The physical retail experience when done right is magical, but the spell is waning, said José Neves, founder, co-chairman and CEO of fashion e-commerce platform Farfetch, at an event in London today.
His antidote? Technology. Or more specifically, the introduction of the Farfetch Store of the Future concept, which aims to link the online and offline worlds using data.
Neves pointed to the fact 92% of luxury sales today still take place in physical stores, according to a report by Bain & Company. By 2025, even with online sales growth, that will have only decreased to 75% and in his opinion it will likely then plateau, leaving the store still very much at the centre of the luxury industry. What has to shift however, is how those experiences take place, he said.
While the industry has been talking about connecting online and offline in an omnichannel sense – turning to ideas like click and collect, same day delivery and more – the missing link still remains around what happens on the shop floor. At this point in time, the majority of shopping experiences from the consumer’s perspective are entirely anonymous until point of sale, after all. There is no data on hand to enable otherwise.
“How can you really be serious about data when 92% of the action is happening in stores and you are not collecting data in stores?” Neves asked. During an average five-minute session on the Farfetch site, 15,000 data points are collected, he noted by comparison, highlighting one of the reasons his company is currently valued at over $1 billion, is looking likely to eclipse Net-a-Porter and is rumoured to be prepping for an IPO.
“Retailers need a way to collect information about their customers while they are browsing in-store, just as they collect data from online searches,” he explained in a press release. Indeed data is at the very heart of the new Farfetch proposition, built around driving personalised customer experiences.
“Store of the Future aims at providing the in-store experience of the future by giving visibility to retailers on what is happening in the store. It’s the offline cookie that closes the loop, between a great online presence and a complete omnichannel offering and, finally in-store technology which augments the experience of customers in store and overall. The next stage in the evolution of the fashion industry is the connected store, which uses technology to enhance the luxury retail experience to become even more customer centric,” Neves said.
A beta version of the Store of the Future was on show at the FarfetchOS event – so named for the idea of an “operating system”, which is what the concept aims to become. It will officially launch in Browns in London and Thom Browne in New York later this year, but has the potential to reach any one of the brand partners Farfetch works with, not to mention the hundreds of boutiques around the world, thereafter.
The system is built on the idea of a universal login or identity for each customer. Modular in form, it could consist of a multitude of different experiences, but the one on show demonstrated such ideas of a connected store as logging in initially using a QR code stored within the Apple Wallet, and then having access to things like a smart mirror that suggests recommended items based on an algorithm. It also recognises pieces brought in via RFID tags and allows the user to ultimately change what they’ve got for other sizes, colours and more accordingly, and then checkout via their smartphones too.
An early-stage product recognition tool meanwhile, allows items picked up off a clothing rail to then be logged in the user’s app on their mobile device to create an instant in-store wishlist. Everything is pinned back to that device identity. There was also a customisation bar on show with footwear designer Nicholas Kirkwood.
The central idea within all of it is built around an opt-in data-sharing concept, where the customer’s shopping preferences, browsing behaviour and purchase history are known so as to allow better and more personalised clienteling by the sales associate. In doing so, it enables such employees to rather become “in-store influencers”, Neves explained. The aim is to “humanise” the retail experience. It works well for luxury of course because of the fact this tends to be a more intimate and limited shopping exercise, comparative to say what Amazon Go is trying to achieve, which is about shifting mass products at scale.
As highlighted, the platform is a modular one, allowing Farfetch to tailor the tech solutions based on each brand and store. It’s an open API, meaning that Farfetch hopes others will build on top of the platform – existing indeed as an operating system with numerous applications created specifically for it, as opposed to a full solution.
Again, the key value lies in data. Simply put, Farfetch views its potential to connect multiple boutiques and brands around the world more wholeheartedly with the physical consumer as a huge opportunity for the future of retail. It’s gearing this launch primarily at the millennial customer, who it believes sees data as currency or a transactional entity – something it’s willing to exchange in return for value and service.
As Neves explains: “The mantra of this industry needs to be a single view of data. This is the single most powerful thing of the Store of the Future. It’s absolutely imperative that we bring that data intelligence into our businesses and deliver to customers incredible mind-blowing experiences that only data allows us to do.”
This story first appeared on Forbes.