In an era where luxury is becoming increasingly defined by personalization, wealthy consumers are demanding that brands innovate, tailoring their offerings to match their individual preferences.
Take, for instance, luxury giant LVMH. The company’s Selective Retailing business, offering “personalized shopping experiences matched to individual aspirations,” focuses on curation and on maintaining highly individualized shopper relationships.
Their bet is paying off big time. As of the company’s last earnings report looking at the first quarter of the year, revenue for the Selective Retailing was up 11%, seeing far and away the greatest growth of any segment.
“With locations all around the world, our Selective Retailing Maisons make sure that customers are the number-one priority for their strategies and their staff,” the company stated in its last annual report. “Sephora, DFS and Le Bon Marché are all pioneers in their fields and continue to innovate and imagine the shopping experience of the future for their customers.”
Affluent consumers increasingly value experiences over material possessions, PYMNTS Intelligence data indicates, seeking unique and memorable encounters that resonate with their personal interests. Luxury brands are responding by offering exclusive events, bespoke services and personalized travel experiences designed to cater to the individual tastes of their clients.
Indeed, wealthier shoppers demand more personalization than the average consumer. The PYMNTS Intelligence report, “Personalized Offers Are Powerful — but Too Often Off-Base,” created in collaboration with AWS, found that 89% of consumers who make more than $100,000 a year are interested in receiving personalized offers. This share is markedly higher than the $83% of those who make $50,000-$100,000 and the just 74% of those who make less than $50,000 who said the same.
The rise of digital platforms has enabled brands to gather and analyze vast amounts of consumer data. This data provides insights into individual preferences and behaviors, allowing brands to tailor their offerings more effectively, such as leveraging data to curate exclusive collections and provide personalized recommendations based on past purchases and browsing history.
On the retailers’ side, take the new luxury powerhouse that will be created by Saks owner HBC’s acquisition of Neiman Marcus, with Amazon holding a stake. In the news release announcing the merger, HBC shared that by integrating artificial intelligence (AI) and first-party data, Saks Global, the merged company, aims to deliver highly tailored interactions both online and in-store, enhancing customer engagement through bespoke recommendations and seamless service.
“This is an exciting time in luxury retail, with technological advancements creating new opportunities to redefine the customer experience, and we look forward to unlocking significant value for our customers, brand partners and employees,” HBC executive chairman and CEO Richard Baker said in a statement.
Still, the merged company has an uphill battle when it comes to winning back the loyalty of their high-income target audience, and it remains to be seen whether these tech-enabled capabilities will be enough to restore the department store company to relevance.
“When [wealthy buyers] do shop, they don’t seem to be beating a path to department stores,” PYMNTS’ Karen Webster observed in a recent feature. “… Department store sales are 50% below their peak in 2000, and 30% below where they were in the 1980s. The ’80s, as in 40 years ago. It’s hard to understand what people mean when they say, ‘department stores are back.’ Back from what, exactly? Coming back from zero sales during COVID to levels which don’t even match sales made four decades ago is hardly a comeback story worth writing.”
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