International sales of luxury British brands and jewellery have been soaring as the pound falls. Georges Berzgal, vice president Europe, Pitney Bowes Ecommerce Group explores the emerging opportunities for high-end retailers.
British luxury brands have long been sought after, but the market for high-end apparel, accessories and jewellery from the UK has grown amidst the decline in the value of the pound sterling.
The UK already had a leading position in the online export market of luxury goods, but the sterling’s slump, relative to other major global currencies, has given the sales figures of luxury retailers and jewellers a further shot in the arm, presenting international shoppers with the opportunity to buy the goods they have always loved, but at lower prices.
The global search for the best British brands
Both Google and OC&C Strategy Consultants rated the UK as the world’s leading export market in 2014. Since then, however, there has been a rapid expansion in the number of searches for UK brands and jewellery manufacturers. This growth has been particularly pronounced in emerging markets such as India, Russia and Brazil.
Although the shifting value of the pound has made market growth hard to predict, many retailers forecast healthy, continued growth amid the disruption. In 2015, luxury analyst Wealth-X and the Walpole group of luxury retailers, predicted that the UK luxury retail market, worth £32bn in 2015, would grow to £51.5bn by 2019. Early indications are that a weaker pound will inflate the sale of luxury British goods beyond these predictions, creating unprecedented opportunities for the purveyors of such products.
Indeed, the demand for British brands and jewellery is booming worldwide and international customers are finding their clothes, necklaces, bags and bracelets more affordable than ever. These consumers are willing to pay a premium for high quality, and the level of disposable income required to fund a habit for luxury means that loyal customers tend to remain high earners and buy high-end even in difficult times.
As a result, luxury has stood the test of time throughout global economic turmoil, but the slump in sterling has presented itself as a promotional offer to people paying in other currencies. Naturally, many have been taking advantage of the opportunity for a bargain.
Achieving international success
Although the incentives for British luxury retailers are greater than ever, there are still challenges to consider when selling overseas.
Customers only pay high prices if they are confident that their purchases are authentic, that they will be delivered undamaged and on time, and that the payment process is secure. Retailers have different ways of meeting these expectations, but the most successful approaches centre on having a cross-border strategy based on localisation and personalisation.
By developing a localised approach, luxury brands are able to gain and retain the trust of international shoppers. They have heeded the advice of Deloitte, who maintain that providing shoppers with familiar – that is, region-specific – technology and authentication systems, will result in high sales and fewer abandoned shopping carts.
So, what do luxury brands need to look into to capitalise on cross-border opportunities?
- Let consumers pay how they prefer to
When it comes to payment preferences, choice is key. Limiting options for payment alienates a significant number of would-be consumers. Shoppers consider a variety of factors when selecting a payment option, including: service fees/total cost of purchase (33%), the value of the purchase (25%), and offer of a purchase protection plan (25%).
Pitney Bowes’ Global Online Shopping Survey proved that no one payment option was distinctly chosen by most cross-border shoppers, but the majority of cross-border purchases are made with credit cards and e-wallets such as PayPal and Alipay. Not taking this into account will damage retailers’ reach and prevent them from having the best customer experience they can offer. It is not a matter of offering a broad set of payment options but the right set for your particular target markets.
- Take the hassle out of online shipping and returns
Shipping and returns processes remain major pain points for consumers. In fact, even the most basic elements of the customer experience such as shipping the right item, accuracy in address and tracking, a transparent returns policy and proper duty and tax management still prove troublesome for some etailers.
This is especially important for overseas luxury shoppers who need to generate a stronger sense of trust and accuracy. Consumers are paying premium prices for premium products and they’re expecting a “white glove” service.
- Accept the local currency
Just as the local language should be available to shoppers overseas, the same principal applies to currency. Not presenting prices and accepting payments in the local currency means that shoppers will probably incur conversion fees, which ultimately will make merchants’ products more expensive and less competitive with local brands. To be fully cross-border this needs to be taken into account.
- Understand local customs, taxes and duties
Few things are more frustrating for a shopper than knowing that a long-awaited product has arrived safely to the country but is being held at customs due to incomplete paperwork, or having to make the trip to pay the required duties to release the parcel. Worse yet, finding out that the duties and tax charges are much higher than expected.
Brands, particularly luxury items that may include exclusive fabrics or materials, need to consider beforehand all requirements they need to comply with, including understanding of prohibited and restricted items for each market. Local regulations and time to process through customs should be considered when estimating the arrival date of the product. Stating products’ fully landed costs before the order is placed to eliminate ‘costs on the doorstep’, along with any additional hurdles that the customer may have to traverse before receiving their order, should also be a focus point.
Failure to do so will only award retailers an unhappy customer who may never shop from them again, and will share this experience with others.
Success breeds success
These are just some of the key elements that need to be considered. Naturally, the luxury retailers who embrace them and put in the legwork to improve their offering are the ones poised to benefit from increasing demand. Those who have taken the time to adapt, optimise and extend their online presence, in addition to establishing physical stores across new locations, are the ones who are thriving in the post-Brexit, high-end marketplace.
Avenue 32, a London-based luxury retailer which offers jewellery from designers such as Anna E Alex, Atelier Swarovski and Charlotte Chenais, responded to triple-digit growth by adapting its international payments process, and integrating a calculator into its transaction page that allowed customers to pay duty in full at checkout.
Other retailers have sought expert assistance to expand their international selling capacities. Harrods, for instance, uses the Borderfree Retail global ecommerce platform from Pitney Bowes to simplify the process of ordering overseas. Shoppers now have access to their collection, which features designers such as Boodles, Annoushka and Theo Fennell, from almost anywhere in the world.
International success for companies like Harrods or Harvey Nichols, which offers jewellery by Alexander McQueen, Vivienne Westwood and Swarovski, is no coincidence. By assigning the task of building and maintaining a dedicated, secure ecommerce platform to Pitney Bowes, they have been able to concentrate their attention on trading; safe in the knowledge that the challenges that come with managing the technical and commercial barriers to cross-border trade are well taken care of.
A complete vast array of payment options and delivery methods, while updating tariffs and taxes in real time, thus keeping the shopper informed and the order on track, are all integrated in their platform.
There is always an element of risk when it comes to expanding retail operations across borders, but in this instance, at least, the potential reward for luxury British retailers is too staggering to miss.
Cross-border trading is not always simple, but it can be simplified. Harvey Nichols have certainly found this to be the case. Since partnering with Pitney Bowes in 2014, they have been able to seamlessly expand their operations to 122 countries, handling 70 currencies.
By aligning with industry professionals, the risk that does exist can be heavily mitigated. With the support and guidance of experts in cross-border ecommerce, every British luxury retailer and jeweller should be making the most of this unprecedented opportunity.