June 5, 2013
VIENNA, Austria – An executive from American Express at the FT Business of Luxury Summit 2013 shared new findings that verify the power of a multichannel brand presence to push not only accessible luxury, but also the highest-end products.
During the “Luxury’s Changing Landscape” session based on findings from American Express Business Insights, the presenter discussed why luxury marketers should make it a top priority to appeal to the ominichannel customer who experiences the brand across the Web, mobile and in-store. In fact, the online luxury customer who is most profitable to brands is also shopping at bricks-and-mortar locations.
“Omnichannel customers have become the most valuable,” said Armand de Milleville, vice president and head of merchant services for France and the Netherlands at American Express.
“Those that experience your brand across all channels are the most profitable consumers,” he said.
“More and more customers are certainly online, but those that are also in-store are the most profitable for you.”
This data was gathered from transactions and other evidence from American Express.
The online space is varied in comparison to the in-store shopping experience.
Consumers have access to designers, department stores, discounters, online-only retailers, flash sales and more.
This means that luxury is now more accessible to a broader audience.
Instead of fearing this reality, luxury brands should embrace digital since it is the fastest growing shopping channel across the markets in the study comprising the United States, Britain, France and Italy.
The luxury sector entered the ecommerce arena later than other industries, but now that affluent consumers are shopping online, luxury brands must have a presence there.
“It doesn’t mean that bricks-and-mortar is obsolete,” Mr. de Milleville said. “It just means that this is the fastest-growing channel.”
In the U.S., 24 percent of luxury consumers shop online only, 60 percent shop in-store only and 16 percent shop online and in-store.
“In the U.S. where the online experience is very well advanced, you have 40 percent of your customers who have gone online – and some have gone only online,” Mr. de Milleville said.
In Britain, 6 percent shop online and in-store and 93 percent shop in-store only.
Eight percent of luxury consumers in France shop online and in-store and 96 percent shop in-store only.
Also, 4 percent of luxury consumers in Italy shop online and in-store and 95 percent shop in-store only.
These figures show that Europe is still dominated by bricks-and-mortar, but the online and multichannel shopping habits of U.S. luxury consumers foreshadow what is to come.
“It is worth looking at the U.S. if this is the most advanced market [among these markets] for online shopping,” Mr. de Milleville said.
Mr. de Milleville
While 16 percent of U.S. luxury consumers are omnichannel shoppers and 60 percent are in-store-only shoppers, omnichannel shoppers account for 45 percent of luxury spend, which almost equals the 49 percent of luxury spend that in-store shoppers generate.
Of omnichannel luxury consumers, 13 percent belong to Generation Y, 48 percent belong to Generation X, 33 percent are baby boomers and 6 percent are seniors.
In comparison, 12 percent of bricks-and-mortar-only shoppers belong to Generation Y, 42 percent belong to Generation X, 36 percent are baby boomers and 10 percent are seniors.
But most notable for ecommerce-enabled luxury brands is that 62 percent of the omnichannel spend share is on premium luxury, while 38 percent is on accessible luxury.
Also, the transaction share among U.S. omnichannel shoppers is 41 percent premium luxury and 59 percent accessible luxury.
“The conclusion here is that now – which was probably not the case two years ago – omnichannel is becoming the new normal,” Mr. de Milleville said. “Its values are closely aligned with traditional bricks-and-mortar shopping.”