How luxury department stores are navigating the holiday season
‘Comfort shopping; revenge shopping. Call it what you will. Department stores across the world are counting on consumers wanting to spend more money than usual, particularly on luxury, in the narrow countdown to Christmas, putting some gloss on sales figures after a staggeringly bleak year.’ BARE shares an article by Kati Chitrakorn for Vogue Business with some ways department stores are rushing to boost Christmas spending.
‘The hope is that gifting — always a key driver of sales at Christmas — will be extra-generous this season as shoppers seek to cheer up their loved ones and spend some of that money that is not being spent on travel this year.
American consumers are forecast to spend just short of $1,000 on gifts, holiday items such as decorations and food, and additional non-gift purchases for themselves and their families, according to a survey by the National Retail Federation and Prosper Insights & Analytics, which interviewed 7,660 consumers. To drive sales, luxury department store retailers are relying on digital selling tools, virtual and in-person experiences and early promotions.
Saks president and chief executive Marc Metrick is upbeat. “Fragrance is booming. Jewellery is going to be big. It gives people a sense that even if they can’t get dressed up for going out, they can put it on at home and it makes them feel a little bit more normal,” he told Vogue Business during a recent The Long View webinar on US recovery. “We expect to see a lot more self-purchasing. The way we look at luxury fashion is that it’s the comfort food of product. It’s the splurge and people want to treat themselves.”
The crowds were back at Selfridges on London’s Oxford Street last Wednesday — the day that marked the end of the UK’s second nationwide lockdown. Queues formed outside the concessions of Louis Vuitton and other leading brands. A similar pattern is repeating as retailers seek to recoup sales lost during the pandemic.
A poor Christmas trading period is not an option. “It’s critical, there’s no sugar-coating it. It’s tough for retailers,” says Nick Found, senior consultant of the UK’s Retail Economics. “This Christmas there are fewer events, fewer parties and fewer weddings — all these things are really important [for retailers].”
Rekindling a sense of community
At Christmas, department stores boast lavishly decorated windows, a plethora of gift ideas and a unique sense of theatrical occasion. That special role of the department store during the holiday season is being emphasised more than ever in the year of Covid-19.
Department stores are exploring the pulling power of community events. At Lane Crawford in Hong Kong, customers are responding enthusiastically to the retailer’s Support Local programme, which promotes small businesses and entrepreneurs, according to Amiee Squires-Wills, vice president of marketing and communications.
“Smart department stores will use these exceptional circumstances to support charities and communities in their local markets and burnish their sustainable credentials through authentic content,” says Stéphane Girod, professor of strategy and organisational innovation at IMD Business School. “This is all about greater customer intimacy and relationships by being more inclusive, and meeting the trend for finding local roots and authenticity.”
Activities and new launches pep up the sense of theatre. In London, festive film screenings are a draw at the new Selfridges cinema, while the store is also hosting performances from buskers. At Harrods, a new Gordon Ramsay burger restaurant, with a wagyu beef burger priced at £80, received a flood of bookings on its first day in business.
Elevated support for gifting
Thinking multichannel is essential this season. Neiman Marcus is offering an online gift advisory service, where customers can take a quiz and be paired with an advisor to help select and deliver products. Selfridges has partnered with postal service Royal Mail to offer a “one-stop shop and ship service” for customers.
Where is the growth? At Lane Crawford, home and lifestyle have performed well during the pandemic. And, says Aimee Squires-Wills, “There has been more interest in beauty and wellness as people are investing in themselves and leaning towards more clean, natural and organic skincare. These categories saw double-digit growth versus last year.”
Safety-first shopping protocols are being emphasised throughout department stores. Some 51 per cent of holiday shoppers still feel anxious about shopping in-store, according to Deloitte. At Selfridges, hand sanitiser pumps are available on every corner, while face masks and gloves are worn by store associates. This Christmas, many consumers will nevertheless opt for minimal time in-store, with 35 per cent of American shoppers in a Deloitte survey indicating they will choose to buy online, pickup in store (BOPIS), while 27 per cent will use kerbside pickup.
Digital shopping services
An upside of the pandemic has been the full-on retraining of sales staff to deliver service in the digital world. A new breed of well-trained virtual customer service agents are giving fit and style tips, often from their homes.
During the week of Black Friday, Neiman Marcus saw less traffic in stores but “good conversion and a high value of spend online”, says David Goubert, president and chief customer officer of Neiman Marcus. NM Connect, a proprietary tool that enables employees to deliver customer service online, was rolled out back in March to 5,000 store associates. Within two months of lockdown, 90 per cent of associates were trained to use it.
In September, Neiman Marcus invested in over 100 positions in client development, which includes bringing on experts “to train associates to become digitally savvy”, says Goubert. “Going into Christmas, the idea was absolutely not to lose this way of virtual selling but to continue building on the tools we give our associates to connect with clients remotely.” Since launch, over $100 million in sales have been recorded through NM Connect.
Lane Crawford has also invested in digital clienteling. Store associates have hosted weekly Zoom calls with long-term customers, offering exclusive previews of the store’s decor and advising on gifting and party dressing, says Squires-Wills.
Likewise, Harrods has transitioned heavily to omnichannel this year, announcing a global partnership with Farfetch in February as well as boosting its online private shopping options. “Our private shoppers have been running at full capacity, servicing customers across the world. We’ve even started listing supper, so if a customer wants to get all of the things that they used to enjoy from Harrods’s restaurant or food halls, they can get it,” says Harrods’s managing director Michael Ward.
Discounting: A necessary evil
The economic impact of the pandemic weighs heavily on department stores, prompting new thinking about how to sell piled-up inventory. Harrods opened an outlet in the Westfield London shopping mall in July. “To be closed twice in a year has had a dramatic impact. In the first [lockdown], we were left with massive amounts of stock,” says Michael Ward of Harrods. “So we opened the outlet to try and allow us to do it in a socially responsible way. That was a massive initiative for us — 85,000 square feet in five weeks.”
And Harrods’s celebrated Boxing Day Sale is already up and running, launched on 2 December, when the store was permitted to reopen. “We’re putting offers to our customers now so that they can have a very good shopping period,” says Ward, putting a positive spin on the decision. “We thought it would be nice to give something back to all of our customers who have had a pretty hard year.” The sale will end earlier rather than last until late January.
Neil Saunders, managing director of GlobalData Retail, notes that Harrods’s aggressive discounting is recognition of an urgent need shared by many department stores to shift inventory fast. “Consumers are still shopping, but demand is much more subdued. You have to work hard to entice people to buy.”
All department store executives agree that maintaining a good relationship with customers this Christmas is not merely about ensuring good sales. It’s a long-term investment too. As David Goubert of Neiman Marcus puts it, “Christmas is a very important season for us in any year, because of the emotional connection and relationships that we have with our clients. We think that more than ever, this season will matter a lot for our customers, who are looking for something positive.”
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