Over recent years we’ve witnessed changes in the sharp divide between online and physical retailing. At first, one was perceived as the enemy of the other, then the notion of omni-channel retailing sought to reconcile the two. Now under the new rubric of social retail, we are seeing impressive attempts to combine the two. In retrospect, this might seem to have been inevitable but the mechanics that have made it possible are relatively new: concept has coincided with capability.
The interaction between brands, retailers and consumers has been permanently altered by technology. Simply offering products and content is no longer sufficient: the market has matured to an extent that customers now expect immersive multi-channel environments. This is particularly true of Millennials and Gen Zers, for whom tech is second nature. By mixing the physical retail space with advanced digital technology, social retail enables users to indulge in one of the great pleasures of consumers, the sharing of products and experiences.
Perhaps not surprisingly, it is luxury brands that are investing heavily and quickly in the idea. In the Chinese city of Shenzhen, Burberry has opened a 5,800 square foot store where customers use the Chinese messaging app WeChat to browse products, access information about them, book in-store appointments and make reservations in the café.
But the benefits don’t end there. The greater the level of interaction, the better the shopping experience becomes. The app enables users to collect social currency which ‘buys’ exclusive rewards and discounts. With QR codes applied to every item in the store, your smartphone connects you to a world of data, incentives and special offers. Visiting a luxury store becomes a multi-faceted experience that is not only enjoyable for customers but extremely valuable to brands in helping foster deeper connections and encouraging loyalty.
Social retail represents a powerful opportunity for luxury brands, which have for decades depended on the customer’s associative responses. Luxury represents quality, affluence and indulgence. It feels like a reward. It is aspirational. Long before digital technology, stores and boutiques in locations such as Bond Street, Fifth Avenue and Rodeo Drive sought to position themselves as ‘high-class’ with an entirely different approach to customer service. But where those practices always had a strong element of exclusivity to them, the pleasures of social retail are available to all. It is an inclusive way of selling which invites the participation of a very broad customer base through different channels. Whoever you are, all you need is a willingness to engage, a taste for something new and a smartphone.
The timing of this innovation couldn’t be better. The luxury goods market in physical stores fell significantly during 2020 and 2021 while online it has remained fairly constant, with online market share expected to rise to 30 per cent by 2025. By importing the versatility, resilience and appeal of ecommerce into physical stores, luxury brands can be very hopeful of seeing the old rescued by the new.
The technology that drives social retail is, of course, available to any retailer, but it is difficult to imagine it having the same transformational effect outside the luxury market. An interactive, immersive supermarket visit doesn’t have quite the same appeal. An augmented reality fruit and veg aisle has limited application. But bringing the latest innovations in digital tech into an environment which has always striven to present itself as a place of experience rather than simply purchase can open up a world of new possibilities. In time, the practice may filter down to retailers of essential goods, but as social retail becomes established, it is luxury brands that are appropriately leading the way, promising benefits for all.