I just participated in a panel at the 2017 Luxury Interactive conference with the young founders of two luxury, multi-brand e-commerce websites who both have dipped their toes into (pop-up) retail. Physical stores, even short-term occupancies, are expensive for young companies, but once a nascent e-tailer attracts private equity capital (Warby Parker or UNTUCKit, for example), the reality that nearly 88% of all retail sales were still store-based in 2016 typically drives the retail footprinting of the brand.
The luxury category of purchasing is about communicating our recognition of quality and demonstrating our status to others. A store like Canada’s luxury department store chain Holt Renfrew, that treats its customers as “omni-channel” purchasers and doesn’t differentiate between in-store and e-commerce shoppers, can generate 60-70% higher customer spending. The key to this customer approach is personal relationship and engagement realized (at least initially) only by face to face interaction with in-store salespeople. These relationships can become almost completely “virtual” because of the appeal and effectiveness of chat-based communication. A customer may only visit a physical store once a year, but would have never developed this a personal relationship without meeting a sales person face to face. If a sales person is enabled to know a customer’s buying history (and tastes) and creatively integrate both in-store and e-commerce offerings with a customer’s profile, messaging technology becomes a powerful tool to expand sales. None of this is possible if there’s no physical store.