The High Cost of Low Standards: How Poor Merchandising Is Costing Luxury Retailers Billions
According to a recent study by One Door and GlobalData, luxury retailers are losing nearly $10 billion annually due to poor visual merchandising.
(You can download the full report here.)
Overview
Key Shopper Insights
Compared to other segments (mid-market, needs-based, and discount retailers), luxury retail accounts for the lowest proportion of losses from poor visual merchandising.
This could largely be attributed to luxury retailers, representing the smallest percentage of the entire market.
However, luxury consumers are the most sensitive to poor visual merchandising because these affluent consumers have the highest expectations:
- Luxury shoppers thrive on the exclusivity of the products they purchase. They expect a premium in-store experience to match the premium price they pay.
- Luxury shoppers need to see and touch products before purchasing to verify their high quality. This makes effective in-store merchandising essential for driving sales.
- Luxury shoppers prefer the in-store experience largely because of personalized sales assistance. One-on-one in-store assistance is a top contributor to luxury customer satisfaction, enhancing the shopper’s sense of importance.
Luxury retailers have some of the most loyal customers across emotional spending categories, which is why it’s of the utmost importance that these retailers prioritize proper visual merchandising.
Top Merchandising Challenges for Luxury Retailers
- Poor Display Management: 35.7% of shoppers cited cluttered displays as their biggest frustration. Almost 30% were annoyed by messy displays, and 26.4% were upset with disorganized displays.
- Hard-to-find Products: 29.4% of shoppers were dissatisfied with hard-to-find products.
- Worn-out fixtures: Nearly 19% of shoppers expressed frustration with worn-out fixtures.
Poor Display Management
Luxury shoppers expect more than just high-quality products. They expect an experience.
When they walk into a luxury department store, like Neiman Marcus or Bloomingdale’s, they want to be immersed in a retail environment that reflects elegance, exclusivity, and meticulous attention to detail.
Luxury consumers seek refinement. They want to feel special and indulged during their shopping trip. They’re there for emotional spending.
Unfortunately, messy, disorganized, and/or cluttered displays disrupt that shopping experience.
Poor displays create an immediate disconnect between the luxury brand’s promise and the customer’s perception:
- A cluttered display diminishes the sense of exclusivity by making products feel commonplace. Cluttered displays cost luxury retailers $2 billion per year in lost sales.
- A messy display makes it harder for shoppers to slow down and appreciate the craftsmanship of each piece. Messy and disorganized displays cost luxury retailers about $2.5 billion annually.
- Poor display management makes luxury shoppers feel hurried, distracted, and stressed.
It’s hard to picture a messy luxury store, even for accessible retailers like Coach and Michael Kors, because these emotions are entirely misaligned.
Poor displays can also suggest neglect, which is particularly damaging for a luxury retailer.
Not only does neglect negate a sense of exclusivity — the caviar and quail eggs of luxury retailers — but dusty shelves, disorganized racks, or askew product placements send a message that the brand does not prioritize quality or care.
In a market where prestige and aspiration drive emotional purchasing decisions, a misstep in presentation can lead discerning shoppers to take their business elsewhere.
For luxury retailers, impeccable visual merchandising isn’t just about aesthetics.
It’s about upholding the brand’s reputation and ensuring every customer interaction feels as polished as the product displays themselves.
Hard-to-find Products
What constitutes an exceptional shopping experience for a luxury consumer?
Easily finding the products they desire.
When you find exactly what you’re looking for, it’s a good day.
Unfortunately, when high-end merchandise is difficult to locate, it disrupts the sense of effortlessness that luxury brands, like Louis Vuitton, Gucci, and Prada, are known for.
Unlike bargain hunters, who may be willing to dig through racks and search for deals, luxury consumers value convenience and curated precision.
If they have to hunt for an item, especially one that’s supposed to be one-of-a-kind, their frustration can quickly override their enthusiasm.
A key element of luxury shopping is the feeling of being catered to as if every detail has been meticulously considered for the customer’s comfort.
If a shopper walks into a luxury store and has to navigate hidden collections, the experience loses its allure.
Luxury shoppers expect their time to be valued, and when products are hard to find, it signals a lack of thoughtfulness in the retail experience.
Hard-to-find products cost luxury retailers a staggering $1.2 billion per year in lost revenue.
Beyond lost sales, difficulty in locating products can lead to brand disengagement. A luxury shopper who can’t quickly find what they want may simply leave rather than endure the hassle.
About 1 in 4 luxury shoppers said they decided not to visit the store again after experiencing poor visual merchandising standards.
For premium retailers, ensuring that merchandise is easily discoverable is a crucial component of delivering the exceptional service and sophistication that luxury shoppers demand.
Worn-out Fixtures
Worn-out fixtures accounted for almost 20% of luxury shoppers’ frustrations, costing retailers $277 million in lost sales.
This is a major problem because luxury shoppers expect every aspect of their shopping experience to reflect the same level of quality as the products they’re purchasing — down to the literal studs.
If they’re going to pay top dollar for products, they want a top-dollar shopping experience.
Worn-out fixtures, like scratched display cases and chipped shelving, aren’t part of that premium shopping experience.
Even small details, like scuffed display tables, dim lighting, or aging fixtures, can erode the carefully curated image of a luxury brand.
These imperfections can make luxury merchandise feel less valuable, undermining the sense of prestige that luxury brands work so hard to cultivate.
If a luxury retailer fails to maintain its fixtures, shoppers may once again question the brand’s commitment to quality.
Beyond aesthetics, worn-out fixtures can also affect the shopping experience itself. As previously mentioned, luxury shoppers need to see and touch products before purchasing to verify their high quality.
Broken shelving or poorly maintained seating areas can make it harder for customers to browse, try on, or interact with products in a way that feels effortless.
In an industry where perfection and exclusivity are paramount, any signs of wear and tear can diminish the overall experience and drive shoppers to competitors who better uphold the luxury standard.
The Cost of Poor Merchandising: The $125 Billion Challenge
For a retail segment that’s all about appearance, luxury retailers need to prioritize visual merchandising now more than ever.
To learn the true cost of poor visual merchandising for luxury retailers, download GlobalData and One Door’s latest report, The Cost of Poor Merchandising.