Luxury retail services Flashcards
Retail Economics
- Helps to understand the industry and its future
- Gives deeper insights of the retail industry by category, channel and region.
- Provide data on market sizes, market shares and forecastsSaves time by accessing all
the need-to-know retail datea thanks to various IT tools - Provide key metric vitals for the business & improvement to its permormance
Luxury store needs
- a concept
- a carefully crafted strategy incorporating cutting-edge style, an elegant and understated
atmosphere
⁃ a management structure
⁃ a performance management system
⁃ an organisation a budget
Retail (nom)
is the activity of selling goods direct to the public, usually in small quantities
Luxury Retail
is a segment in the retail industry that specializes in selling high-end goods that are characterized:
- High quality
- High prices
- High degree of exclusivity
Retail
is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to
business or institutional customers.
A retailer purchases goods in large quantities from manufacturers, directly or through a
wholesaler, and then sells in smaller quantities to consumers for a profit.
Retailers are the final link in the supply chain from producers to consumers
Luxury Retail VS Retail@
Luxury retail differs from regular retailing in many aspects:
→ from the design and atmosphere of the store,
→ the merchandising and visual display of the items, to the retail experience itself
→ how customers are served.
Luxury retail store
The store atmosphere and design relays the luxury, exclusive, nature of the brand, and hence
luxury store displays are characterized by low density displays and a toned down atmosphere.
Furthermore, luxury retail stores do not carry high depth for any SKU, in order to re-enforce the
concept of exclusivity and scarcity.
Clienting
is an approach that builds a long term relationship with customers and serves
them based on the data and information collected throughout this relationship’s lifetime.
- New demographic shift
- Organic promotion and marketing through social media, due to the prevalent culture of “sharing” everything.
Before: new customer acquired above 40 meant bringing 3 to 5 more new customers through
word of mouth,
Nowadays, a new, younger, customer could mean 100s or 1000s of potential new ones.
Technology to reach and to serve new audiences.
Digital Clienteling Apps
With clienteling being an essential part of the sales process at luxury brands, many luxury retail
operators have started building their own clienteling apps to better streamline the process and
manage customer data and communication.
KPIs definition
- A Key Performance Indicator is a measurable value that demonstrates how effectively a
boutique is achieving its key business objectives - By the level of the performance indicator we measure the turnover of the boutique and its
business progress: where the business of your boutique is, relative to where it has come
from, and where it is going
The KPIs should be compared in:
- Time
- Target
- Amongst the store belonging to the same or different regions
Gross Margin Return on Invetsment (GMROI)
GMROI is an important retail metric used to help buyers determine if a sufficient gross margin is
earned by the products purchase
You can compare the investment in inventory required to generate those gross margin dollars.
GMROI measures the profit you make from the amount you invest in product stock
Generally tracks specifics products or inventory rather than inventory as a whole
Offers more nuance than just sales or profit margin
Its specificity can tell you what is worth carrying in your stock and what is not, as well as what
you could invest further in.
The more you make on each profit margin, the better your retail business does as a whole.
Growth comes when you find products worth investing in and have a good return on their initial
costs
Inventory turnover (TO)
Inventory Turnover = Net sales/Average Retail Stock
- How many times during a certain calendar period a retailer sells its inventory and
replaces it (turnover) inventor
Average number of transactions
= Number of transactions during time period/Time period
Units per transaction:
= Items sold/number of transactions
Every retailer should consider an Omnichannel strategy to grow their business it’s
important to measure the affect on each sales channel on your revenue
Conversion rate:
Number of purchase / number of visitors x 100
“Conversion rate” – the two most important words for KPI retail metrics IRetail conversion rate measures the proportion of visitors to a store that make a purchase.
The ultimate goal of any retail enterprise is to convert sales, making your conversion rate
paramount to success
Shopper Dwell time:
More & more retail business takes place online
When a customer choose to go to a brick-and-mortar store in person, there must be:
- A reason for them to go
- Compelling reasons to stay
- A reason to purchase from you
- Dwell time is an indicator of customer engagement
Breakeven point:
The level of output at which the cost of production equals revenue.
Sell Through rate (taux de revente en fr)
- Compares the inventory received from a supplier verses the inventory sold.
- Usually calculated as a percentage
- In Luxury, a ST of 65% is common before sales (soldes)
Gross profit margin
(Total revenue – Cost of goods sold (COGS) / Total revenue) * 100
Retailers should view COGS as the amount it costs a company to produce the goods or Services that it
sells.
The higher the number, the more efficient your retail business is in turning a profit for every Euro of labor cost involved
Gross profit margin and net profit margin are two different retail
KPIs that business Managers can use to assess a Retail store business’s stability and financial health.
Main benefits of the KPIs
For the business
- It allows to measure the success of the shop
- They let it choose concrete actions to reverse specific situations
- It is a vehicle to better understand your business and align it with your mission
For the teams
- Involves the team in the project
- Inspires the development of creativity
- Enables more autonomous thinking
- More proactively work
PURCHASING BUDGET / OPEN TO BUY:
A store should only purchase what it should be able to sell during a season :
Turnover projection translates into purchases: Open to Buy (OTB)
Brands use different approaches:
- The store or Sales Manager is allowed to purchase what they believe is good from a wide
selection of products (HERMES podium) - The Store Managers are not decision-maker, stocks are delivered to the stores by the
head office where the selection is automatically calculated by a centralised information
system based on previous sales (LV, SAINT LAURENT EXAMPLE)
Turnover forecast:
Look at:
- Traffic
- Conversion rate
- Average transaction or ticket
- Average income level of potential customers & profiles of passers-by
- Size of the store planned / Turnover per sqm of the brand/Competition
- Product category
What kind of initiatives could you take to improve the performance?
Look at all KPI’S and take concrete actions to improve each of them, Measure the improvement
on a daily /weekly basis and play the team!
Performance review:
1) Evaluate an employee’s work performance
2) Identify strengths and weaknesses
3) Offer feedback, and set goals for future performances
Stock management
= the practice of ordering, storing, tracking and controlling inventory.
Inventory management is one of the pillars of a successful retail operation.
Retail inventory management techniques help stores and ecommerce sellers satisfy customers,
reduce costs and increase profits.
Improves Multi-Channel and Omnichannel Performance and Order Fulfillment:
If you are selling via physical stores, your website and third-party merchants, it can be difficult
to keep correct inventory counts across all channels.
Having accurate inventory data across selling channels lets you use your inventory more
efficiently, ultimately getting the product to consumers faster.
Reduces Shrinkage
Shrinkage is inventory loss due to shoplifting, product damage, vendor mistakes or fraud,
employee theft and administrative errors.
Improves Forecasting
You can use data such as historical sales results and available inventory to project future sales,
growth and capital needs.
These forecasts are vital to your budgeting and guide spending for marketing, product
development and staffing.
Retail franchising
is a business model in which an individual or business, referred to as a franchisor, grants a license to another individual or business, referred to as a franchisee, to use
its trademarked products, services, and brand.
A retail concession
is a dedicated space within a single-brand store that is used by a nonrelated but complementary brand.
Soft and Hard skills
Soft skill is a personal attribute that supports situational awareness and enhances an individual’s ability to get a job done.
Hard skills: describe a person’s technical ability to perform a specifically defined task, soft skills
are broadly applicable across job titles and industries.
LINK WITH RETAIL
For businesses that have a customer service/relations component, strong soft skills are a way to
ensure a positive relationship between customer and company without providing extensive
training.
Employee Management:
A proper Retail Sales organisation
Recruitment of sales teams
Clear responsabilities
Precise job descriptions and KPIs
Career Perspectives
Setting Turnover targets
Fair compensation system
Grooming guidelines
CX and Selling ceremony guidelines
Training and Empowerment
What is an omnichannel retail strategy?
An omnichannel strategy is a sales and marketing approach that provides customers with a fully
integrated shopping experience.
Omnichannel strategies unite user experiences across multiple touchpoints, including brickand-mortar, web, and mobile devices.
Benefits of an omnichannel strategy
1- Makes it easier to optimize stock levels and improve inventory management.
2- Helps you gain a competitive edge.
3- Better customer experience.
4- Increases sales.
5- Personalizes the customer journey.
6- Creates a unified brand experience.
Customer experience
How customer perceive their interactions with the brand or company at different stages of
their Customer Journey and in various Touch points
Renew focus on local clients and build a life-long relationship
With travel shopping affected by restrictions, brands had no choice but to focus on their local
clients.
◦ The reconnection must be personalized
◦ The front lines must be empowered to lead the reconnection.
Since sales advisors personaly engage with the
clients, they have the best knowledoe of what
Net Promoter Score (NPS) =
= how likely is your customer to recommend you to a friend or
colleague
You can also use Mystery shopping
The success of a luxury stores relies on great customer experience -> great experiential retail ->
relationship between your talent and tour customers
- Track what your customer is experiencing in real life
- Asses your teams
- Understand what needs to be done to align with your brand promise
Luxury organization are traditionally structured in 3 separate division:
- Retail: boutiques
- E commerce
- Social Media
Optimize and unify customer data
- Online and offline customer data need to be connected for a unified retail
- Data of the brand’s international subsidiaries need to be interconnected
= This is a great challenge for Luxury Brands
Phygital Retail
Combining the best components of Digital and physical experience in one ->
improve customer experience and boost sales revenue
CRM
= a technology of managing all your company’s relationships and interactions with
customers and potential customers
Goal: Improve business relationships to grow your business
CRM system helps companies stay connected to customers, streamline processes and improve
profitability.
Key customer retention metrics:
Nmbr of customers at the start of a given time period (S)
Nmbr of customers at the end of that period (E)
Nmbr of new customers added over the duration of the period (N)
Customer retention rate (X):
((E-N)/S)*100 = X
Customer churn rate (% of customer lost during a period)
(Y/X)*100 = Z
Customer Lifetime Value =
(Average order value/Repeat Purchase rate)*100
Sustainability is a need
67% of consumers consider the use of sustainable materials an important purchasing factor.
Lateral, initiatives such as Pre-Owned Luxury, Renting… all feed further into the creation of a
circular economy
What is social commerce?
Social commerce is the process of selling products and services directly through social media.
With social commerce, the entire shopping experience from product discovery and research to
checkout, takes place right on social media.
Reasons to try social commerce:
- Social commerce makes shopping a social experience
- Gen Z loves buying on social media
- Opportunity to collect instant feedback
- Sales to highly targeted audiences
- Shorter customer journey: product and check out
Consumers explore products and complete transactions through social media and content
creation platforms, all in an app.
This emerging form of shopping :
- removes friction from the buying process
- creates a more engaging journey for the consumer
- presents new opportunities for brands to generate consumer interest
What are the KPIs indicators
SMART
