If you’ve noticed a dip in your 2024 sales numbers over last year, you’re not alone. Luxury retailers nationwide are facing new challenges—beyond economic factors—that are impacting the way customers engage and buy. Rather than reacting with quick fixes, it’s essential to dig into the factors behind these trends to get a clear picture of what’s happening.
After all, ecommerce and an explosion of alternative gifts to jewelry (electronics, travel, experiences, etc.) have given customers more choice for their discretionary spending and gifting.
This article covers five key reasons why sales may be declining and offers insights into how you can adapt to overcome them. By understanding what’s driving these shifts, you’ll be better equipped to adjust your strategies and see stronger results.
1 – Luxury retail sales continue to struggle around the world
In America and around the world, retail brands in exclusive, luxury markets are experiencing a continued downward trend in sales and profits as consumers get exposed to new brands and options made possible by the surge in new brands led by personas and startups leveraging digital platforms and global supply chain accessibility.
Estimations of around 5% growth didn't play out. Instead, the industry average for luxury goods market growth is 2.8%. These numbers come from incredibly popular high-end brands including ones like Burberry and Prada, but they reflect a sector-wide truth that retailers have to deal with.
The downward trend only seems to pick up speed as the year goes by. Perhaps buoyed by holiday sales, the first quarter looked much brighter than the latest numbers, with third-quarter sales dropping 3% across the board. These statistics can provide reasons, but they certainly don't offer any solutions. For those, you need to look more closely at buying habits and customers' values and interests.
2 – Consumers have refocused their values
In the past, overt luxury and highly exclusive experiences were the cornerstones of high-end retail sales. Customers primarily focused on getting exceptional products that other people couldn't access or afford in a setting that made them feel highly important. While these things still matter to a degree, especially for aspirational consumers, the larger shift is toward a focus on values that resonate more deeply with their personal beliefs and lifestyle choices.
As social consciousness increases, things like sustainability, ethical workforce treatment, responsible sourcing, and lack of cruelty to animals have become much more important. Authenticity outranks opulence. In fact, in some sectors, the overt display of wealth has become a detriment to social standing. It's more impressive to look as if they've invested in something meaningful.
Of course, customers have their own personal values they'd rather support regardless of public perception. It's not unexpected to find these values reflected in more expensive product classes, of course. If your brand isn't keeping up with these interests, it may represent a strong reason why your sales have declined.
3 – It costs more to attract individual customers these days
A huge array of specific details goes into customer acquisition costs. Everything from brick-and-mortar store locations to brand longevity to existing product lines affect it. Across the board in retail sales, the price-per-acquisition rate has increased over the last year, especially when it comes to paid marketing methods for luxury brands.
This may necessitate a shift in how you advertise, which can come with growing pains of its own and therefore even higher costs for a while.
Of course, if you simply pay more to attract first-time buyers, you may still shift as much inventory as last year. However, your profits will go down, which gives you even less to spend on more acquisition-focused efforts. Any decline in sales only exacerbates the issue. A refocus on keeping the brand loyalists you do have might help keep revenue high.
4 – Convenience outpaces exclusivity as a top shopper goal
A portion of high-value consumers will always prefer shopping in physical stores where they can interact with doting sales associates and try on outfits or accessories immediately. Global disruption in in-person sales a couple years ago sparked a major shift in the way many people buy things, however. Ecommerce took over and has now reached over 20% of all retail sales. The trend continues in luxury markets.
The convenience and ease of browsing multiple items, buying them with a few clicks, and having them shipped directly to the door has reduced brand loyalty to some degree. The sales process is so simple that shoppers focus on a smooth transaction and delivery rather than special treatment. They simply don't need to work very hard to buy things from multiple retailers. The more spread out the sales, the more competition, and the lower the sales for individual brands.
5 – You aren't making a personal connection with customers
As mentioned above, many of the reasons for lower sales this year are unavoidable. A single retail company can do nothing about economic downturns or the ever-increasing role of ecommerce in the B2C shopping world. You do have the power to counter them with strategic marketing, communication, and other interactions, however. If your brand fails to make a personal connection with every potential and existing customer, you will lose them to the next brand down on the shopping portal or search results' pages.
Even if they want to spend less money or value the convenience of online shopping more, consumers still want to feel like the brands they buy from appreciate them specifically. With the right data and strategies, you can prioritize relationship building and create a more memorable and rewarding experience. This will make them come back to your door or website again and again.
So what’s the solution?
Clienteling is the answer. It's a smart customer relationship management strategy designed specifically to forge those personal relationships that lead to sales and long-term loyalty. In order to make it work well, you need to collect and analyze as much specific data as possible with a platform like Clientbook. Things like purchase history, preferences, and values lead to more effective marketing, personalized communication, and product recommendations that grab their attention.
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