Class and sophistication are adjectives of a luxury brand. Customers in this category have one thing in common – they appreciate the subtle things. Blockchain technology can play a role in serving this clientele.
The luxury market value is estimated at $3 trillion. The higher dollar amount means you’re playing in the big league. You either go big or go home. Necessary business tools are inadequate to be successful in this market. Advanced technologies like blockchain come handy.
The blockchain retail global market is predicted to hit 1.76 billion by 2024 at a 78.49% CAGR through 2018 to 2024. It streamlines retail businesses in the areas of database management, inventory management, supply-chain visibility, payment and order management, product safety, and authenticity among others.
5 Ways Blockchain is Improving High-end and Luxury Retail
In the face of market growth and competition, luxury retailers leverage blockchain technology to have an edge in the following ways:
1. Guaranty customer satisfaction.
The high cost of luxury items does not substitute the place of good customer service. If anything, it raises the bar. To whom much is given, much is required. While customer service should be at its best across all business types, luxury retailers have more responsibility of meeting the high expectations of their customers.
High-end buyers have zero tolerance for mediocrity.
Luxury retailers need more than the standard customer service to satisfy them. Monica Eaton-Cardone, Co-founder & COO of Chargebacks911.com, reiterates the importance of excellent customer service in luxury retail, saying: “When an affluent person buys something, it’s because he or she values the product more than the price-point. Your mission, then, is to validate their decision by making the sales experience so seamless and perfect, they’d do it all over again. Even better, they’d also recommend you to their friends.”
According to a Transparency ROI study, 73% of customers disclosed their willingness to pay more for products that offer total transparency. Blockchain allows retailers to make the customer part of the transaction process.
They can track business transactions and see the progression from start to finish.
With blockchain-enabled payments like Smart Contracts, payments are initiated only when both parties meet stipulated transaction conditions. Customers have little worries, knowing that they get to pay for a product only when they are satisfied with it.
After service is a vital part of the customer service chain. Customers need to be guided in the way they use a product to ensure that they get the most of it. A McKinsey report found that companies in the manufacturing niche make over 15% of their revenue from services rendered.
2. Verify product authenticity.
With customers who are ready to pay good money for high-end products, the luxury market is becoming infiltrated with counterfeits. Data from the Counterfeit Market and the Luxury Goods study revealed that the luxury market loses $12 billion to counterfeits every year. Perpetrators of this crime have mastered the art, creating fakes that look like their originals. It is easy for sellers and buyers to fall for their antics as the eyes cannot spot the difference.
Blockchain technology is an excellent tool for fighting product scams.
It creates a digital signature for identifying valuable products and ascertaining their authenticity. World acclaimed largest luxury brand, LVMH, is already leveraging this technology on its platform called AURA.
Products are allotted a digital identity, and this information is made available on a computer network. Members of the network have access to the information to verify the authenticity of products they have vested interest in. While selected individuals are privy to the data, they cannot alter or delete it.
Retailers can now sleep with both eyes closed, not worrying about buying and selling fakes at the detriment of their reputation.
The inclusion of supply-chain information in the authentication process is another way retailers can fight knockoffs with blockchain. Relevant information to ascertain a product’s authenticity will be missing on substandard products.
3. Build a connection.
The era of businesses sitting in glass houses while the consumers watched them in awe from outside is gone. Now, both parties operate better, sitting right across the table.
Consumers want to know more about the businesses they are patronizing.
They crave realness beyond well-crafted sales copies and perfect visuals. Consumers of luxury brands are not exempted. They may seek the finer things, but they are human too, and gravitate toward brands they resonate with. Having a rapport with customers builds trust. In a State of the Connected Customer report by Salesforce, 95% of customers disclosed their willingness to be loyal to brands they trust.
Through its decentralized network, blockchain enables luxury retailers to share personal information about their products. By showing customers the dirt their favorite fancy item went through before it attained its glory, they connect with the brand and appreciate the product even more.
Share pictures and videos of what a typical day at work looks like. For example, if you sell hand-made products, share photos of people making the products.
Information shared on the network is not available to the general public. Only authorized persons have access. You do not have to worry about putting private information about your business out there completely.
Quality has grown beyond the perceived prestige a brand builds for itself. With a rising level of consumer awareness, they want to associate with brands that share their beliefs and standards. A consumer concerned about environmental pollution would wish to patronize only brands that put that into consideration in its manufacturing process. Retailers who meet this standard can include it in the decentralized blockchain network, and consumers will get to see it.
4. Boost employee engagement.
Employees drive the goal of every establishment. Their motivation, or lack of it, affects business outcomes. A State of the American Workplace report found that engaged employees are more productive by 21%.
Luxury retail needs the most motivated employees to engage their high net worth client base. Otherwise, such clients will not feel valued enough to stay.
While an organization’s policy may state that employees are free to express their dissatisfaction with company ethics, they may not be forthcoming on this due to fear of victimization.
Blockchain provides an opportunity for retail luxury businesses to get feedback from their workers anonymously.
Knowing that their response cannot be traced back to them, employees give their honest opinion on issues about the business. US luxury brand Levi adopted this technology in collecting feedback from their employees in their Mexico facility, and the result was positive.
Employers can make use of such information to tie loose ends and harness untapped opportunities. Feedback is evaluated in the shortest time possible – thanks to the advanced features available.
5. Transfer ownership of products.
The luxury market boasts of expensive items. Unlike most products that lose their worth over time, some of these products appreciate, hence, ownership documentation is essential.
Blockchain technologies enable ownership traceability in the supply chain.
Luxury retail goods can be tracked as they move from one owner to another with the use of markers like QR codes and RFID. With such a system in place, imitating high-end luxury products is a hard nut to crack.
Leveraging the decentralized network for storing and sharing information, luxury product owners reserve exclusive rights to their products via the digital signature assigned to them. During purchase, the signature is transferred to the buyer. This information is available on the network for the information of relevant parties.
Blockchain acts as the middleman in luxury retail – safeguarding the interest of both sellers and customers. Both parties can transact business in a convenient, transparent, and safe environment. Its decentralized system breaks the monopoly of power and creates a level playing field for business transactions.
If you are having a hard time getting this caliber of customers, luxury marketing is an excellent place to start. It puts your brand right in front of them and speaks a language they resonate with.