Millennials and Generation Z consumers are driving 85% of the global luxury sales growth. While older shoppers have traditionally been the growth engine of luxury sales, affluent Millennials and Generation Z customers now represent over 30 percent of all luxury spending.
These younger affluent shoppers have different expectations when it comes to retailing. They want an experience that is personalized and seamlessly integrated both online and offline.
This generational shift leads to a notable acceleration of sales through connective technology as the internet becomes an integral part of purchasing habits.
In parallel, developments in technologies such as voice commerce and Internet of Things (IoT) are reshaping luxury retail to become more customer-centric and personalized in a scalable fashion. There are three major technological accelerators that are radically influencing the future of luxury retail:
Augmented reality to enhance luxury retail experience
Augmented reality is defined as a technology that layers digital enhancements atop a consumer’s view of the real world and enables its user to interact with these enhancements. Luxury brands are using augmented reality in combination with their physical retail stores to elevate the shopping experience.
New AR technology, such as smart mirrors, is allowing affluent customers to naturally interact with luxury products and rapidly gather relevant information such as price, components, or origin.
Augmented reality is also expanding the reach of brands, by enabling consumers to visualise and “try” new products at home before making a purchase. Design app Morpholio Board, for example, created an AR platform for designers and shoppers to easily create new home interior models and share their work with a vibrant community. The app helps its users create mood boards and visualise how certain objects would fit into their living room. Morpholio is democratising the interior design process, enabling more people to create and visualise their home interior ideas in glorious details.
Artificial intelligence: personalised high-end shopping recommendations
Artificial intelligence assistants such as Amazon’s Alexa, Google’s Assistant, and Apple’s Siri are seeing their market penetration accelerating drastically over the past two years. This is driven by both new smartphone sales – latest smartphone models often come with personal assistants pre-installed – and smart home speakers adoption. Devices such as Amazon Echo, Google Home, and Apple HomePod are indeed bringing their AI-based assistant into consumers’ living room.
A recent study by Verto Analytics found that 98.6 percent of consumers in the US with access to a smartphone based AI assistant used it an average of 10 times per month. And this trend is expected to accelerate as customers upgrade their smartphone over the coming years.
Voice commerce: conversational luxury retailing
Closely intertwined with the market penetration of artificial intelligence, the adoption of voice-controlled eCommerce is enabling consumers to make ad-hoc and spontaneous purchase decisions in a new shopping environment.
Voice commerce means that a customer’s voice is used as a new user interface. This is a new platform for interacting with services.
By 2020, half of all online searches will use voice or image search rather than text. “More efficient and often more convenient than typing, voice-based interfaces are ramping quickly and creating a new paradigm for human-computer interaction,” predicts Mary Meeker of KPCB, a venture capital firm that specialises in tech investments. Voice commerce is indeed providing a frictionless customer experience, with purchase completed as a single conversational stream rather than multiple clicks on a website. Affluent consumers increasingly expect frictionless and instant luxury experiences. With voice-controlled eCommerce, luxury brands are able to deliver services rapidly while also building trust to increases the likelihood for consumers to return in the future. As a retail channel, voice assistance provides exceptionally fast and convenient service at a minimal cost and with the capacity to scale effectively.
EuropeanLife Magazine, 2021.