Bridging the Generations: Helping a Luxury Retailer Expand its Customer BaseDOWNLOAD
Over the past century, this luxury fashion retailer has built a stellar reputation by providing affluent customers with distinctive merchandise and high-quality service through its network of traditional stores, web sitesand catalogs. Like others in the luxury segment, this company was not insulated from the repercussions of the recent economic downturn, which left many consumers with less disposable income and an increased propensity to save.
When merchandise sales plunged, the company’s leadership looked to Deloitte to help them identify ways to increase sales while protecting the brand. Our research showed that the company was concentrating its attention on a limited customer segment, while their competitors attracted a more diverse customer base, including a younger generation of affluent consumers with high growth potential. Addressing the needs of the company’s traditional customer, as well as new, potentially valuable customers could help revitalize sales if the right changes were made to the shopping experience.
Senior management’s strategy to increase sales was focused on differentiating their stores from their competitors by enhancing the brand’s goal of delivering white-glove service to their most valuable customers. Deloitte was asked to help them understand their customers’ evolving needs and to develop recommendations that would improve service, increase merchandise salesand build customer loyalty.
Deloitte analyzed the company’s database and conducted new customer and competitive research to gather insights into the shopping patterns of affluent customers. We focused on two key groups: the company’s traditional core customers and other affluent customers who had visited their stores, but did not return. Perspectives from these two groups were gathered through phone surveys and in-person meetings, including focus groups. Some customers also allowed us to follow along as they shopped while sharing their thoughts about what matters most to them about the shopping experience.
The preliminary results were eye-openers for senior management. Like many luxury brands, their business model was based on exclusivity. However, the required execution of this business model was working against them. Some affluent customers – particularly younger customers – did not feel welcomed in the stores. Even some of their most loyal core customers felt that they were not receiving enough value for the price premium they paid. As a result,they were shopping with competitors more often.
To return to growth, the company needed to expand its targeted customer base and refine their shopping experience to cement customer loyalty and command a higher price, through good economic times and bad.
Senior management wanted to preserve and grow relationships with their traditional customers and reach out to new segments. Deloitte was charged with helping them protect their brand while making changes around the edges to the shopping experience, merchandise selectionand service levels.
Merchandizing strategy. The merchandise was targeted toward their aging traditional customer. To spur additional sales to younger customers, recommendations for adjusting merchandizing included:
Cross-channel integration. Customers expected to receive consistent service wherever they shopped, whether in-store, catalog, mobile, call center, or online. Recommendations for improvements included:
Store experience. While senior management wanted to continue special treatment of their most valuable current customers, they did not want to alienate others who may become valuable customers. Recommendations for improving overall customer sales and service included:
Deloitte helped this retailer increase sales and attract new customers while protecting its brand. Since leadership consensus was critical to developing a lasting growth solution, we engaged senior management in reviewing customer insights and developing recommendations at each stage of the project. By examining their existing customers’ behaviors and preferences, along with the needs of a new generation of shoppers, we helped this retailer take steps that enhanced their service quality and positioned the company for a second century of growth.