April 9, 2020
FIT CFMM Capstone 2015 – New Luxury Platforms

FIT CFMM Capstone 2015 – New Luxury Platforms

The future of luxury brick-and-mortar is
at a crossroads. Our objective today is to leave you with a few actionable ideas
around the future of brick-and-mortar 15 years from today why refocus on
brick-and-mortar ecommerce is outpacing brick-and-mortar by nearly five to one
in growth rate in 2014 in the US store traffic declined 8.2 percent and
transactions were down 10 percent we believe that this is happening in part
because Millennials value pleasure over possessions BCG reports tells us the
seventy-two percent of this customers say they would rather spend money on
experiences than physical products an experience they are heavily engaging in
social media Millennials spend an average of five point four hours a day
on social media this platform allows them to write their own story and create
their own brand they are more destructive than ever brands and
retailers must find a way to get their attention BCG reports that over the last
decade sixty percent the majority of luxury growth came from retail expansion
in forty percent was organic in the future the reverse will be truth with
sixty-five percent of growth predicted to come from the customer in thirty five
percent from retail expansion the next decade it’s all about the customer Jeff
Bezos CEO of Amazon reinforces this idea through the following quote we see our
customers as invited guests to a party we are the hosts it’s our job every day
to make every important aspect of the customer experience a little bit better
in the past luxury products or a representation of self-worth a personal
stamp evaluated by others but now we need more than just product
we are craving experiences the lines are blurring between product and experience
so what is the impact for retail presently retailers compete with one
another for share of wallet however the future belongs to those that can win her
share of time the answer lies in giving her an experience she wants to spend
time on the traditional retail model has been defined by four pillars assortment
service navigation in product we will walk you through what they mean today
and how they will evolve in the future but before we do that let’s review
certain mega trends that are impacting the retail environment she is looking
for a simple experience reminiscent of a mom-and-pop like the local bookstore a
familiar place where everyone knows her name this retail format fosters a sense
of belonging and allows customers to be treated as individuals in fact Wells
Fargo reported forty-three percent of small business owners have revenues
higher than 12 months ago as observed during our Asia field studies one
prevalent trend is slow shopping retailers are dedicating selling space
to areas for customers to relax in like cafes and libraries the retailers know
that the more time she spends in store the more likely she is to make a
purchase transparency is an emerging value marked by increased customer
interest in understanding where products come from and how they were made the BCG
fi t global customer study finds that sixty percent of customers site
authenticity as a driver of interest in provenance customers want
behind-the-scenes access and visibility into product inspiration and creation
she also does not want to own as any possessions as she may have
previously our collaborative research with BCG tells us that Millennials are
more interested in renting versus owning than prior generations in fact 75% say
they’re willing to rent a wedding dress winning her share of time requires new
thinking and a new approach it’s not about marketing it’s about creating
according to Bernard Arnault chairman and CEO of LD mhm it’s not about
creating dresses to put in museums what we do is create desire in our clients
and attract them to our products it’s about creativity that is pragmatic the
old model pushed out product to large groups of customers the new model
creates desire pulling in customers one individual at a time with the objective
of capturing her share of time we will break down the retail landscape as we
know it now that you’ve seen the four pillars let’s begin with the first
assortment 24 million pieces of content are shared every day not to mention the
thousands of new products launched every year the customer is overwhelmed she has
access to too much information and has far too many choices as authoritative
tastemakers luxury brands have the ability to guide the customer through
their choices they can set the trends and they can curate her life our
recommendation for a lifestyle curation is an 8020 model one in which eighty
percent of your store is filled with your product the remaining twenty
percent is non-competitive product that complements her lifestyle your brand’s
can employ creativity and playfulness to drive commerce as mentioned earlier it’s
creativity that’s pragmatic there are three ways in which we recommend
executing the remaining twenty percent of that 8020 model store is a magazine
co-creating and share of ownership store is a magazine is a concept in which
assortment turns over several times a year the product is merchandised to
express a point of view Rachel Schekman owner and founder of New York City’s
one-of-a-kind innovative concept store called story shares the story to the
consumer through inventory that’s turned over every four to eight weeks this is
editorial merchandising for example the most recent concept at story focused on
women it showcased influential women and the products they loved this was truly
an experience for her by her another execution of a t20is co-creating it’s a
partnership between two brands creating something truly unique and ownable an
inspiring example of co-creating is Noma in Copenhagen described as edible
theater Noma is the number one restaurant in the world where chef rene
redzepi forges raw ingredients and prepares culinary delights nomas co
retail partner was club monaco launched in February of 2015 Noma and Club Monaco
created a pop-up space showcasing carefully curated products the
partnership resulted in a 360 experience for both customers considering people
wait three months to get a table at Noma imagine what it would be like if your
customers would be willing to wait three months to step inside your store the
final example of a t20 execution capitalizes on a growing movement
towards shared ownership this is characterized by a customers interest in
renting vers owning today companies like rent the runway in village locks offer
customers limited time access to fashion village luxe a members-only website is
where you can lend your wardrobe or rent from another’s
you have one hundred percent control of who can borrow your beloved pieces and
one imagine providing your customers experience of wearing a luxury product
without the responsibility of owning it by executing the new 8020 model through
stores a magazine co-creating or share of ownership your assortment becomes a
discovery you’ve just seen how assortment has transformed into
discovery the second pillar is service in-depth analysis finds that retain
customers are fifty five percent more valuable in terms of spin than new
customers yet less than half of customers are retained by brands year
over year to build and retain long-term customer relationships we need to invest
in the main link between our brand and the customer our sales associate they
are at the heart of the relationship and have the key to creating long-term
customer loyalty to invest in the sales associate we recommend the following
create the role of experience manager at point-of-sale provide long-term career
options and adjust your compensation model Taylor to drive the goals of the
brand so what is an experienced manager the experience manager drives local
consumer engagement communicates with a customer and provides feedback to the
brand and is evaluated on customer retention and brand loyalty the
experience manager is intuitive she is a tune and understands customer behavior
she is tech-savvy eager to learn and embrace technology collaborative she is
vested in the success of the team and she is diverse she can relate to the new
and evolving future customer according to Camille McDonald president of brand
development at Bath & Body Works an effective sales person should never be
lost to a competitive brand they’re just too hard to find to retain the
experience manager we need to offer career options that provide exposure to
learnings that support the movement of talent cross
functionally we also need to allow for greater work/life flexibility this is
the number one reason that people leave in the field we need to offer this to
our best and brightest we also need to invest in an updated compensation model
with competitive based salaries collaborative based team incentives and
a bonus structure that changes from product driven to customer relationship
loyal when the experienced manager is charged with managing the brand
experience and the brand invests in her she will focus on the key brand goal to
build relationships with customers service now becomes relationship driven you’ve seen assortment become discovery
service become a relationship the third pillar is navigation or the way in which
we guide the customer through all categories of the store in the future we
will define navigation as the way we guide the customer through her entire
purchase cycle shifting from real time to right time Intel explained the shift
as predictive and pre-emptive understanding not only where she is
going to be but also why she is going there as the consumer moves throughout
their journey from online search to peer-to-peer conversation we had the
ability to collect data however data is not enough this is about turning big
data into smart data Disney’s new Magic Band technology leverages smart data as
it helps facilitate the customer experience through the entire theme park
responding at the right time the Magic Band supports productivity one example
is that it monitors the flow of visitors and can detect when crowds are forming
Disney will respond with the character parade to break up these crowds
entertain the visitors and move them to less crowded areas not only making the
entire park more productive but bringing a smile to everyone’s face
ultimately it is emotional drivers that will dictate customer behavior nike and
google went into customer living rooms to learn their passion points firsthand
to optimize their World Cup experience uncovering the customers wanted to feel
closer to the action nike took their smart data and overlaid it with
emotional motivations creating 3d ads of athletes scoring immediately following a
real-time goal to enhance the moment an overall feeling of celebration
navigation becomes the balance of the win and the why the real time and the
right time in other words it is the perfect balance of high touch and high
tech what does the future of brick and mortar look like according to Intel it
is WA CD what Amazon can’t do more importantly it is about providing a
unique and relevant experience for the customer communicating with customers at
the right time transforms navigation into a journey that the brand takes with
the customer now that we have created an assortment curated for the customers
lifestyle and push service to become relationship driven taking the customer
and brand on a journey together we can now address the most critical element
which is product because ultimately it is the product that drives the
transaction and impacts the bottom line we want to bring you back to our opening
statement the lines are blurring between product and experience it is about
creativity that is pragmatic in general the paradigm for luxury has been brand
centric where the brand dictates to the customer what she wants the future will
be one in which the consumer dreams and the brand creates today product is
three-dimensional in the future product will be enhanced by the fourth dimension
which is bernard arnault stated is creativity creativity that is inspired
by the brand but brought to life by the customer
technology allows for a revolutionary degree of customization and
personalization forcing a dialogue between brand and customer the brand
provides the context the ingredients the craft while the customers desired colors
textures and patterns are both predicted and anticipated as the customer engages
in product creation product truly becomes an experience brands and
retailers must take the traditional retail fundamentals and push the
boundaries the combination of these new pillars will capture the customers share
of time the new pillars of the retail model will be applied across all
channels including freestanding stores pop-up shops and even ecommerce however
the ideal context to bring these pills to life is the global flagship the
ultimate retail expression of a luxury brand it must be a unique environment
where the brand is showcased and celebrated our vision is that the global
flagship incorporates the four pillars of the new retail model but goes much
further for us the unexpected is turning the retail experience inside out today
we go into a store and experience product tomorrow we’ll go into a store
and experience the full lifecycle of product creation inside we envision a
future in which the customer has transparency into the craftsmanship and
creative process of luxury goods we predict that the future flagship
resembles an open kitchen concept where the customer is invited behind the
scenes just as in an open kitchen the customer can witness the creation of the
product beginning with the raw ingredients that are prepared in a
recipe and then brought to life fine craftsmanship has long been considered
the hallmark of a luxury product in fact amez defines luxury as that which can be
repaired omez manufactures only 70,000 Birkin bags a year
the number is limited due in part that it takes two years to train the
craftsman that make the bags LVMH on a particular is a program that allowed the
public a rare glimpse into the detailed creativity and craftsmanship to some of
the most exclusive brands including Bulgari fendi and lowe ave offering
tours of the workshops and ateliers and factories the two-day event attracted
more than 100,000 visitors imagine if customers could experience this in your
global flagship the new global flagship exemplifies transparent storytelling and
a celebration of the craftsmanship and creative process of luxury we predict
the future global flagship becomes a place where the customer gets to create
their story in the context of your brand she gets to write another chapter in the
story of her personal brand that she will want to share with others the 2007
capstone recommend that the flagship as a brand museum in addition to housing a
museum which looks to history the future flagship looks forward telling a story
that blends the heritage of the brand with a customer’s narrative elevating
their personal brand this collaborative storytelling will capture the customers
share of time ultimately the future of the global flagship transforms and
becomes the capital of creation it is where the customer dreams and the brand
creates truly an experience worth her share of time now I invite you to take a
look into the future of luxury retail it’s been a long day without you my
friend and I’ll tell you all about it when I see you again damn
who knew all the planes we flew good things we’ve been through then I’ll be
standing right here talking to you bout another path I know we loved to hit the
road and laugh but something told me that it wouldn’t last had to switch up
look at things different see the bigger picture those were the days hard work
forever pays now I see you in a better place talk about family when family’s
all have we got everything I was do you were standing there by my side and all day without you my friend and I’ll
tell you all about it when I see you again we’ve come a long way where we
began no story will tell you all about it when I see you again tell you when I
see you

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