When you enter a famous brand’s retail premises, be it a sleek and minimalist boutique or an opulent space with showstopping displays, you enter their world. Everything from the color of the lighting to the demeanor of the employees is engineered to showcase the products and represent the brand’s personality.
But while visiting a brand’s flagship store can be as memorable and immersive an experience as using their products, these stores are becoming more of a rarity, among luxury brands in particular. Indeed, luxury store openings fell 13% in 2023. Now luxury brands are seeking new ways to connect with consumers, and Professor Dominique Rouziès and her co-authors examined the challenges that go with one increasingly frequent strategy: selling luxury outside of a luxury environment.
Selling luxury alongside non-luxury
Luxury brands are stepping out of their carefully controlled spaces to find additional customers. In many cases, they are entering non-owned stores like specialist retailers of luggage or eyewear, or department stores that sell their products alongside more affordable and everyday goods. In doing so, they trade control over the retail environment for new opportunities to reach customers and make sales.
Despite the risk of brand dilution, appearing in non-owned stores alongside other brands can help a luxury marque succeed with a wider range of people. The non-owned store can present premium-priced items like handbags or sunglasses in a less intimidating environment and may also have more branches in more geographical locations. To connect with these markets, the luxury brand may also decide to extend its product ranges, adding more affordable, ‘entry-level’ product lines accessible to general consumers, particularly the generation called Millennials.
This merging of routine and rarefied retail seems to be succeeding. The strategy is so widespread that as many as 60% of sales of luxury products are now made outside of the luxury environment. This suggests that luxury brands can flourish outside of their natural habitat if they are able and willing to adapt. How this happens, though, has been something of a mystery to researchers. “In sales, the one area we didn't know much about was selling luxury, and especially selling luxury in a non-luxury environment, which is where the sales are happening most often,” says Rouziès.
The pivotal role of sales clerks
But what about the personal touch? A department store employee may be trained in serving customers, but they are not necessarily trained to sell these luxury brands, which all have a carefully curated brand identity. Nor do they have the skills or time to provide the kind of luxury service found in a brand-owned store.
In most cases, a non-owned store employee can’t match the brand-specific training and expertise of an owned-store one. But are there some salespeople in non-owned stores who outshine their peers in this respect? And if so, wondered Rouziès and her colleagues, why?
The team studied the effect salespeople have on luxury brand sales in non-owned stores, discovering that some employees are indeed better at selling fancy luggage or jewelry than others, thanks to a range of intersecting factors.
Who succeeds at selling luxury goods in non-owned stores?
When a luxury brand is sold by a non-owned store, salespeople, as well as the public, will perceive and judge the fit between the store brand and the luxury brand. And whether they deem the brand to be ‘at home’ in its non-owned environment affects how much effort salespeople will make in selling it to customers.
The researchers found that when the salesperson feels that there is a good fit between the store and the brand, say, high-end sunglasses in a Parisian department store, the effort they allocate to selling the brand is higher. If they judge the fit as poor, for example, if the same product is sold in a mall or on the high street in a provincial town, they will reduce their effort.
“We found that the closer the fit between what salespeople think the store brand is and what they think the luxury brand is, the more they're going to devote their selling effort to the luxury brand."
"You want them to feel that the brand fits in this environment because if there is a big discrepancy it's not going to work – they're not going to make any effort,” says Rouziès. “We found that the closer the fit between what they think the store brand is and what they think the luxury brand is, the more they're going to devote their selling effort to the luxury brand."
This effect can be strengthened or weakened by two other personal traits and beliefs the salesperson holds.
• One is luxury sensitivity. A person is sensitive to luxury when they understand the value of luxury and react positively to it. If the salesperson is especially sensitive to luxury in general, the effect of store-brand fit is reduced. “Luxury sensitivity is how much people understand the value of luxury. There are people who really don't care, but there are others who really are sensitive to it. For them, luxury means something,” says Rouziès.
• The other is personal identification with the brand. Brand identification is a perceived oneness with a brand, where an individual defines themselves by the same attributes with which they define the luxury brand. For example, if a person sees themselves as feminine and elegant, they may identify with a brand that embodies these same qualities. The store-brand fit effect is stronger when the salesperson feels personally identified with the luxury brand in question.
So, finding harmony between the luxury brand and the stores that will sell its products is crucial because a perceived mismatch will make store employees less effective at selling it – especially if they have a taste for luxury themselves. And when salespeople personally identify with the luxury brand, they will make a good fit even more effective.
“It was interesting to see how these concepts were playing a role in the behavior of salespeople in these environments where luxury brands were not in control. The brands had no influence on the environment, but also no influence on the behavior,” Rouziès reflects.
