Infographic – Customer experience technologies for the luxury market
By Anais Descleves - 19 May 2022
In the luxury sector, more than in any other sector, the customer experience is crucial. With new digital tools and the constant evolution of attitudes towards technology, luxury brands have now entered the digital experiential era, which is more immersive and interactive. In the infographic below, we have summarised the key figures and trends surrounding consumer experience technologies in the luxury market.
Key statistics and factors affecting the luxury industry
Here are 4 key numbers to keep in mind:
- Worldwide spending on customer experience technologies totalled $508bn in 2019, which represented a 7.9% growth compared to 2018 (IDC). So it has already been some years since luxury brands started innovating in their customer experience, but this trend is far from being over.
- Our research shows the global sales of luxury products to Millennials and Gen Z customers could generate $265bn by 2025. Attracting customers from these generations and meeting their high standards of omnichannel experience is therefore paramount for luxury brands.
- Global online luxury sales are predicted to reach $91bn by 2025. With the pandemic having forced customers to adopt digital retail channels, luxury brands have to ensure their online customer experience feels as special as their in-store experience.
- 71% of consumers felt frustrated by impersonal shopping experiences in 2020, as reported by Forbes. Indeed, reaching the same level of experience tailoring online as in-store has proven difficult for most brands, which reinforces the need for new customer experience technologies.
Customer experience technologies shaping the future of luxury
Below we delve into the four technological trends shaping the evolution of customer experience in luxury.
A metaverse is a virtual world, connected and immersive, in which users evolve as 3D avatars and have social interactions. Tailored to Millennials and Gen Z, it enables companies to engage with customers who are looking for new experiences. This trend represents a huge opportunity for the luxury market. Indeed, Morgan Stanley estimated that metaverse opportunities might generate an additional $50bn in revenue streams for fashion and luxury brands by 2030, thanks to NFTs and virtual events. Startups are emerging to enable creators and brands to design avatars, share moments in unique virtual environments and publish digital content (often as NFTs).
Mass production was introduced in the 19th century, driven by economic considerations like the imperative to lower costs of production, increase productivity and reduce the time needed for a product to hit the market. However, for the past two decades, there’s been a shift towards the old tradition of customisation.
Brands seek to differentiate themselves and consumers seek a more exclusive experience. In fact, according to Research and Markets the global customised gift market CAGR is expected to grow by 8% between 2020 and 2027. Several startups are developing solutions to facilitate customisation of the luxury market like FanVoice, a platform that involves customers in the design cycle to co-create products.
Customer experience is at the heart of every retailer’s concerns. The same is true for luxury players. Driven by consumer demand, immersive and multi-sensory experiences are in the top 3 of luxury consumers’ expectations. Moreover, luxury consumers are increasingly for digital channels to engage with brands and their products. The virtual fashion market is expected to be worth $400bn in 2025.
Among the startups addressing this trend, FeelReal provides end-users with a fully immersive and unique VR experience. It develops a multisensory VR mask that adds smells, temperature changes, vibrations, wind, or water mist to the experience. It is equipped with aroma capsules added by the user, water mist slots, micro-heating, and cooling devices. Consumers can, therefore, fully immerse themselves into the experience, beyond sight.
Finally, there is a rise in contactless payment methods, which often leverage biometric and AI-enabled technologies. This new generation of payment methods encourages retailers to move towards new checkout experiences. Coupling contactless payment with biometrics gives a smoother and quicker checkout experience to customers. It can also make transactions safe thanks to fingerprint, voice, or facial recognition. Indeed, biometric payment allows for a unique validation process and is favoured by consumers. 54% of them said they were ready to use biometric payments in 2018.
Some startups act as technology providers to enable new payment experiences for traditional players. For instance, Zwipe (a startup rated by Early Metrics) develops contactless and biometric payment solutions. Their credit cards allow end-users to make secure transactions using their fingerprints, without compromising their privacy.