Reimagining Luxury Retail: Are Luxury Department Stores Delivering the Experience Edge?
A Case Study on Luxury Department Stores' Overall Customer Experience in France and the UK
The Context
Luxury Department stores are at a crossroads. Facing a shift in consumer behavior and a competitive landscape brimming with standalone stores, these iconic institutions are reinventing themselves, e.g., rebranding efforts, digital innovations in-store and online, immersive installations, focusing on pop-up/concept curated spaces, sustainability, etc. But are these initiatives enough, given today’s complex microeconomic framework?
Our in-house study demonstrated that customer experience is a key factor in driving positive business impact; we delved into the customer experience (CX) provided by four iconic European department stores, uncovering valuable insights to elevate the luxury retail experience.
The CXG Approach
Unveiling the Customer Journey
Our methodology focused on the customer journey, encompassing both online and in-store touchpoints. Evaluators from our CXG proprietary database embarked on a simulated shopping experience, acting as they normally would while shopping:
- Website Browsing: Evaluators explored the department stores’ websites, searching for products and services.
- Distant Interaction: They engaged with online customer service channels to make inquiries.
- Luxury Department Store Visit: After their online interaction, evaluators visited the physical stores, browsing for an hour and interacting with staff across different floors and departments.
Across 120 visits (30 per luxury department store), we captured a diverse range of perspectives (72% Female, 28% Male; Gen Z – 26%, Millennials – 46%, Gen X/Boomers – 28%). The study spanned three months (July – September 2023) and covered four iconic luxury department stores.
CXG Advocacy Index
Measuring the Power of Recommendation
A crucial element of our CX measurement is the Advocacy Index. This CXG proprietary metric gauges a brand’s ability to create positive word-of-mouth, turning satisfied customers into ambassadors. For this study, we asked a key question: “Based on your overall experience today in the department store, how likely are you to recommend it to a colleague or a friend?” The results paint a clear picture:
- Only 27% of customers became in-store experience ambassadors, highlighting a significant gap compared to the industry benchmark for luxury retail (42%).
- Online experiences mirrored this trend, with just 22% advocating. Across all stores, online and offline advocacy remained consistent. While one London-based luxury department store led with the highest in-store advocacy (33%), two of the four luxury department stores fell short of their respective market benchmarks (Paris – 40%, London – 44%).
The Outcome
Navigating the Customer Journey: Insights and Opportunities
Online Experience: A Missed Bridge
The online experience offered a positive first impression, with easy navigation and a pleasant browsing experience (58% and 53% of customers, respectively). However, challenges arose:
- Finding contact details: One-third of customers struggled to locate contact information online.
- Remote interaction delays & friendliness: Response delays and a lack of friendly tone were evident, particularly at one Paris-based department store (only 37% strongly agreed the conversation was friendly).
- Bridging online and offline: A missed opportunity was identified – only 21% of customers were encouraged to visit the physical store during online interactions.
In-Store Experience: Ambiance Meets Human Touch
Stepping into the stores, a positive atmosphere generally prevailed, with 83% of customers enticed to continue browsing based on the first few minutes in the department stores. However, aspects needed improvement:
- Navigational challenges: Signage issues and difficulty locating concierge services hampered smooth navigation (only 37% strongly agreed the department stores were easy to navigate).
- F&B shortcomings: While product offerings were generally well-received (average rating above 74% across departments), food and beverage options fell short (62% advocacy rating).
- First impressions matter: 56% of customers were not greeted upon entering the stores, a crucial missed opportunity for a warm welcome.
- Proactive engagement & building connections: Proactive assistance and advisors’ ability to connect with customers were areas for improvement (42% and 26%, respectively).
- Loyalty program awareness: A significant disconnect existed – 79% of customers were not informed about the department stores’ loyalty programs during their visit.
- Promoting signature services: A missed opportunity was identified – 85% of customers were not informed about the department stores’ signature services.
In Conclusion
Redefining Luxury Retail Through Human Connections
Our study reveals promising first steps taken by these luxury department stores. However, a clear need exists to elevate the customer experience across all touchpoints. Here are some key takeaways:
- Bridge the online-offline divide: Foster a seamless journey by encouraging online interactions to connect with physical stores.
- Invest in human-centric training: Empower sales advisors to be proactive, build rapport, make customers feel comfortable during their visit, and champion the store’s signature services.
- Invest in experiential retailing: Luxury department stores should aspire to transform into vibrant “destination hubs,” offering more than traditional shopping experiences. They should aim to curate immersive and culturally enriching experiences to entice visitors.
By focusing on these areas, department stores can transform themself into true customer destinations, fostering brand loyalty and advocacy in a competitive landscape.
CXG can be your partner in this transformation. We offer comprehensive services and solutions designed to elevate your luxury department store’s customer experience across all touchpoints. Contact us today to learn more about how we can help your brand thrive in the age of experience-driven retail. If you are interested in the full study, please contact us.
