As stark as the changes have been for retail in the wake of COVID-19, they’re even more pronounced in luxury goods. BCG helps top luxury brand retailers move quickly to reset their presence and invest in digital solutions that sharpen operations and strengthen customer experiences.
BCG’s luxury goods consultants help clients to rightsize spending and prioritize digital and personalization efforts in both the front and back of the house—while still investing in long-term brand equity. Our work gives design-led luxury brands the ability to create the highest quality product, partner smarter in supply and distribution, digitally transform their businesses, and supercharge a new level of personalization across merchandising, marketing, and clienteling—in-store and beyond.
Decades of experience working with global brands and retailers gives us a unique understanding of the pandemic-driven challenges facing this sector—and how to respond. In the industry’s key luxury market, for example, our unparalleled China-based team—with years of experience in the field—has remapped the Chinese luxury consumer journey, using its cultural knowledge to identify and quickly act on shifting behavior and trends.
As the light begins to appear at the end of the pandemic tunnel, luxury brands need to rethink what, when, and how they sell, recalibrating operations to meet a changed sales picture. The tradeoffs are not easy: luxury companies must emphasize efficiency and adapt to new sourcing and distribution constraints while making rapid investments in digital capabilities.
Our two-pronged approach—reset and invest—addresses both sides of this new reality.
Distribution. We clarify where to divide effort among owned stores, wholesale, multibrand sites, and omnichannel experiences, and focus on strategically building out the digital ecosystem. Due to travel restrictions, stores may need to reorient marketing and in-store experiences around local luxury customers.
Sustainability and the Supply Chain. To respond faster to shifting sourcing conditions, BCG helps you build closer partnerships, develop risk-sharing arrangements, and decrease time to market. We also work with brands to develop baseline metrics on sustainability performance along the supply chain to pinpoint improvement potential and create a roadmap for change.
Operations. Using a zero-based redesign, we work with you on an operating-model transformation that rightsizes nonheadcount areas, reinvesting the savings in marketing and data and analytics, which help speed forecasts and commercial decision making while still delivering a reduction of 10% to 30% in net cost.
Brand Purpose. We help you set the new industry standard for brand purpose, exploring the values that define your brand. We also develop strategies for communicating clearly around sustainability and responsibility goals and where you truly are on the path to reaching them.
Community and Inspiration. With luxury consumers spending more time in the inspiration phase of the journey, brands need to raise their game on social channels and community marketing, showing a deeper awareness of social, civic, and environmental causes and creating a meaningful dialogue with cultural pioneers.
Clienteling 2.0. By introducing a bionic operating model, we put tools and analytics into the hands of your associates to engage customers more meaningfully, offering digital styling, seamless purchases, and post-purchase relationship management—changes that have proven to lift net sales by 10% to 15%.
Digital Ecosystem. We help you remap your luxury customer journey—from inspiration to post-purchase—across all digital players, ensuring that online experiences go far beyond the transactional to include private showings, personal shoppers, and white-glove delivery.
Digitizing Core Processes. Working with BCG GAMMA, we develop use cases for building an AI-driven technology backbone and help pinpoint investments that will accelerate processes related to product development, e-commerce, marketing, HR, and more.
BCG’s luxury goods consultants and industry experts become your partners in setting new standards for operational excellence and marketing and creating unique experiences in luxury goods. Many of our luxury managing directors and partners have decades of experience working with fashion and luxury brands.
Personalization and Clienteling 2.0. Working with a multibrand luxury retailer facing fierce competitive pressure, we undertook a personalization transformation that articulated a clear vision, and then we prepared and executed 60 pilots. Across stores and digital channels, we focused on next-level clienteling and customer experience, resulting in a net sales uplift of more than $40 million.
Large-Scale Transformation. We undertook a large-scale operating-model transformation for a global fashion and lifestyle brand that had just seen a three-year decline in revenue. First, we identified key opportunity areas, and then we worked across departments to develop an overall growth strategy. During the pandemic, we revised the strategy yet stayed on track to deliver second-quartile (up from bottom quartile) total shareholder return (TSR), $1.7 billion in prepandemic TSR value, more than $100 million in indirect procurement savings, and $200 million in corporate payroll cost savings over four years.
New Business Models. New business models, such as secondhand commerce and rental, continue to accelerate in luxury. We’re helping a number of brands and retailers think through the right operating model to use these new business models in a way that is economically viable, brand accretive, and drives new customer acquisition.
Sustainability. To overhaul the sustainability strategy for a high-profile luxury brand, we used BCG’s proprietary benchmark methodology to reveal key environmental and social-impact levers and areas for differentiation. Employing those insights, we crafted a strategy and end-to-end roadmap for execution within the organization and supply chain, including target setting, cost estimates, and corporate governance.
Digital Transformation. For a global luxury brand, we developed a holistic strategy across all digital channels—own.com, multibrand pure plays, department store.com, and social e-commerce—accounting for the range of journey touch points. The scope included building out the omnichannel experience and reviewing the client’s marketing technology stack to ensure that it supported newly introduced digitization and personalization.
Demands for more responsible practices can’t be ignored. Yes, Sarah Willersdorf acknowledges, making changes will be costly. Not making changes? Ultimately, even more so.
Our changing times and changing consumer attitudes are redefining “luxury,” pushing brands to rethink every aspect of their business.