The luxury retail sector concerns high-end merchants selling their expensive products either online or in-store. Although there is not much difference among retailers when it comes to the omnichannel approach, luxury retailers face a unique challenge in keeping the long-debated balance between convenience and security, since there are high-risk transactions involved. High-end retailers also tend to aim to expand their operations globally, which means considering local payment methods, new regulations, and even new shopping habits. Luxury retail is still retail, but the shopping experience has many variables to take into account. Here are some helpful tips for retailers looking to make their way into this space.
Don’t neglect Chinese customers—they could shape the future of global commerce
An HSBC report has predicted that Chinese buyers will shop more and more online to buy luxury goods in fashion, accessories, and jewelry. They already seem to be the biggest luxury shoppers worldwide, making up to 32% of the EUR 262 billion spent in the global market in 2018.
In China, shoppers use mobile channels for expensive products as well, as transaction limits are high—a single mobile transaction limit is around EUR 43,000. Outside the country, if they pay via Alipay or WeChat Pay, for instance, they should know that in Europe, there is a transaction limit of EUR 40,000 for the former and of 10,000 EUR for the latter. Retailers need to support popular Chinese payment methods because they allow Chinese consumers the freedom to spend as they please.
Chinese tourists will most likely start shaping commerce on other continents as well—more specifically, mobile commerce. In 2017, there was a low penetration of mobile payments in the luxury retail, but the industry has started to grasp the consumers’ need for more convenience and have begun to diversify their payment methods. Currently, Alipay is supported by Farfetch, Swarovski, Neiman Marcus, Harrods, Selfridges, and Galeries Lafayette, just to name a few.
Go for Mail Order/Telephone Order payments when faced with strong customer authentication
Retailers may be worried that the implementation of Strong Customer Authentication (SCA) will be a burden on their customers—but friction is not necessarily something new for consumers, as they have gotten accustomed to 3D Secure 1.0 for some time now. A retailer that cares about their reputation and their clients’ security allows for this layer of security. Consumers that pay over EUR 1,000 for an item want to make sure that their money goes in the right account. For this reason, in the luxury industry, convenience and the frictionless experience needed to be valued differently.
Luxury brands are exempt from SCA if they support MOTO (Mail Order/Telephone Order) payments. Their clients may often feel the need to speak with a brand expert before making a great investment. Besides, high-value transactions may fall under the “do not honor” code, so the client will end up speaking with a brand representative anyway. On this premise, high-end merchants should definitely consider MOTO payments.
Look into POS customization
POS terminals designed specifically for luxury stores are not an extravagance, but rather a way to improve offered services. The main features that retailers should look into are those that facilitate track sales and inventory across channels, including multiple store locations and customer analytics. They should also integrate the POS into their accounting programs for financial purposes. There are even POS terminals created for particular sectors, such as jewelry, clothing, cosmetics etc. NextGen POS products can substantially improve the in-store experience—and some stores already tapped into this technology years ago. This Sabon story, for example, offers a detailed perspective of the customer experience in their shops.