28 October 2016
Given the availability of digital tools, many consumers are well-informed by the time they step into physical stores or boutiques. Photo: Bluebell
Given the availability of digital tools, many consumers are well-informed by the time they step into physical stores or boutiques. Photo: Bluebell

How high-end brands must adapt to the digital era

As more people shop online around the world, luxury and lifestyle brands are being forced to adapt to a new business landscape.

A key task facing the firms is to compete in the digital environment without sacrificing their brand image and reputation.  

To discuss the challenges facing high-end retailers and legacy brands, real-estate consultancy Savills spoke to Ashley Micklewright, the CEO of Bluebell (Asia), a pioneer and leader in luxury and lifestyle brand distribution in Asia.

Here are Micklewright’s insights in a Q&A format:

Q: How is digital transforming the consumer landscape?

A: It’s increasingly obvious that consumers are looking online – they’re well informed when they step into our boutiques. They are already forming opinions based upon online activities, blogs, ads, or via sharing their own research, and this has become a huge influence. People really can know a lot about the brand before they come into our boutiques. Sometimes they come just to try on what they have seen online; and sometime it’s the other way around.

Q: Is omnichannel becoming the obvious way forward for brands?

A: Yes, brands need to become omnichannel. This will mean changing the business strategy and the business model. When you work with a brand, you now have to accept that consumers can buy online as well as in-store, which is not a problem in itself, but for legacy brands, the business model was structured in such a way that the digital business sat with the brand wherever it is based in the world.

So if someone buys online, they may actually be buying from a different company to that which represents the brand in the local market, thereby creating a conflict of interest. The non-legacy brands are ahead of the curb. They recognize the shop is about interaction, not just about the transaction. When you go omnichannel, the business model has to change, because those managing the physical interactions with the customers may not be rewarded in a commensurate way, so these business partners will be lost as a result.

Q: That means digital is threatening traditional retail?

A: Yes, but business models merely need to adapt so that they shouldn’t see digital as a threat. If a customer comes into our boutique we should not care if they buy in-store or online. We we need to work together as the most important relationship is between the brand and the ultimate consumer, not the local operator. The local operator is merely the facilitator, but they need to be totally in tune with both.

Prices need to be consistent between digital and the store too. At the end of the day, if we are opening stores in Hong Kong, and people buy online from within the city, then you have to treat it as a sale from Hong Kong and not wherever global site is based. So the model will evolve over the years. We need to create a win-win situation for the local partner, the brand, and the consumer.

Q: Do you feel brick and mortar stores will be gone soon?

A: No, I think physical stores will continue to exist, but their number may reduce. They will probably become bigger and more related to the experience than a point of transaction. Stores will always have a place in retail, but as I mentioned, the pricing should be consistent worldwide, and digital should just be another platform to interact and/or transact with the customer. 

Q: Looking into your crystal ball, how will physical and digital retail environments play out for fashion?

A: When we invested in Grana, a pure digital play, we wanted to understand how the digital business worked and what we found was fascinating. It seems that even the pure digital plays can benefit from a physical presence. A physical presence will help build the brand – if you are just on the web it may not be so easy for people to find out about you.

But obviously we use other digital tools for our retail. For example, we have a system that sits in our stores which tracks people walking near to as well as into the boutique – for example it tells us, according to the time of the day, how much traffic is walking past the store, how many stop to look at the window, and how many walk in. It then tells us where they walk around the store, and how long they stay. The result is effectively a heat map of where people are walking and how it relates to our merchandising. We are running it in several markets and I can’t wait to see if it improves our customer service.

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Managing Director and Head of Leasing for Savills Hong Kong

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