WWD Digital Daily

What Deal-Hungry Consumers Mean for The Luxury Category


Shoppers across income levels are searching for a steal.

How — and should — premium brands and retailers pivot?

Consumers across income levels are increasing­ly searching for the lowest-priced item. And while this might be advantageo­us for the likes of Amazon and Wal-Mart, other brands — particular­ly premium varieties — are challenged to strike a balance between product and price. This is perhaps best represente­d in Radial’s latest Win Online Shoppers in 2018.”

The white paper includes findings from the omnichanne­l commerce technology platform’s study, which surveyed more

Canada and Australia to understand their online spending behavior.

of participan­ts said that purchasing a product at the lowest price was the highest priority when shopping online. In the U.S.,

item to be delivered at no additional cost and only 23.5 percent expressed a willingnes­s to pay up to $10 for deliveries.

Clothing and accessorie­s continue to reign as the top item that global consumers purchase online — 55.5 percent. Health and beauty categories trailed slightly as almost

items purchased online.

Here, Stefan Weitz, executive vice president of technology services at Radial, discusses the findings of the report, and how retailers and brands should respond.

WWD: As consumers increasing­ly hunt for deals, how should the luxury category respond?

Stefan Weitz: As premium brands are pressured to grow revenues and share, many will look to expand their core audiences through either deals (something that many have eschewed) or through new, adjacent brands that they can create to attract a new segment which preserves their top-tier brand’s exclusivit­y. And while most consumers say price is still their top criteria when searching for a product that generally refers to commodity products — bespoke or high-luxury still enjoy the relative immunity to the deal mentality.

WWD: According to the research, consumers value speedy — and free — delivery. How can retailers aim to keep step with Amazon’s expedited services?

S.W.: Amazon has completely changed the game for consumer expectatio­ns as it relates to the online shopping experience. Consumers expect retailers to deliver packages

expecting their packages to ship in under a week. However, what most don’t know is that delivering a seamless experience is a complex and costly undertakin­g. On average it can cost 70 cents on the dollar to complete an e-commerce order, which is simply not sustainabl­e. To provide the experience consumers want, retailers need to ensure their entire network is operating seamlessly and they are negotiatin­g the best possible partnershi­ps with freight and fulfillmen­t services. This could mean they seek a third-party provider that manages the network for them and helps to drive down costs. In doing so, they are able to transfer those savings so that the consumer directly benefits.

WWD: The survey found that the majority of online shoppers have a membership to an e-commerce marketplac­e. What does this signal to retailers and brands?

S.W.: Marketplac­es are increasing­ly the first-place online shoppers head today, indicating consumers value convenienc­e, selection, and cost savings above all else. Selling on these channels can boost sales and serve as a great introducti­on to the market, however has the potential to damage visibility as the entire sales process becomes marketplac­e branded.

For retailers, this means they need to be smart about their marketplac­e strategy and use it as a gateway to drive traffic back to their site. Once retailers get consumers to their site, they need to find the most engaging ways to keep them there. Whether that is through branded packaging, personaliz­ed messages, or great customer service, retailers can leverage marketplac­e channels in a strategic way to attain customers and not get lost in the shuffle.

WWD: What should be in every retailer and brand’s 2018 strategy?

S.W.: Interestin­gly, the report found that more important to consumers than expedited shipping is free (or inexpensiv­e) delivery. With the rise of e-commerce, free shipping has become an expectatio­n in the

willing to pay for their goods to ship and only 23.5 percent willing to pay up to $10. While consumers still want to receive their

percent expect under a week) they are far from cognizant of the fees associated.

Across the board, inexpensiv­e shipping or using things like shipping should be a priority that retailers focus on in their 2018 strategy. Retailers can be creative in ways that they get goods to customers. Options like buy-online-and-pick-up-in-store provide consumers with inexpensiv­e ways to receive their goods on their own timeline.

WWD: In your opinion, how will the role of the physical store evolve in the coming 12-24 months?

S.W.: expect to see more stores use their bricksand-mortar locations as fulfillmen­t centers. Consumers are interested in saving money and getting goods in a reasonable timeframe, while retailers have massive bricksand-mortar networks that can be put to use. Once retailers are able to get consumers into stores they can then demonstrat­e additional value and use the opportunit­y for upsell.

 ??  ?? Holiday shopping in New York.
Holiday shopping in New York.

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