Retail Dogma

What is Luxury Retail?

Luxury retail is a segment in the retail industry that specializes in selling high-end goods that are characterized by high quality, high prices and a high degree of exclusivity.

Read Also: What is a Luxury Brand?

Over the last few years, the luxury retail industry has seen a tremendous growth, and in this article we will explain the differences between luxury and traditional retailing and the reason behind the boom in luxury.

Luxury Retail vs. Retail

Luxury retail differs from regular retailing in many aspects; from the design and atmosphere of the store, the merchandising and visual display of the items, to the retail experience itself and how customers are served.

The Luxury Retail Experience

The luxury retail experience depends, to a large extent, on the concept of clienteling, while the normal retail business uses traditional customer service to tend to their customers.

Clienteling is an approach that builds a long term relationship with customers and serves them based on the data and information collected throughout this relationship’s lifetime.

For example, in normal customer service the salesperson will ask the customer what he wants and serves him on the spot, and the transaction ends with the exit of the customer from the shop floor.

In clienteling, on the other hand, the customer’s visit to the store is the start of a relationship that builds on every visit and every purchase. The customer’s data and preferred mode of contact are taken, an associate is assigned to this “client” and starts reaching out to them when new products are launched that match their preferences and tastes.

At some luxury brands, and with certain key clients, some pieces are taken to the customer’s home to choose from and buy what they want.

The Luxury Retail Store

The store atmosphere and design relays the luxury, exclusive, nature of the brand, and hence luxury store displays are characterized by low density displays and a toned down atmosphere.

Furthermore, luxury retail stores do not carry high depth for any SKU, in order to re-enforce the concept of exclusivity and scarcity.

Read Also: Depth vs Breadth

The staff at the store reflect the luxurious image of the business in their uniforms, body language and how they attend to each and every customer and treat them as a “client”.

The sales process does not focus on pushing as many pieces out of the door, but rather on building long term relationships with HNWI (High Net Worth Individuals), that will bring more referrals and repeated purchases down the line.

The Real Reason Behind the Luxury Retail Boom

A look at the stock prices for some of the famous luxury houses, such as LVMH, will reveal big acceleration in growth that started around 2016-2017.

Luxury Retailer LVMH Stock Price Increase

This boom in the luxury retail industry is driven by younger generations entering this market much earlier than their parents, and staying with the brands for a longer time.

It used to be that sales from customers below the age of 40 years contribute around 25% to the business, but nowadays this share has grown to 50% and 60% at many luxury brands.

This new demographic shift brings with it organic promotion and marketing through social media, due to the prevalent culture of “sharing” everything.

So if in the past, a new customer acquired above 40 meant bringing 3 to 5 more new customers through word of mouth, nowadays, a new, younger, customer could mean 100s or 1000s of potential new ones.

This whole new dynamic simply means more buyers, bigger addressable market, and longer customer lifetimes.

This shift in demographics has led some of the luxury fashion brands to start adapting their way of making business decisions, in order to cater more for a younger audience.

The ones who did it right, such as Gucci, have stayed relevant and seen amazing success.

What Are Some Key Trends in Luxury Retail Today?

Some of the key trends in luxury retail today are linked to technology and reaching and serving new audiences.

Digital Clienteling Apps

With clienteling being an essential part of the sales process at luxury brands, many luxury retail operators have started building their own clienteling apps to better streamline the process and manage customer data and communication.

Purpose Driven Product Development

The younger generations entering this segment are more conscious about what they buy and are more influenced by the story behind the brand.

A lot of brands are becoming more focused on the environment and on building eco-friendly products, and are now sharing these stories with their audience to drive brand loyalty.


Some luxury brands have started collaborating with other younger brands to reach and appeal to a wider, younger audience.

Collaborations such as Supreme x Louis Vuitton , The North Face x Gucci and the acquisition of Off-White by LVMH all show how luxury fashion houses are keen to stay relevant to this audience and its pop culture.


A big focus has developed over the last few years on localization of the customer relationship function, so it can be more effective in communicating with the clients.

In a market like Dubai, for example, you will find Arabic as a language being a requirement in most luxury client advisor jobs. That’s because most of the HNWI in this market are Arabs.

In some malls, where Chinese or Russian customers form the majority, Russian and Mandarin language skills becomes a requirement for such jobs.

It used to be that, if you just speak English you can get a job in luxury retail, but nowadays with the focus on localization, having one of the highly sought after language skills gives you an advantage and also higher pay.

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