There is no business like the fashion business, especially when it comes to luxury.
A luxury fashion company is an organisation required to withstand the highest standards of quality across the board. In order to sustain its “dream factor”, a luxury brand needs to be perceived consistently over a variety of mediums.
In this post, we are going to look at the evolution that fashion retailers have experienced over the past decade, in order to understand how omni channel distribution and brand growth have become the driving forces of distribution decisions in this industry.
Here are the topics we’re going to discuss in this post:
This is no easy task. At the beginning of the internet era, many companies perceived the web as “a place” where the values associated with the fashion world were hard to defend. The internet is in fact easily associated with discounts, lower prices and high product accessibility. All of these values hardly align with a firm’s intent to associate its items with a sense of exclusivity and timelessness, to justify premium pricing.
Fashion firms, however, realised that the way to address this challenge was to merge a customer’s physical and digital experience through an omnichannel distribution strategy.
Through omnichannel distribution companies are able to integrate the “digital” and the “physical” purchase experience into the customer’s journey, exploiting the benefits of both channels to create a synergy between a physical store and an online marketplace.
Here in Italy, Luisa Via Roma was one of the first movers into this uncharted territory. As a multi-brand high-end fashion store, it was able to earn media space through influencer marketing campaigns and create a new shopping experience which allowed its customers to find both social validation and one-click access to a vast collection of designer brands.
By looking at current trends in the fashion business, we need to acknowledge that an online store has a series of advantages. Here are some examples:
These benefits have shown to fashion firms that the integration between a physical and digital experience can help to create better profit margins, despite the challenges connected to a brand’s dilution.
Seamless integration of physical and digital journeys can be achieved through the merger of customers’ expectations. This happens through the development of features that allow the transition from an online store to physical stores with a single click.
Some examples of these omnichannel functions can be:
These elements of physical and digital integration change customer behaviour at its foundations and support the process of re-imagining stores to foster a better “phygital” synergy.
So much can be done online, but physical stores need to change as well if they want to better support the omnichannel distribution approach pursued by a fashion brand.
In the next paragraph, we are going to discuss some of the new retail formats that many luxury brands are developing to innovate in-store experiences.
As presented in the video, creating a “phygital” (physical and digital) experience for your customers requires you to learn a new language. Burberry’s flagship store in London set a new best practice when it comes to creating an experiential journey breaking the boundaries of traditional retail.
The reason why Burberry chose to start the retail revolution from its flagship stores has to do with what makes this kind of store different from anything else.
Here are some key elements defining flagship stores:
Angela Ahrends was one of the visionaries behind Burberry’s 121 Regent’s Street store in London. Mrs Ahrends was able to imagine a retail format that many deemed impossible. It comes with no surprise that she was then hired by Apple to lead the change into their retail store and to continue the tradition of radical innovation Apple is famous for.
In short, we can summarise the benefits of a flagship store in the following three points:
The rich experience provided by these stores, and their ability to become brand gateways, shows us why companies are using flagship stores as an entry strategy to foreign markets.
This is an important aspect to consider, and we are addressing it in the next section of this post.
Fashion retailers may find themselves torn between different possibilities when entering foreign markets. To some extent, they are able to draw from a wide pool of choices spanning from export to greenfield operations. We discuss foreign market entry modes in greater detail in this article.
It has to be clarified, however, that a flagship store is not the beginning but the culmination of an entry strategy. Fashion brands still rely on wholesale distribution. When fashion firms create a flagship store, their intent is to signal that the brand has reached a point of maturity where it has gained the confidence to support its value proposition across international markets.
A flagship store shows that a company is capable of bearing in-depth scrutiny regarding the quality of their products.
There are two main perspectives in terms of using a flagship store to establish and develop a foreign market presence:
In this perspective, we see how the customer journey paradigm pushed fashion brands to adopt experiential approaches rather than operational approaches to market entry, as the former reduces the distance between the brand and the consumer, regardless of any actual physical distance.
There is no business like the fashion business. Fashion companies are constantly drawn to innovate and reimagine retail. In this article, we have conducted a short survey of the latest trends in fashion retail looking at how international and digital markets are reacting to new customer trajectories.
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