Digital

Social Retail Has Landed. What Does This Mean for Luxury Brands?

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Limei Hoang | September 07, 2020

Long considered a pioneer in the digital luxury space, Burberry has opened up its first ever social retail store designed to encourage customers to engage both online and in-store. But what does social retail mean for the industry, and how can luxury brands best leverage it to their advantage?

British luxury goods company Burberry has opened up its first ever social retail store. Designed through a partnership with Tencent Technology, the concept space in Shenzhen, China allows customers to unlock exclusive content and personalised experiences through a dedicated WeChat mini programme, taking social interactions online into a physical retail environment where users can then share with their communities.

The move by Burberry may herald in a new era for the luxury retail space. Long considered a digital pioneer within the industry, Burberry was one of the first brands to embark on a “see now, buy now” strategy that enabled customers to buy its collection straight after they appeared on the runway. The company describes its foray into social retail as a ‘unique space to test and learn, and to trial innovation that can be expanded to the rest of Burberry network in China’.

“Burberry has always been a brand of firsts, built on a belief that creativity has the power to open spaces,” said Burberry Chief Executive Marco Gobbetti in a statement. “We test new ideas and push boundaries of what’s possible. When it came to innovating around social and retail, China was the obvious place to go as home to some of the most digitally savvy luxury customers.”

Indeed, China is no stranger to social retail. Similar concepts have already been developed with fast fashion and sportswear brands like Uniqlo and Nike. The Uniqlo store in Shenzhen, which opened in March 2018, uses augmented reality allowing users to randomly scan codes in-store to see product information, styling suggestions and animated advertising and promotions on a QQ app.

Nike’s two concept stores, one in Shanghai and one in Guangzhou showcase interactive digital installations, and enable users to use a dedicated mini-programme to search a store’s inventory, product information and access the benefits to its loyalty programme.

Burberry's new Shenzhen store.Credit: Photo: Courtesy of Burberry

Deemed a ‘space of exploration’, Burberry’s new store features 10 rooms for its customers to discover and generate ‘social currency’. Visitors can find its latest collections, seasonal products as well as exclusive pieces that are only available to buy at the Shenzhen store, all of which are labelled with QR codes that unlock additional context and product storytelling. Digital screens can be found around the space to further enhance customers’ experience.

To brands who might be new to the idea, social retail can be described simply as selling products via social media channels, says Neil Saunders, managing director at GlobalData Retail, a retail research agency and consulting firm. “It’s very different from traditional methods of marketing and selling, in the sense that you have to do it in a very appropriate way that’s in tune with what those people are selling.”

“It’s a very inclusive way of selling,” he added. “But really, it makes use of having a very extensive audience via different channels and commercialising that in some way. And, of course that means making sure that they are able to buy products in a seamless way as possible as they come through whatever social media channel that they are on.”

There has never been a better time for brands to reconsider how their physical and digital experience join up. The personal luxury goods market fell by 25 percent in the first quarter of this year according to estimates from Bain & Company, and a recovery to 2019 levels is not expected until 2022 or 2023.

In contrast, online luxury has remained resilient, having already experienced double-digit growth in 2019, the channel is expected to continue to gain market share and account for up to 30 percent of the luxury market by 2025.

It comes as little surprise then, Burberry would choose to experiment with this format, at a time when brands are having to rethink the parameters of not only safety in their stores, but also how to shape their luxury experience in these unusual times whether that be through their physical stores or online.

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The move makes sense, notes Fflur Roberts, Head of Luxury Goods at research firm Euromonitor International. “In the current climate, it’s a way of being able to keep that dialogue open and it’s a way that customers can still have that level of communication.”

“If you think of Burberry’s key demographic moving forward, they are getting younger and we need to be looking at Gen Z here,” said Roberts. “Digital natives are the key target audience in the case of Burberry's new social retail platform, and they’re the ones that are going to obviously benefit the most and use these platforms the most. By default, it only makes sense to have these platforms in place now and start the process of social retail.”

Features like QR codes, which feature heavily in many use cases, augmented reality and uploading content to social media are components that brands should consider as a way of encouraging visitors to interact online in a store. “If you use something like augmented reality, for example, you find that a lot more people engage because they are just interested in the technology or just interested to see what happens,” said Saunders.

“The same thing goes for taking photos in store,” added Saunders. “It’s fine to encourage people to take photos and upload them to social media, but what you have to do is, maybe reward them for doing that. What people on social media like to do, and especially on channels like Instagram and TikTok, is sometimes have a more unusual background, something that is really interesting or a space where they can actually perform or do something that they want to do.”

But most importantly, social retail is simply about ensuring that a brand’s physical presence is seamlessly integrated with its social channels so that customers view all of a brand’s channels – be that, e-commerce, social media, bricks and mortar stores or last-mile delivery as part of the whole experience.

“Burberry are going as close as possible to create the best customer experience and service through digital,” said Roberts. “Right now, the luxury marketplace is so crowded, and more and more consumers want that level of customer service. Now, more so than ever before, people may be thinking hard about their discretionary spending. Brands need to keep their customers happy and when it comes to the luxury space, this is an area where they can excel. More and more consumers have also come to expect the highest level of customer service.”

The Burberry store in Shenzen.Credit: Photo: Courtesy of Burberry

Roberts sees many other luxury brands following suit like Gucci andLVMH. “They have launched various services, maybe not so much social retail but other services to make the digital retail as personalised and as customer-orientated as possible,” she said.

It's a view Saunders shares. “A lot of luxury brands will look very carefully at what Burberry has done and what players like Nike have been doing and they will be seeing some of the success and saying to themselves, actually this is something we could replicate.”

“What brands have to do is find ways of reaching younger customers,” said Saunders. “A lot of young people do is spend their time on social media channels. They will spend the time on TikTok or Instagram Reels, and they will spend a lot of time on these channels. Now if you can expose them to your brand on those channels, that’s really important for building up a fanbase, but then if you can integrate some of that into your physical store, that also gives people a reason to come to the store and it makes them very comfortable shopping the store because it’s almost an extension of what they are seeing on social media.”

“Digital stores for the digitally native shopper, which is actually a much bigger part of the market, is actually really sensible and I think of a lot of luxury brands will look at this and say, how can we, make our store environments comfortable for these shoppers and how can we connect what we do online and on social with the physical store to make it more of an integrated experience.”

Additional reporting by Alexander Wei.

Cover Image: Courtesy of Burberry

Digital | Social Retail