Luxury retail brands are rolling out VIP schemes for big spenders

With luxury goods now available at the click of a button, high-end brands are rolling out VIP services and reward schemes to make sure they attract and retain ultra-high-net-worth clients

Feature image
VIP services are undergoing a makeover. The luxury design, attentive staff and exclusive atmosphere that previously characterised such services no longer translate in a world where more people are buying luxury goods online

An all-too-familiar concern for travellers is that their luggage will be lost in transit, forcing them to spend their trip in clothing bought from an obscure retail outlet at the earliest convenience. That is, unless your destination happens to be the Hotel Café Royal on London’s Regent Street. In 2017, the hotel launched an in-room private shopping service in partnership with luxury retail giant Matchesfashion. Guests staying in these elite suites can arrange for business attire and eveningwear to be delivered to their room by concierge. They can even enlist the help of a stylist for a consultation.

By offering curated trips to runway shows and behind-the-scenes visits with designers, luxury brands keep their customers feeling special

VIP services are undergoing a makeover. The luxury design, attentive staff and exclusive atmosphere that previously characterised such services no longer translate in a world where more people are buying luxury goods online. Brands are desperate to reinvigorate the VIP experience in a bid to attract and retain the high-net-worth clients who form a fundamental part of their
customer base.

Members only
When online shopping first took off, luxury brands were reluctant to jump on the bandwagon. Many were sceptical that customers would buy high-value products outside of a brick-and-mortar store. But online sales of luxury goods continue to accelerate, growing by 22 percent in 2018 to reach nearly €27bn. The brands embracing digital transformation have reaped the benefits.

LVMH, the luxury goods conglomerate that owns Louis Vuitton, Dior and Givenchy, has enjoyed soaring revenues ever since appointing Apple’s former senior director of iTunes, Ian Rogers, as its chief digital officer; its sales leapt by 17 percent in the third quarter of 2019. Meanwhile, Gucci, which recently introduced scannable adverts and 90-minute deliveries, also reports robust growth, despite protests in Hong Kong negatively impacting sales.

But there’s a fine balance to strike. The fear that mass-consumption and e-commerce could dilute the image of luxury brands is not unfounded. When Burberry’s licensees began producing everything from dog cover-ups to kilts in the late 1990s, its trademark check pattern became so ubiquitous and vulnerable to counterfeit that it picked up downmarket associations, and the iconic British brand saw a sharp decline in sales. Former Burberry CEO Angela Ahrendts, who is widely credited with turning the brand around, wrote in Harvard Business Review: “In luxury, ubiquity will kill you – it means you’re not really luxury anymore. And we were becoming ubiquitous.”

Luxury brands have a strong commercial incentive to position themselves as elite members’ clubs. Net-a-Porter has done exactly that through its ‘extremely important people’ list of customers, which makes up three percent of the site’s customer base but accounts for 40 percent of its fashion and beauty sales. Those on the list can benefit from personal shoppers, exclusive previews and premium delivery. This special treatment appears to be paying off; Net-a-Porter’s extremely important people shop 12 times more often than the average customer. Like many other loyalty programmes, Net-a-Porter’s is invitation-only. It’s not clear what customers have to do to get an invite, although presumably spending an incredible amount of money helps.

Exclusive access
By offering curated trips to runway shows and behind-the-scenes visits with designers, luxury brands keep their customers feeling special. These opportunities give clients the chance to delve into the heritage of the brand. “When people walk down the street and look through the shop window, what people really want to see is what’s going on behind that,” said Jill Sinclair, CEO of Sinclair Global, an experiential marketing consultancy that works with some of the world’s top luxury brands.

Personalising products can also help to forge brand loyalty. Savile Row, for example, is loved around the world not just because of the high quality of its suits, but because of the one-on-one service clients receive. Brands are now looking to take this bespoke service to the next level. “A lot of the research we’ve done shows us that people are looking for detail – richer, more authentic experiences,” Sinclair told European CEO. “People think luxury is all about flash, but it’s not about that. It’s about more in-depth experiences. For example, there are make-up brands where you go and have your DNA taken and then they can produce a skincare serum tailored to you. We also organise exclusive events where you can meet the woman who designs bespoke, couture lingerie for weddings or for special occasions.”

Technology offers some exciting opportunities for brands to experiment with personalisation. When a customer buys a high-end product online through JD Luxury Express – launched by Chinese e-commerce giant in 2017 – they can expect a superior style of delivery. Instead of having their new garments unceremoniously squeezed through the letterbox, a “specially trained” employee wearing a suit and white gloves will personally hand-deliver the package. It’s hard to say whether this extravagant delivery method makes much difference to JD’s luxury shoppers, but for Zhenhui Wang, CEO of JD Logistics, the logic is clear: “Customers who buy premium products online deserve a premium service.”

Welcome to the club
These gifts and rewards aren’t just designed to retain high-paying customers, but also to acquire new ones. In 2019, Burberry announced the launch of a chat function called R Message, which will allow VIP customers to engage directly with in-store retail associates. Using the service, customers can receive photos of new products, arrange store visits and let staff know about upcoming anniversaries and birthdays. Burberry hopes R Message will draw in the next generation of luxury shoppers.

Currently, Millennials make up 32 percent of spending in the luxury market; by 2025, that proportion will be 50 percent, according to the 2019 True-Luxury Global Consumer Insight report. Luxury brands must adapt quickly to cater to their needs. According to visual commerce AI company ViSenze, 60 percent of Millennials and Generation Z customers make retail purchases via their mobile.

Earlier this year, Net-a-Porter unveiled an invitation-only digital destination for high-end jewellery, prompting a 60 percent rise in visits to its fine jewellery pages. The company said in a statement: “Bringing the experience of the private jewellery salon to the digital realm, the private and personalised online space will offer the ultimate immersive and interactive experience for traditionally offline and highly renowned jewellery maisons.”

There are still some brands in the luxury sphere that remain adamant that nothing can replace the experience of a physical store. Rolex, for example, is still yet to build an online shop. But the examples set by digitally savvy companies such as Net-a-Porter and Burberry prove that stepping into the online marketplace does not have to mean sacrificing the exclusivity and personalisation that have come to define luxury. In fact, after years of disruption and customer disillusionment, technology is finally bringing the personal touch back to luxury.