Luxury Retail 2020: The Mega-Trend This Year May Shape the Future Luxury Industry

Before the COVID-19 crisis hit, luxury brands were used to implementing experiential marketing techniques to create more immersive experiences between brands and customers. We’ve seen everything from exclusive product sampling to branded pop-up stores in the hopes of exploring new collections and markets.

While some luxury physical locations remain closed during the post-pandemic period, branded pop-up stores are on the rise. Pop-ups are quickly becoming a permanent strategy in Western and Asian countries to revive the luxury market and boost online growth.

In the wake of China recovering from the COVID-19 pandemic, pop-up shops are becoming more important to boost online and offline luxury goods sales.

Why has it become the most critical trend in the luxury industry? Can pop-ups revive the sector during the post-pandemic period?

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(Photo Shot at K11 Musea, Tsim Sha Tsui, Hong Kong)

Branded Pop-up Stores: Novelty & Scarcity

Consumers are still feeling the burden of travel restrictions and store shutdowns. Branded pop-up stores promote a sense of novelty and scarcity. For luxury brands, investing in pop-up shops can complement their omnichannel strategies during the post-COVID-19 period. 

More importantly, decentralised fashion weeks are significantly reducing exposure opportunities for luxury brands. Pop-up stores are trendy right now. Consumers appreciate the oddity and somewhat gimmicky environment. Luxury brands can now create exclusive “experiential luxury” beyond department stores and flagships. 

Millennials are particularly intrigued by the introduction of branded pop-up stores where they can explore the latest collections and limited edition products. For example, Dior set up several “Dioriviera” pop-up stores this summer, which offered limited edition pieces and social sharing for fashion lovers. They also collaborated with WeChat, a mini-program that provides product recommendations and encourages shoppers to use hashtags to share items. Founder and chief executive of The Lionesque Group, Melissa Gonzalez, confirms such moves during post-COVID-19 adjust period allows luxury brands to show up where it makes sense.

Multisensory Shopping Experiences

According to the McKinsey report, Cracking the code on millennial consumers, 40% of millennials are value-driven customers. To further entice these young customers, luxury labels are collaborating with brands from other industries to provide multisensory shopping experiences. 

For example, Fendi partnered with Mr Doodle to set up mini-cafes where guests could see tablewares coated with Mr Doodle’s graffiti. This kind of pop-up store brings visual pleasure to the shoppers while also focusing on smell and taste. Catering to multiple senses helped increase sales and offered a better overall shopping experience. 

Apart from having a brand collaboration, pop-in stores with extraordinary customer engagement often stand out from the crowd. Gucci opened a successful branded pop-up store to celebrate its Psychedelic Collection at Selfrideges’s Corner Shop. The Guccified limited-time pop-up shop transported shoppers to a 70s nightclub with neon branding lightbox, sparkling disco balls, red strobe lights, and fully dressed mannequins. This kind of experiential campaign proved to be incredibly popular among young shoppers, likely due to the enhanced emotional response and unusual experience.

Harmonized Store Experience

Gen Zers and millennials are technology-oriented generations, meaning the high demand for social media sharing and digital experiences heavily influence luxury brands’ retail strategies – harmonised retail. McKinsey reported that millennials spend 17.5 hours on the internet per week, 98% of which are social media usage. Luxury brands are digitising pop-up stores by marrying the online and offline shopping experience. This tactic was adopted by Burberry and Selfridges to create a more harmonised store experience.

Burberry partnered with Snapchat to open a branded gamified pop-up store – ‘Animal Kingdom,’ which incorporated AR. Shoppers could scan the Snapcodes embedded in the pop-ups, and moving animals would show on their smartphone screens. The interactive customer journey grants high-quality content for tech-savvy shoppers to share on social media and increase their peers’ influence. 

On the other hand, Selfridges’ shoppable store window displays in London allowed shoppers to use QR codes to purchase the products without entering the store. The store window displays were a creative customer engagement strategy that helped them stand out among competitors and deliver a unique customer experience during the lockdown.

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Final Thoughts

While online is a key distribution channel, physical retail stores are still where brands connect most with consumers. Pristine window displays, personal and multisensory experiences in physical stores are still highly sought-after. Pop-up stores are helping brands deliver that exclusiveness luxury consumers expect. It is also predicted to be a permanent brick-and-mortar strategy during the post-pandemic period. They help increase the exposure in areas during the lockdown and maximise the value creation of luxury brands.

Store window displays help engage customers by creating a warm, welcoming atmosphere. At TDF Asia, we offer flexible visual merchandising solutions in just 5 easy steps. Learn more about creating window displays, product displays, and fixtures for the luxury retail industry. Please don’t hesitate to contact our project management team at enquiry@tdf-asia.com or give us a call at +852 2116 9583.

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