As disruption from the pandemic rises and falls in waves around the globe, retail brands are pivoting their business to try and make up for related sales losses. Many brands were in good shape to manage this with robust digital and omnichannel ecosystems already in place. Many luxury brands, however, were not as well prepared. Heavily reliant on an in-store, really personal customer experience model, luxury brands in North America are now scrambling. A drastically changed in-store experience, the loss of tourists from Asia, and inexperience in the digital realm are some of the key challenges they’re facing.
Fortunately, Casey Golden, founder and CEO of retail experience platform Luxlock believes that luxury brands have everything they need to get through this crisis and come out on the other side by leading digital transformation and setting a higher standard for shopping online.
Transcript
Melinda: Hi, I’m Melinda, and you’re listening to Think Retail. As disruption from the pandemic rises and falls in waves around the globe, retail brands are pivoting their business to try and make up for related sales losses. Many brands were in good shape to manage this with robust digital and omnichannel ecosystems already in place. Many luxury brands, however, were not as well prepared. Heavily reliant on an in-store, really personal customer experience model, luxury brands in North America are now scrambling. A drastically changed in-store experience, the loss of tourists from Asia, and inexperience in the digital realm are some of the key challenges they’re facing.
Fortunately, Casey Golden, founder and CEO of retail experience platform Luxlock believes that luxury brands have everything they need to get through this crisis and come out on the other side by leading digital transformation and setting a higher standard for shopping online.
Casey, welcome. Thank you so much for speaking with me today. Can you start us off by telling us a little bit about you and your journey in the world of luxury?
Casey: Yeah. I’m really excited to be talking about this topic. It’s rare, everybody, you know, is so focused on mass retailers and I’m like, “No, there’s another part of retail.” So, thank you for opening up this conversation. You know, I started in luxury on the floor. I was a salesperson and I worked at a store called Mario’s over in the Pacific Northwest. And, you know, I started on sales, moved into buying, we opened up the first contemporary store back in 2006/2007, that was the beginning of a shift in luxury retail by merchandising with a Theory or a Rag & Bone or Phillip Lim and really bridging these contemporary and luxury brands with a pair of jeans. And through that, that’s really when customer data changed. From my perspective, it had to encapsulate so much more than a handbag. It was really about style because you’re mixing across categories and some of these brands have never sat on the floor next to each other. You know, they’d be on different floors.
And so, that was really in the beginning of just really diving in and getting curious on who is the customer? How do I serve this customer? How do I make sure that they left happier than they came in? And those salespeople just, from my experience, they didn’t have the respect in the organization. They really were seen as the bottom of the totem pole instead of being that most important person that’s managing that customer experience, that’s building the relationship. I just saw this disconnection and mostly it was due to the fact that there was no technology. So, this was really when I started seeing the problem of this is not a scalable career. And this is probably one of the most important pieces to a fashion brand when you’re starting to shift from wholesale to direct-to-consumer.
Melinda: Right. So, I mean, other retail categories, everyone’s been hit hard by COVID, but some were in a better position to shift to a digital experience and still manage that kind of relationship. How well were luxury retailers…if we kind of look at them as a whole, how well were they prepared for this disruption?
Casey: Well, in 2019, a lot of luxury brands stopped outsourcing their e-commerce and pulled it in-house. And I think that it would be a different story today if they hadn’t done that. Being able to have that business in-house has prepared them in a stronger way for 2020. There’s a lot of brands that are experiencing double-digit increases because you have to remember the luxury customer, the $800 blouse is just a blouse. It’s not necessarily seen as “I’m making a luxury purchase” necessarily. It’s just a blouse from, like, a brand that I really enjoy. And I’m sick of what I’m wearing on Zoom every day. And so by having that, they’re starting to gather that information and be able to start digesting it.
Unfortunately, they don’t have the context that they’re used to, the context of that customer. Essentially, a lot of them are starting from scratch, have a lot of data that just doesn’t make contextual sense. Like, I just don’t know who this person is, and trying to marry it to decades of in-store that…so there are some brands, you know, when you launch e-commerce obviously, you know, you’re starting at $0, so it’s a lot easier for them to have some increases and to have incremental business increases because they didn’t have an e-commerce store last year.
You know, Balenciaga launched in the fall of last year. And so, being able to drive business this year, at least you’re moving. You know, you started to build this business, but yeah, it comes down to them not just having a platform. That’s probably the number one piece is that they actually have platforms now. And it is an initiative. It is a department in the company. It is getting funding and the experience is just off-par from what it’s like to walk into that store. And so, I think that this is the next challenge is how do you translate all of that emotion and brand affinity and excitement and engagement online? It doesn’t work with the way that we shop versus the way that you navigate a website.
You know, when you walk into a store, you get to walk in and you get to see some looks, you’re inspired. I don’t really know…a lot of times you’re not there specifically for an item, you’re there for a feeling. And like some type of…it’s really this tangible piece you leave…even if you don’t leave with a bag, you leave with something. And being able to translate that on to e-commerce is going to be, you know, that’s kind of the next round is great, you’ve got an e-commerce platform, now what?
Melinda: Yeah. I mean, it’s very true. You know, you think about wanting to buy the $5,000 bag isn’t just all about the bag. You know, it’s about going into the store. It’s about having that conversation, looking at the different choices, picking them up, seeing what looks good on my arm, how would I carry it? All of that is so much more…it’s almost like a sensual experience. So, how can luxury brands overcome this and offer a remote or digital omnichannel experience that kind of achieves maybe not the same type of experience, but something that captures some of those feelings?
Casey: Yeah. You know, I think one of the callouts that I have is…Balenciaga did a great job, the website’s up. But when I go to the website, it’s a navigation bar. I have to go through three clicks and know exactly where I want to go before I get to see a picture of a product, which gives newer, more contemporary design and it is gorgeous, but it leaves me a little lackluster. Dolce, they are much more upfront pushing smaller accessories for, you know, access. But then when you go to a Net-a-Porter or a Farfetch, there’s just so much more editorial and they’re braver. And they’re just being a little bit braver in trying to speak to customers.
Melinda: Can you tell me exactly what you mean by that?
Casey: Even writing articles, right? Writing articles, thought leadership, and then going into a lot of, you know, the influencers, but at the same time, like Dolce has a TikTok channel, right? And they’re leveraging these different pieces and we’ve got these luxury avatars called genies where you can buy digital clothes. They’re trying new things. And I think that that’s the big piece is that we’re going to have to release a little bit of control to say, we know who we are, but we’re not afraid to learn who our customers are and really break down that barrier of this is who I think my customer is, this is who they actually are, and these are the people dying for our attention because they are building that brand affinity.
And I think at the very least, like right now, we have a very unique opportunity in 2020 to try new things, to have limited risk. But our customers have relationships with people who work in these stores, you know? So, I’ve had plenty of conversations with million-dollar sellers across the entire globe, just checking in on them to see how’s business, how’s the company taking care of you because I know you don’t make minimum wage, you know? And they are nurturing their clients and they are taking care of them and they’re checking in and they are talking about things outside of just fashion. But the customers have said like, “I’ll wait for you.” Right? Like, “I will wait for you.” And I don’t think that these brands need anybody to wait for anyone, we need to get these salespeople online, allow them to sell, let them to clientele, work with their customers, whether or not they get new customers from online, allow them to clientele and have access to this digital inventory.
Obviously, I’m biased because this is part of…like my biggest mission was to enable the salespeople to be more productive and get rid of a lot of this admin work and stop schlepping up Madison Avenue and taking pictures and putting everything in your cell phones because a company needs to understand the sales process. Because there’s a pre-sales process, a sales process, and then what happens afterwards that is so important to understanding how are we going to build our company? How are we going to communicate with our customers? If you don’t know how you currently communicate with your customers, it’s kind of hard to measure and adjust. And a lot of these conversations all happen offline between the salesperson and their client.
Melinda: Yeah. I mean, we have been hearing so much about big data, big data in the past 5 to 10 years, and knowing your customer, knowing your customer. But I mean, I would say even just from my own experience, you know, Amazon wants to sell me something that I’ve already bought most of the time. So, it’s not really predicting anything, it’s just regurgitating what I’ve already purchased. And I mean, because luxury brands have been so reliant on those frontline sales team and maybe not value that information that they have in their heads, how can they take that knowledge and those relationships and integrate them to create a more robust ecosystem that doesn’t just rely on, you know, me maybe filling in a customer profile with answering 5 to 10 questions about what I like?
Casey: Yeah. You know, there’s enough data in the world for a “hello” to be absolutely gorgeous. It’s just really about what systems are we able to have this data live in that’s not attached to an advertising business because that’s where we kind of lose the value versus trust. You know, you have brand equity, you have trust, the consumer trust you, if you’re going to start using it to advertise, now you’re changing where you sit in that consumer’s mind. And maybe now I trust you a little bit less. Is that advertising campaign going to hurt your brand equity or hurt your consumer trust? You know, like, I’m very adamant, we have everything we need. We have amazing salespeople. We have great talent. The product is beautiful. The heritage and the story of the brand has lasted 90 years. We’ve fared through many of political and environmental catastrophes. And these luxury brands have retained and remained very strong with a very strong brand identity.
And I think right now, if you have salespeople that are furloughed, we’re not doing a great job. As a company and as a luxury brand, that is the heartbeat of our sales. It shouldn’t take six months. It shouldn’t take 20 people in a room to make a decision to deploy your in-store sales team online. They convert, they have the relationships, they know how to sell. We can trust them talking to the customer. Unlike being able to trust maybe a newer influencer to communicate your brand to a customer, you have talent that lives and breathes your brand, and they have been trusted to be that voice. And so, I think we just need to kind of shift the way that we think and really empower those people and let them work. You know, really right now, they’re all fighting for their livelihood and there’s really no downside by allowing them to.
Melinda: Yeah, absolutely. I mean, in China, I know that they’ve used WeChat, especially things like mini programs to help boost luxury sales, and they did allow, in some cases, their sales staff to have one-on-one conversations through WeChat. And here we’ve seen some attempts to leverage social media influencers, for example, to boost the customer relationship.
What’s the role of social media for luxury brands? Does it really have the power, or it sounds like you would lean more towards allowing these one-on-one conversations as opposed to maybe going the route of trying to leverage influencers?
Casey: Yeah. So, I have a very strong position on take care of what you have before you go get more. I think that there’s a lot of interesting things that we can be doing in social media. And we can open some access and make it more playful and less scary or snobby as some people might think. You know, there is this difference between like, “I don’t feel comfortable there,” to, “Oh my gosh, why have I not been here for the last 10 years? Like, I love this brand.” Because they finally get to feel it. There’s a fine line between that but I think we need to just kind of focus on our core. It’s not super flashy, it’s not, you know, this little twinkling star, it’s your core customers and making sure that your organization works on a sales system. You know, that your top 25 percent of customers are served. They’re taken care of. Your employees are making money. They are able to work their clients. You’re able to understand who your customer is.
We’ve got a live chat, we’ve got a new direct-to-consumer CRM that’s focused on preferences and managing a relationship, not an ad campaign. And I think if we can get that, it’s not about going out to the masses right now. It’s about bringing it in, making it very intimate. We’re launching a brand, a luxury brand right now, and their entire website is editorial. And they’re putting on our live style chat on the website and the only people that can use it are the customers that have been invited because they need to be able to take care of their core first. If it doesn’t work for your top clients, is a new shopper really going to aspire to have this type of shopping experience? Right? So, I mean, we really have to start at the very top and say this is the way we take care of customers. This is how the shopping experience should feel. And then start opening it up to more and more customers. And, you know, the velvet rope strategy always works. Luxury brands invented it!
So, I think that you know, when we’re looking at it, these super apps, I’m a big believer in the super app. I think that the U.S. needs a super app. I think we still have a lot to learn on digital ethics and humane technology, which I don’t think we’re ready for a super app right now. I think it’s going to be very interesting to continue to watch what’s happening to WeChat, what’s happening to TikTok and Facebook and Google and data regulation, but some of the very few companies in the world that need very intimate PII data are luxury brands.
Melinda: So, you have a platform called Luxlock and it is a luxury-focused platform. Can you tell me a little bit about it and why you think it could help in this circumstance?
Casey: Yeah. So I had a direct-to-consumer startup back in 2011 and I competed with Trunk Club and the Stitch Fixes of that time period. And I was actually in business because they had 40 percent returns and I’m like, I’ve been a salesperson or like worked in fashion for, you know, six years on the floor and I think I can count my returns on two hands. How are you having 40 percent returns if you’re supposed to be shopping with a stylist? This is insane. And so, just sitting at dinner with, you know, some of the owners of these companies or the CEOs of these companies complaining about all of these returns, like I shouldn’t have even made the product, this is ridiculous. I’m like, well, give it to me, I’ll go ahead and sell through it. Like, let me help you get through all of these mess-ups because I don’t have a problem making something stick. And we did that.
And so, going back into it, I decided that it was a direct-to-consumer problem, but it was a B2B solution. And so, I kind of relooked at how do I take care of that customer that spends $500,000 a year? I know Alex, I know her family, I shop with all of her family. I know all the ins and the outs of this whole entire family’s dynamic and their style. How would I take care of her, right? And I would pick some clients that I had in my mind that I worked with and I did make their dinner reservations when they were traveling to Italy. I packed for their Sun Valley trips. All of these things that actually happens at that very top tier layer is really special and it doesn’t cost these customers any more money. All they’re doing is buying clothes.
And so, I really used that as a map. And when I look at a brand or a luxury brand, I don’t just see apparel. I see, you know, concierge services. I see that they own restaurants. They own hotels. They own a vineyard. They own a fleet of cruise ships. They have these other experiences that some of their clients will go on in these excursions. And we have these lists of all of the best restaurants in Rome and in São Paulo. And we have these hotels because we make these recommendations on a regular basis if not picking up the phone or emailing to book on behalf of. And so, I really looked at it as whether or not this customer is walking into an Armani store, whether or not they’re on armani.com, if they’re at an Armani hotel, or if they’re having dinner at Armani, that brand affinity and that customer record needs to straddle.
We looked at that as we have to kind of engage this customer online, we have to translate the beautiful art of retail and that shopping experience that happens in-store and bring it online. And the best way to do that, I believed, was to bring the salesperson. I’m like, I’m bringing the talent, I’m bringing the relationship to online, have the conversation, and then we can marry the online and in-store. So, Luxlock is omnichannel native. We attach at the relationship level, not at a business location level. It’s really done at connecting at the relationship level. Then it came into “How do I sell a product?” And this was probably the reason why it took three years for us to launch. Outfitting is not easy. So, websites are static. Images are static.
The shopping experience and putting a laydown together or an outfit, and I grab something they bought last season, I put it in the outfit. I sell outfits. I sell grouped products. I sell toothpaste and a suitcase and, like, slippers. You know, you sell things that don’t necessarily make sense to maybe a data scientist. You sell things that don’t make sense to…like, you’re getting recommended to buy the exact same thing again, instead of a pair of shoes or a pair of earrings or, you know, face cream that you should be run out of. And a person, if they work with you on a regular basis, they know all that. And they know when to upsell you, they know when to bring you a new product because maybe you weren’t happy with another one or you used something and this would be great. It’s really about putting all of that data into these images and so I wanted to be able to slide any images together to create a beautiful picture, but I wanted all the data stacked behind it.
Melinda: Wow.
Casey: And that was like our big constraint was how do I put an outfit together in chat and have a seamless experience where the conversation continues to flow, not asking the shopper to open up all these browsers and go here, I don’t want you clicking, I just want you having a nice conversation like we’d have in the store? And so, I feel like we’ve got the basic of the core down. You can shop online with a stylist on a regular basis, pick up the conversation. You can get personalized outfits put together for you. If you wanted to, you can grab a Ralph Lauren blazer and put it with, you know, Python belt from Gucci on gucci.com if that’s the goal. You can have that Bergdorf Goodman shopping experience from multi-brands on every individual brand’s website.
But I’m really excited to know that I was a bit more forward-thinking. I didn’t know that all the stores in the world were going to close for a couple quarters. That has really propelled a lot of interesting conversations with even brands I never felt like they cared about a customer or their salespeople. And so, it’s definitely changed even my perspective on some brands where they want to put that in the first and forefront. I want to make sure that luxury brands…like this is their space, this is their bread and butter. They’re the best at it. And this is where they could completely lead digital transformation, setting the standard so high for online shopping that getting a random box full of stuff is not going to be acceptable anymore because that’s not a luxury experience, that is not shopping with a stylist.
If everybody starts being able to have access to a real professional stylist, I think we could see some beautiful things happen just in self-confidence, the way that people understand how products are made and having this higher standard of engagement and less advertising, it’s going to move to service. Luxury industry does service the best. I haven’t been to a brand, a fashion brand that didn’t use the word hospitality as their core. You know, they’re like, “We are a hospitality company.” You know, “We serve our clients. We serve our customers. We serve fashion, we edit, we curate, we nurture.” And I think they could be completely disrupting online retail in general because they have something that nobody else has. And so, I think it just really comes to how are you going to serve your customer? And I think that a lot of that’s going to change over the next five years is it’s going to be less about who owns data and more about who’s using data in the most creative and beautiful way to provide value. And I think consumers are demanding value for their data.
Melinda: Absolutely. That’s great advice and great thoughts. And I’m going to link to Luxlock so people can find out more and get in touch with you.
Casey: Thanks. I’m very excited for, you know, all of these types of retail conversations and exploring different ways of doing business. I’ve never seen customer service and customer experience in Twitter this much or on LinkedIn and people are talking about it. And it just makes me really happy that the customer is starting to actually come first.
Melinda: So, there you have it, luxury brands. Mobilize your team, use data to deliver value beautifully, focus on the customers you already have first, build on what you do best, and really think about how to put the customer first in every way. I’ll link to Luxlock in the podcast description. And thanks again to Casey for her passionate and insightful perspective on why luxury brands have all the tools they need to succeed.
About
Casey Golden is the founder and CEO of Luxlock, a Retail Experience Platform (CDXM) that allows brands to merge digital and physical worlds to create legendary shopping experiences.
Think Retail is a podcast where top designers, strategists, thought leaders and business people discuss what’s coming next. For more information, email info@sld.com.
