-on
• Virtual product configuration (customize and personalize the product itself)
• Virtual showrooms and flagship stores
• Virtual trunk and fashion shows
• Fully immersive product demos
• Catalogs and branded filters for apps like Snapchat

For example, one of the world’s largest jewellery chains partnered with Infosys to build a 3D jewelry configurator for buyers to fully customize their own made-to-order pieces. Customers get a more accurate preview of their final product, which has increased online conversions and reduced returns.

AR/VR experiences can increase conversion, reduce returns and give aspirational customers a way to experience the brand. They also bridge the physical-digital divide by bringing the retail store anywhere the customer is.

Showrooming and endless aisle

Today’s digital commerce can happen anywhere, including at a fashion show or live event, within a pop-up location, through an airport kiosk or airport lounge. These experiences paired with endless aisle capability (digital access to a brand’s full range of styles) served through a mobile app, Web experience, QR code or smart objects opens a new world of shopping.

Digital clienteling and virtual white glove

Digital clienteling brings technology to the traditional “customer book” sales associates keep for their loyal customers.

Customer profiles connect interactions across touchpoints to provide personalized recommendations, notifications, marketing and mobile messaging to both in-store and online touchpoints, including tablets and other devices for sales associates.

Paired with always-on AI chat, brands can take calls, make appointments, source hard-to-get items and support in-home showings 24/7.

Digital clienteling solutions may incorporate:

• Instant messaging apps like Meta, WhatsApp and Telegram
• Live streaming video platforms for virtual showings
• Virtual closets for product recommendations
• Calendar integration for appointment bookings and event invitations
• Exclusive pre-order previews and purchase links

Online appointment booking

Many brands like Chanel, Gucci and Dior offer both in-person and virtual appointments and these bookings are increasingly happening online. Livestream consults are growing in popularity, even post-pandemic. Ralph Lauren reports that virtual appointments drive double the spend of the average transaction.

In-home styling appointments are also trending. For example, Nordstrom sends its experts to your home, office or hotel for personal styling or a “closet audit.”

Brands like Jimmy Choo, Louis Vuitton and Celine integrate appointment bookings directly into their online checkouts, partnering with last-mile delivery service TOSHI. Shoppers can choose to “try before they buy” through an in-home visit, with final payment processed on-site after they’ve chosen their goods.

Closing the loop with commerce technology

Each of these digital trends break commerce out of siloed channels into the hyper-connected ecosystem. Today’s luxury buyer wants rich brand storytelling, immersive digital experiences and personalized shopping journeys that make them feel ‘elite.’

This requires a careful stitching of data and services to ensure each experience is relevant, seamless and personal.

Because next-gen digital isn’t boxed into just the “ecommerce website,” it’s critical that commerce capabilities can be embedded anywhere – in-store, online, the metaverse, mobile messengers and even into consumer goods themselves.

To achieve this flexibility, you need to:

1. Adopt headless commerce and microservices to provide consistent commerce capabilities across digital and physical engagement points
2. Integrate headless commerce with CRM, personalization engines and customer data platforms
3. Recognize the customer across all channels and touchpoints, and serve the customer consistently using unified profile data
4. Match customer history and attributes to product attributes for accurate recommendations
5. Intelligently match customer segments and serve loyalty-level content, access and perks
6. Capture interactions across engagement points and feed them back to the customer profile

MACH-X technology by Infosys Equinox is microservices-based and API-driven to commerce-enable all touchpoints, and ensure consumer data and context is persisted across the entire phygital journey.

To learn more about how Infosys Equinox can support your luxury digital commerce transformation, get in touch with our commerce experts at contactus@infosysequinox.com to discuss your unique commerce requirements.