by Professor Srinivas Reddy, Mr. Geoffrey DaSilva, and Dr. Sheetal Mittal | 8th March, 2018
As Erica Kerner drove into work on a muggy April morning in 2016, her mind was filled with thoughts about the meeting she had scheduled with her marketing associates. Kerner, the Vice President of Marketing & Communications, Asia Pacific at Tiffany & Co (“Tiffany”), believed that Singapore offered great opportunities for the luxury jewellery and specialty retailer to embark on an omni-channel retail strategy.
Although Tiffany maintained a strong online presence across the globe, it only offered e-commerce solutions in a few select markets. Online sales accounted for a low six percent of its total sales, with limited integration between its brick-and-mortar outlets and online presence. However, it was becoming increasingly apparent that macro-trends, particularly high levels of digitisation, had led to an evolution in the consumer’s search and purchasing patterns of luxury products. Consumers were using multiple devices and channels for different purposes during their shopping journey from browsing to post purchase. And irrespective of the platform being used, they expected the same rich experience associated with luxury brands, demanding consistency in the services offered and reliability in the information provided. Social media further added to the complexity.
In Kerner’s view, the Singapore market provided a perfect test-bed for Tiffany to develop and execute a fully integrated omni-channel strategy, given the island city-state’s high levels of internet usage and mobile penetration. She explained,
Here in Singapore, we want to optimise every opportunity to deliver extraordinary products, services and experiences to our customers, be it leveraging the proximity of our physical stores to the ability to get to know and engage with them wherever they are.
Tiffany had not yet developed an e-commerce website specific to Singapore, and Kerner was eager to hear her team’s thoughts on the matter. What would be the best way forward towards implementing an omni-channel strategy? What would be the key factors to success? How would this enable the brand to differentiate itself from other luxury brands?
And yet, while Kerner was looking forward to hearing their views, she could not help but wonder whether the online medium was in fact an antithesis of all that a luxury brand stood for? Indeed, personalisation and customisation had always been considered critical to building customer loyalty for a luxury brand. Was this move to an omni-channel strategy wise?
What is the key value proposition of omni-channel retailing for luxury brands such as Tiffany?
The luxury sector and the digital platform cannot be more different from each other. Luxury is synonymous with being superior, elusive and premium; a sensory rich experience meant for a privileged few. In contrast, the online world stands for democratisation and minimal to no cost; a ubiquitous experience meant for all. Additionally, along with quality, heritage and tradition, the luxury brands’ customer equity is based on their ability to provide shoppers unique and tailored experiences. On the other hand, the mass market reach of the online medium renders it quite unsuitable for such personalised interactions, and thus initially led the luxury retail industry to shy away from active digital engagement.
However, to continue to stay relevant and contemporary, luxury brands have no choice but to embrace the digi-scape which is increasingly getting intertwined in consumer lifestyles. The online medium’s instant connectivity, 24/7 availability and real time access to numerous multi-media sources is leading to a tremendous change in their buying behaviour, shopping patterns and expectation, with the luxury shoppers using multiple channels and devices interchangeably as per their convenience during their shopping journey. Despite the online share of luxury sales at only 8-10%, most of the buying decisions are influenced and shaped by online engagement.
Furthermore, the evolution in technology is overcoming the online barriers in creating a rich luxurious experience for shoppers, while enhancing the extent of personalised services that can be provided. Digital channels are not only opening up new opportunities for the brands to differentiate and grow, but also help in connecting better with both existing and new customers.
The consumer decision-making process includes five stages from need recognition, information search, alternative evaluation to post-purchase dissonance. Online medium through smartphones, tablets and laptops is increasingly used during browsing and evaluation, while physical stores are preferred for trial, purchase or product collection. Most of the luxury shoppers know exactly what they want before visiting the point of sale for the purchase. The brands and often the model of brand is specified in the customer’s choice-set; the question is ‘where and how’ the transaction would materialise – either the physical offline space or the online digital space.
However, mere presence on multiple channels is not enough. A luxury buyer expects the same superlative experience across all interfaces irrespective of the platform. Thus, the brands need to strive to orchestrate the overall customer experience through a seamless integration across the different channels. The online and offline medium need to work in tandem, complementing each other, for both the luxury brands and the shoppers to reap benefits.
Omni-channel retailing through its innumerable interconnections enables luxury retailers to uplift, enhance and personalise the customer experiences, and most importantly create new ones. Further, it gives customers the control over when and how they want to engage with the brands – through web, mobile or face-to-face. It is important for the luxury brands to empower their customers to self-select into the high-sensory (offline) or the low-sensory (online) channels based on their preferences.
This case was written by Professor Srinivas Reddy, Geoffrey da Silva and Dr Sheetal Mittal at the Singapore Management University. The case was prepared solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This case was developed with the support of Centre for Marketing Excellence's (CME) LVMH-SMU Asian Luxury Brand Initiative and Retail Centre of Excellence (RCoE).