Source: AMAG.com | William Pao | Date: 2023/07/12
Luxury retail is a key segment in the retail industry. More and more, offline luxury retailers are turning to security solutions to address certain challenges and difficulties they face. This article takes a closer look.
We begin the note by defining luxury retail stores. While luxury retail stores vary from place to place, they have a few things in common: they typically feature famous brands, sell high-priced items and provide a personalized/tailor-made service to wealthy customers.
“A high-end retail store offers premium and exclusive products or services to the affluent segment of consumers. Luxury retail stores often carry high-end fashion clothing, accessories, jewelry, watches, perfumes, cosmetics, home decor, and other luxury goods. Luxury retail stores include brands like Louis Vuitton, Chanel, Harry Winston and many more,” said Addy Ho, Segment Development Manager for Retail, Asia Pacific at Axis Communications.
“Luxury retail stores emphasize creating an upscale and opulent shopping experience for their customers. These stores often have elegant and visually appealing interiors, well-designed displays, and luxurious decor to enhance the ambiance,” said Keith Aubele, Chief Security Officer at Salient Systems.
“Exceptional customer service is a hallmark of luxury retail. Employees in luxury stores are trained to provide personalized attention, offer expert advice, and deliver a highly attentive and exclusive shopping experience to each customer.”
Challenges from several fronts
Offline luxury retailers face challenges from several fronts. First and foremost is security. As luxury retail stores continue to do well in business – in spite of the pandemic and inflation – they are also faced with various real and potential criminal activities.
“Last year, the market for luxury goods in America grew by 8.7 percent, well above inflation. For the same year, the US Jewelry Security Alliance reported the highest ever crimes against firms – a total of 2,211 – representing just over a 31 percent increase compared to the previous year. Distraction threats are on the rise as well, including smash-and-grab robberies, despite the fact that many high-end jewelers are located in high-end shopping malls, away from more vulnerable downtown locations and strip centers,” said Jason Burrows, Sales Director for IDIS America.
He added: “A similar picture has emerged in Europe, with one of the largest luxury goods giant reporting a 17 percent year-on-year increase in sales in the first quarter of 2023. Many brands have benefited from the end of the Chinese government’s zero-COVID approach. This has seen the return of Chinese tourists to European cities, each with their own chic streets. However, these locations are also more vulnerable to smash, grab and run robberies carried out on motorbikes and mopeds, particularly during off hours. Crime in many parts of Europe fell during the pandemic due to lockdowns, yet figures hit a 20-year high in the U.K. to the year ending March 2022 with daring raids on luxury jewelry and watch stores, as well as increases in fraud and organized crime, while charge rates hit a new low.”
Beyond security, luxury retail stores also face other challenges. These include operational efficiency, inventory management and delivering a good customer experience. The latter is especially important as competition from e-commerce and online counterparts intensifies.
“The rise of e-commerce has intensified competition for offline luxury retailers. Online platforms offer a wide range of luxury products, often at competitive prices. Luxury retailers must find ways to differentiate their physical stores and create unique in-store experiences that cannot be replicated online,” Aubele said. “Maintaining consistent and excellent customer experiences across all touchpoints can be challenging, especially as the customer base grows.”
He continued: “Managing inventory in luxury retail can be complex. Luxury products often have limited quantities or exclusivity, making it crucial for retailers to optimize their inventory and ensure they have the right mix of products available. This requires careful forecasting, stock control, and efficient supply chain management to avoid overstocking or understocking items.”
Turning to security
To tackle these challenges, luxury retail stores turn to security solutions, which can play an important role.
“For high-level security measures, it is no secret that luxury brands are an attractive target for thieves who often target high-end luxury products through shoplifting or smash-and-grab theft. This is where video surveillance cameras inside and outside stores are critical. Access control solutions can ensure that only authorized staff are allowed into backend storage and restricted store areas,” Ho said.
He added: “To ensure operational efficiency, luxury retailers must consider the customer experience from when they enter the store to when they leave it. Luxury retailers must consider their operational efficiency workflow – from store layout and design to staffing to ensure personalized attention to checkout. Solutions like AXIS People Counter can help determine if the store is too crowded for staff to handle and ensure enough manpower to attend to each customer. With people counting, the stores would maintain the customer satisfaction. When encountering difficult customers, stores require video evidence to support their staff and protect their brand from unreasonable disputes.”