<strong>New York</strong> — Retailers suffered over the last year and luxury brands were no exception. Coming out of the recession, these high-end retailers are embracing change, or what this morning's session at the National Retail Federation's 99th Annual Conference and Exposition deemed, "The New Luxury Paradigm." Perhaps the most significant change is the increased adoption of social media, marked by an imperative to connect with consumers on a personal level. Speakers on the panel included founder and creative director of luxury brand of the same name, Tory Burch, Marc Gobe, president of brand consultancy Emotional Branding, and Steve Sadove, chairman and chief executive officer of Saks.
Like the rest of the retail market, the luxury space has been on the defensive, Sadove described, and is now slowly trying to figure out how to go back on the offensive when it comes to getting customers to start spending again. Value continues to play a key role regardless of what purchases are being made and in the luxury space, "value" often goes beyond price to embody quality and design. "Consumers want luxury products because it isn't widely available," Sadove said. "That's what makes luxury special." The goal, then, is to achieve a balance between value and exclusivity, a challenge Saks, for instance, has tried to tackle by ensuring that 20 to 30 percent of the items it carries can't be found elsewhere. Nevertheless, while Saks used to keep an evenly distributed portion of good, better, best items, the company has seen many of its top-tiered brands shift more of its inventory toward the good and better zone.
While some things may have stayed the same, retailers can't help but notice that the concept of "luxury" is taking on a new definition. "A long time ago it was about wealth," Burch told the audience. "Now it's about how you live your life," pointing to the fact that women are at the forefront of changing what luxury means today. Instead of making big purchases, women are reducing big-ticket purchases and opting instead for smaller items such as jewelry, shoes, and bags. "I don't think speaking will go back to where it was," Burch said, "but we'll give them new categories to be interested in." Tory Burch, for instance, recently introduced a new line of eyewear, which, with the exception of one pair of frames, all cost under $200. "It's not cool to be excessive anymore...or being gaudy," Burch said. "It's really about elegance and understatement."
Not surprisingly, Gobe has seen a huge shift toward online shipping, particularly among women who enjoy the convenience and control. However, Sadove added, there will always be an interrelated experience between online and brick-and-mortar stores primarily because the Internet lacks both the tactile experience and the advantages of an in-person relationship. However, what the online channel does offer is the ability to offer service at a broader and more immediate level through social media.
Panelists agreed that consumer demand for service is higher than it ever was before, prompting companies to find creative ways of reaching the new standards. Burch, for instance, is making more personal appearances in order to get to know the customer. "We want to have an open-door policy with them," she said. "We want to hear what they have to say." Part of that objective has also prompted her company to jump on social media channels such as Twitter, which Burch only started actively using a month ago.
Market research has always been an arduous process for businesses looking to appeal to a customer demand. Especially in a fast-paced industry like retail, the expense can be exorbitant. Now, with a simple question out to Twitter, retailers like Burch are able to get instant feedback. "Social media is one of the most powerful tools [a company] can have internally," Gobe added. From idea discovery to sharing, he sees the tool as a significant resource that will have a significant impact on the type of relationships retailers will have with their customers.
As companies move forward in this new terrain, Sadove encouraged today's leaders to open up to new sources of talent. "Some of us have never been exposed to this kind of media," he said. "Young talent needs to be nurtured and listened to-that's where ideas are coming from."
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