The luxury retail market could be losing its sparkle, according to The Financial Times. A slowdown in revenue marked by geopolitical and economic instability around the world is to blame. While the luxury goods market has historically relied on a stable customer base and strong brand reputation, the recent slowdown indicates that even high-end customers are in need of an extra nudge to start spending again. Enter virtual reality (VR) – an emerging technology, once reserved for gamers, that is making its way into retail. By the looks of early tests, it could help attract and delight the luxury shoppers in a new way.
Virtual gaming and luxury commerce
Years ago, VR was exclusively the substance of sci-fi movies and books. Today, the Oculus Rift, which Facebook purchased for a hefty $2 billion, makes it possible to enjoy new worlds and experiences through a headset. Fashion powerhouse Christian Dior has reportedly used VR headsets to offer shoppers a behind-the-scenes peek into exclusive fashion shows. While Dior’s customers sip champagne and browse, they can also enjoy a front-row seat to the designer’s couture collection in Paris, without ever leaving the store. Now that is a memorable shopping experience!
While Dior’s use of VR technology is unique, other retailers are experimenting with these headsets to lure shoppers in store and wow them with an out-of-this-world experience. Consider North Face’s current experiment. The brand is piloting VR in select stores and offering shoppers a chance to hike, climb and base jump from exotic and remote locations the customer would not visit otherwise. It’s risk-free adventuring for shoppers, and North Face is there to inspire all the necessary tools and gear for the customer’s outdoor activities – real or imagined. As one industry expert points out, VR takes a bland visit to the mall to a truly exciting experience, and that’s exactly how luxury brands can use VR technology to boost sales. If customers leave a store raving about their virtual experiences, there’s a good chance that excitement will inspire sales, brand loyalty, word-of-mouth referrals and a positive reputation.
Turning virtual reality into dollars
VR has the potential to improve retail sales but the question is, “How?” Early adopters like Christian Dior and North Face might benefit simply by being the first to offer a virtual experience to customers. But short-term gimmicks don’t appeal to premium customers in the same way as others. Since these loyal customers generate 70 percent gross profit margins for luxury brands, they will expect VR to be integrated into the entire brand experience. To attract and delight high-end clientele, brands must focus on the details – elegant design, unique shopping environment, superior customer service and attentive staff that cater to the individual’s needs. Virtual reality can play into the high-end customer’s tastes by showcasing how a particular product might look within a specific environment. For instance, a premium customer looking to remodel his home would benefit from VR to see how the imported Italian marble he’s considering might look in his home’s foyer or grand staircase. Or, perhaps the customer would prefer to see and feel a custom gown on the red carpet before agreeing to purchase it. While some brands may use VR to lure shoppers into physical stores, luxury brands can benefit by offering their affluent clientele a unique way to test new products, see how they’re made (i.e. handmade in Milan), or engage in a memorable high-end experience like a fashion show.
The luxury goods market has weathered many economic storms over the last decade thanks to its loyal customer base. With emerging technology like VR, high-end retailers have an opportunity to capture and delight premium clientele in a new and exciting way no matter how volatile the global environment is. VR can guide consumers toward a purchasing decision by bringing them up close and personal to another world. Or at least, a world where the customer envisions himself within the context of the products he considers buying. Ultimately, VR offers more than a gimmick or an ‘escape’ for luxury customers, with a more stimulating way to experience the brand.
For other ways to engage the luxury shopper, read our white paper Cater to the Fashionista in Every Consumer