All Blog Posts

How COVID-19 is Affecting High-End Boutiques

Differentiate by Design - Nov 30, 2020, by Asja Nastasijevic

High-end business is not just about superior quality and selling expensive goods and services. It’s also about making a personal connection with the customers and offering them an exclusive, tailor-made shopping experience. The ultimate goal of every brand is, after all, to have a community of lifelong loyal customers. Although technology plays a role in this, the high-end luxury market has traditionally been based essentially on the highly-personalized in-store experience of the purchase. With this year’s COVID-19 pandemic, this practice, so precious to both brands and luxury shoppers, had to be put on hold and at great expense. Social distancing and personal connection don’t go well together.

The Importance of Consumer Experience

Over the last years, high-end brands invested heavily in a unique and luxurious brick-and-mortar experience that focuses on each shopper. The lavishing boutiques like the Gucci Garden in Florence, or the En store in Paris, look and operate more like creative spaces and galleries than stores. In these places, customers are invited to learn more about the brand’s exclusivity, artistry, and history, as well as engage with other fans. Today’s luxury shoppers don’t just pay for the brand’s name. They equally value the whole in-person shopping experience of getting something exclusive that will make them feel special. The idea behind this trend is to play on buyers’ emotions and personal aspirations, and by offering them an authentic and unique experience, brands are winning customers’ hearts and loyalty. Unfortunately, the COVID-19 has spoiled it all for Gucci bag fans this year.

But the special role of brick-and-mortar stores is not at all exclusive to the luxury fashion industry. Companies like Leica Camera and Apple have invested heavily in their hands-on showrooms welcoming customers to try their products and get in-depth technical advice and recommendations. Offering local repair services and organizing workshops further enhance the unique person-to-person experience.

Smartphones Are the New Shopping Malls

With imposed stay-at-home orders all over the world and temporary closures of non-essential businesses, the pandemic has changed shopping behaviors overnight. It has pushed people more towards buying online. Smartphones have become the shopping malls during the coronavirus pandemic. According to the U.S. Department of Commerce, e-commerce sales grew more than 30% between the first and second quarter of 2020. However, economic uncertainty has caused many to stay away from irrational purchases and focusing on buying essentials. Hence, the luxury industry has been hit hard this year. At the very outset of the pandemic, many of the high-end retailers were already experiencing huge losses, and some of them had to shut down dozens of stores like Neiman Marcus. The world’s leading luxury conglomerate Louis Vuitton Moët Hennessy (LVMH), recorded a 27 percent decrease in sales in the first half of 2020 due to the COVID-19 pandemic that resulted in temporary store closures. According to Vogue Business, a potential loss for the luxury industry in 2020 will be $10 billion. The projection is based in part on the fact that Chinese buyers account for a third of global luxury consumption both inside and outside China and their spending has reduced significantly since the beginning of the year with forced travel restrictions.

High-end Brands Need to Adapt to Meet Changing Needs

It is safe to say that an unprecedented turn towards more digital buying triggered by the COVID-19 pandemic is likely to have lasting effects on luxury retail. Surely brick-and-mortar stores will eventually re-open. However, for high-end boutiques to emerge from the current crisis successfully means extending their e-commerce and improving online luxury offerings. Investing in digital luxury retail requires a shift in mindset: instead of using online channels to bring customers to physical stores, luxury brands need to think about how traditional brick-and-mortar shops can help increase their online sales. A key challenge is to provide customers who are accustomed to exclusive in-person shopping with a high-quality personalized shopping experience online. Investing in social media channels and phone and live chat support is crucial to meet this need. Others, no less important aspects of adapting to e-commerce include investing in reliable and secure shipping solutions, simplifying returns, ensuring high standards customer service as well as using safety measures to eliminate health concerns. To what extent luxury brands are ready and willing to adapt to change to cover the new customer needs and habits that have arisen we’ll see in the next period. One thing is for sure - their future success depends on it.

While the COVID-19 pandemic strongly impacted the manner of operating physical stores, Apple Store seems to have found a way of doing business safely and successfully in these unprecedented times. After going back and forth with closing and reopening their shops, Apple decided to keep their customers safe and satisfied by limiting service to Apple Store pickup of online orders and allowing in-store shopping with a Specialist and Genius Support service with scheduled appointments. By introducing these modifications, the company continued to offer a successful in-store visit to their customers despite COVID-19 limitations. Moreover, Apple set an example of how to further improve the customer in-store experience with coordinated online and offline services, which could benefit all retailers even after the pandemic is over.

Asja Nastasijevic

Journalist and Writer

Asja is a content writer specialized in the arts, design, and culture. She holds a BA degree in Art History from the University of Belgrade and an MA in Art & Cultural Management from the University of Turin. Over the years, she worked as an art gallery assistant, art writer, editor, and content creator for various art-related and design-related magazines, galleries, and online marketplaces. She currently lives in Paris, where she works as an art history and world heritage guide. When not writing, researching, or leading tours, Asja is strolling through her favorite and most beautiful districts in Paris – Le Marais. Her motto is: "Put all you are into the smallest thing you do." It is a verse from a poem by one of her favorite poets Fernando Pessoa.