For this next section, let's look at a fun category luxury. Now, luxury actually didn't do that well in covid. It was hurt and part of that is as I mentioned earlier, like if you're sitting at home in your pajamas, you may not be needing your, Luton handbag, if you're not going anywhere. And so luxury was actually hurt. But luxury learned a lot from Covid and luxury also, learned a lot from china because the chinese shoppers, a big luxury buyer and china came back after Covid more quickly than some of the other countries did. So we know a lot about luxury and there's a lot that you can learn even if you are retailer brand, that's not necessarily a luxury brand. Let's see what we can learn from those retailers that try to offer amazing product and amazing customer experience to their consumers. So you can use this strategy, even to just get up to fair value or maybe to use it to try to think about, how you can do a leadership that, strategy in one of these two quadrants. So what is the paradox of luxury now, luxury is a little bit different than all the other retailers in using my Matrix. So what luxury does, is it does offer the very best product. So that is their leadership strategy, amazing products, amazing accessories, apparel, things that you love, that you're willing to be a very high price for it because it's a, it's something that is worth that very high price, luxury is something that you think of as a brand. Like you might think of a piece of art. You don't even, you can't even put a price on a Monet or in a Picasso, that's the way luxury wants you to think about their products. So very, very, very high product. Now, it used to just be high product but more and more and more. They're recognizing the importance of linking that very high product, with a very strong customer experience. And historically before Covid and before really the growth in digital marketing, that strong customer experience was thought of as a person to person customer experience. So very wealthy people would go into a very expensive stores, and they would have a a dressing room to themselves and a personal shopper giving them amazing luxurious experience. That's what luxury meant historically. Now, in all the other retailers, I say pick your best leadership strategy, leverage that strategy to be best at a second quadrant, the two quadrant strategy, and then be good enough in the other two boxes. But luxury is not good enough in price, luxury by definition is too expensive. You know, and if it's kind of the old adage, if you have to ask the price, you can't afford it, that's kind of the idea of luxury, and in some sense you can price luxury too low. If you discount luxury too much, or you make the price too low, then people who really appreciate luxury for luxury sake won't buy it at that low price. So that's the paradox of luxury, that unlike everything else, luxury is frequently not sold at a fair price, but it is sold at a luxury price. Okay, so that's the paradox. Now, it used to be that luxury was also about making it inconvenient to buy, so that you might think of it as it shouldn't be convenient. That has changed over time. So historically, the paradox of luxury was the best product with the best personalized customer experience, but it was very hard to find, it was inconvenient to buy and it wasn't at a cheap price. Like so for example, for the Birkin bag, they had to choose you to buy it, you couldn't choose them to buy. That is not making it convenient. Now, what's happened in Covid, is what frictionless means has been redefined in the world of luxury. It's not really about making it convenient and making it accessible to everybody because luxury has to be inaccessible, luxury has to be very, very special. So you don't want to make it easy for everybody to buy. But what has changed in Covid is that, what it means to be convenient is changed for the premium customer. So for the premium exclusive customer, I make it easy for you to buy. That's how we've redefined frictionless in the world of luxury, because of the inherent paradox of luxury. So, what's happened in luxury now, one of the things that started to happen pre covid, I predict it will get much stronger after Covid, when some of the store restrictions relaxed. But what has happened is luxury brands have more and more gone direct. Remember we talked about this trend in this tendency to go direct. So although luxuries sometimes sold in department stores and sold wholesale, the idea of luxury going direct was really gaining traction even before Covid. And they started building up these flagship stores, which were amazing customer experiences and in some sense the marketing, the building of brand was done in these flagship stores. So you tended to see beautiful luxury stores in big tourist centers and tourists frequently, when they go to different countries, part of the tourist experiences to go and buy a product that maybe you wouldn't buy at home, but you're willing to buy on vacation because you know what, you're on vacation. And so a lot of this luxury dollar was sold to tourists. And these big flagship stores were the places that they were building the brand and building amazing customer experience. And I think you'll start to see these flagship stores develop again, when we get out of when the covid restrictions relax. And one of the things that happened sacks, which is a luxury retailer, the ceo of sacks gave a talk where he said, look, you know, what one of the biggest lessons I learned from Covid was, how important the store is, because we are creating some of the magic. Some of the customer experience is created in the store, the storytelling, the relationship you have with your store, associate touching and feeling the kashmir, the leather, the fine craft since has to be done in person. And some of that experience is just not done online. So luxury has to be omni channel. The store will always be important. But what we do know, is that this idea of frictional list of convenience. The idea that I mentioned earlier, one of the big trends post Covid is customer centered on Omni channel retailing and you really see it in luxury. What this means. It is about three channels. You've got your online channel, you've got your physical store, and that's connected seamlessly. And then you have data about the customer through some kind of app, which is a customer app or sales associate app. But you have to see that Omni channel Experience through the customer's eyes. So those are three channels and that is what I mean, by customer centered Omni channel experience. So Neiman Marcus went through bankruptcy during Covid to, you know, restructure their debt. And when they come out, they are really committed to customer centered Omni channel experience, and they recognize they have to give a personalized experience to their very best customers, Neiman Marcus caters to the very rich and much of their profit comes from a very thin slice of very, very rich customers. They sell to other people as well. But a lot of their profitability comes from a very narrow segment of very rich people. And they have personal relationships with those customers. And those personal relationships are in person. Personal salesforce relationships never underestimate the importance of personal connection, but they are also 24/7 digital connection, and that's what this connect means. It's a Salesforce tool to connect with their best customers 24 7 digitally and in person. And people can buy the product, they can buy online from Neiman market, the exclusive luxury product that they want to buy online. They can buy online. Or they can come into the store to touch and feel that fine product, to get their favorite salespersons opinion or about their personal buyers opinion, about this product. They can come into the store for alterations and things like that. So it's a re thinking about what the physical store means, what the online experience means and making sure it's connected through the eyes of the customer. Nordstrom is also doing that. Nordstrom right before Covid opened there, a new flagship store in new york city. And one of my biggest regrets, is that I didn't go to this flagship store before Covid happened, and I have to wait a full year for all the restrictions to be released before I can go back into this phenomenally beautiful store. I think it's something like seven floors with multiple restaurants, a martini bar, the state of the art in, in store experience. And nobody does in store experience better than Nordstrom, was built into this beautiful, beautiful store in new york city. And they have a permanent exhibit there with a Velvet line Nike store within the store at Nordstrom. Amazing physical store that unfortunately had to be put on hold during Covid, which is, to me personally, very sad, but it will be back. And that was an investment, in the idea of how important in store experience is. And Nordstrom also does some very innovative stuff with partnering with some of the digitally native vertical brands. They go after some of the young brands and they give them a platform and, in store experience. And they really feature those brands, and that's a win, win experience. They give exposure to these new hip brands and these new hip brands bring the younger consumers into Nordstrom and it's all a wonderful situation. And when the store comes fully back, the Nordstrom store will continue to be wonderful. But during the lessons learned in Covid, where we couldn't go into the store anymore and people learn to shop online. They developed which they again, had developed before Covid. But it became even stronger and more important during Covid, is this idea of Nordstrom Local, Nordstrom Local is a small footprint store that doesn't have inventory. It's basically a store where they can connect with their customers. And what you do is you buy online or two things online and then you come into the store, into the store and those items that you've chosen online are in the store. So you can touch and feel them, you can try them on, you can pick them up in the store, you can make sure you like them, things like that. You, they even offer easy returns from other online retailers in this physical store. If that's easier for you. They do alterations. They allow you to connect with sales associates to get their advice. So essentially what Nordstrom Local is, is putting the customer experience, in one place catering and that, and personalizing that to the customer and only bringing in the product in the inventory that you need for that experience. It's a very different idea, than traditional retail and it's really building the physical store on the idea of customer experience. They also, this is pre Covid, but I'm sure we'll see it come back and we'll talk about this again when we talk about china, they developed customer experience in different ways. Like the drop culture Supreme was really good on this. I think it was the first thursday of every month, they would drop new products. People wait on really long lines, for the chance to get this product. They talked about it as a line, in line culture. So part of the customer experience was just waiting on line for this, this product you may or may not get. I mean that is the definition of really differentiating on customer experience. You may not even walk away with a product, but you're coming for the experience. And of course, the influencers like kylie Jenner or kim Kardashian and we'll talk about the key opinion leaders in the chinese culture and some of those, really K O L. S that are operating, in Tiktok culture and things like that. The idea that what customer experience can mean, cannot just be online or physical store, but it can be this shopper tainment. This whole different world of entertainment and shopping is now taking place in, entertainment venue, rather than in any kind of physical or online store venue. So that idea of what customer experiences is very different, and you're certainly seeing luxury retailers embrace that as well. And one of the things just as a caveat to think about for online shopping and luxury is this, this problem with counterfeits. And so a lot of the better retailers are guaranteeing that you're not getting a counterfeit product, you're getting the real thing. And as we move to new models for luxury, which you're also seeing not only an online, but you're also seeing in re commerce, like real, real or, or reuse luxury. One of the really big issues and luxury is guaranteeing that you're getting the real brand and that it is not a counterfeit. So that is something that's also very important, when you're thinking about luxury retailing.
