Unlocking Growth in Luxury Fashion Retail

Connected Merchandise

This post was modified on October 30, 2023.


Luxury fashion retailers have mastered the art of creating a shopping experience that’s second to none. But behind the scenes, the same elements that create unique experiences and products – including high end apparel with low sales density and the real estate that’s second to none – create unique challenges that demand innovative solutions. 


This is where real-time customer behavior data and AI-based analytic solutions become a powerful tool for luxury brands, empowering you to revolutionize everything from your buying and visual merchandising strategies, to inventory balancing in order to meet your customers with exactly what they want, wherever they are.

Unlocking Growth in Luxury Fashion Retail

The Cost of Carrying Goods: A Luxury Dilemma

Luxury retailers face a unique set of challenges when it comes to managing inventory. High-end products command top-tier prices, but the cost of carrying these goods can be exorbitant.


Every day a product stays hanging on a wall or folded on a display, the store margins get tighter. It’s more than a missed sales opportunity; it’s money – a lot of it – in limbo. 


Take into consideration the heavy investment in upscale real estate and the challenges around what to do with zero sellers after the sell-through period, and the need to increase sales per square foot becomes even more intense.


The problem is, it’s impossible to guarantee higher sell-through when you’re reliant on sales data alone.

"When you're in fast fashion, if you miss a trend or you send the product to the wrong location, you just discount and move on to the next thing. For luxury, every sale counts, because you only sell a handful of units in a season in a store. And we cannot discount and move on as easily.

Quality and full-price sales is everything."
- CEO, Luxury fashion retailer

Why Luxury Retail Needs Real-Time Data

Today you know what is sold in each store, but not how shoppers engage with each item. 


Were garments taken to the fitting room before being purchased? 


How many styles were presented to the customer before they saw the one they wanted? 


Did the store staff miss an upsell opportunity? 


From the second a shopper enters your store, up until checkout, everything is a black box.  Any data that you do have is anecdotal, and collected manually from store staff, with no guarantee of accuracy. 


That swirl of uncertainty directly impacts everything from sales to strategy. When your teams test out new categories, determine  visual merchandising strategy, and define allocation across regions, they are basing it on historical category and style data and six-weeks-old sales excels.  

Sales data is simply not enough to understand the performance of a product.

That data doesn’t refresh quickly enough to make your high-cost merchandise decisions in sync with what’s happening in your stores this week. And it won’t tell you why a style didn’t sell, or which styles or accessories had the potential to sell more, had they been displayed differently

Unlocking Sell-Through for Zero Sellers

Today it takes six-plus weeks to make a call on how a style is performing in a store.


Why? Because on any given week, most styles do not sell at all.

In affordable luxury, 75% of style options each week are zero sellers. In luxury, that number is much higher.


So on any given week you have no data at all on the majority of your styles. And you can’t increase sell-through on zero-sellers, if you don’t know why they aren’t moving. 


Once you have customer journey data on all your products, then you can understand the performance of a style in 1 to 2 weeks instead of 6, and predict and impact sell-through – both on a local level, and across the chain – much faster.

If you want to better balance merchandise, increase sell-through and eliminate waste from overstocking, you need to be able to answer the following:


  • WHY isn’t something selling as expected – could it have sold more?
  • WHERE is the optimal location for each category and brand?
  • HOW should each collection or style be displayed around the store? 
  • WHICH style should be highlighted on display?
  • WHAT visual merchandise approaches will drive sales? 


Today, AI-based customer behavior analytics solutions like Nexite can help you answer those questions as they come up, bringing you closer to your in-store customers. You’ll be able to understand exactly why shoppers may engage with a product in the store, for example,  but walk away without buying it, the same way your digital retail teams do on their e-commerce platform.


Every bit of your data – from how each area of the store contributes to sales, to style popularity – is a piece of the puzzle that can inform and support faster decisions about localizing and optimizing store assortments, allocation, visual merchandising strategy, and clienteling.

Decoding Customer Behavior in Retail Stores - Download Report

Item-Level Customer Behavior Data

Imagine being able to monitor how customers engage with your merchandise in real time. You can see the story of each piece – for example:


  • how the sales person presents it to the customer (whether it was recommended as part of a look or offered as a solo piece?) 
  • whether the client manager suggested it as upsell at the fitting room


You can see which pieces are capturing the attention of your clientele in each store, which ones receive the cold shoulder – and why they’re underselling. 


That information will help you quickly adjust your strategies much faster. When combined with predictive analytics, you can gain insights that will help you improve future assortments, improve localization and inventory allocation and VM strategy, directly and deeply impacting  sell-through rates and turnover time across your chain.


For example, if a silk wrap dress is in a prime location on the sales floor, gets lots of engagement, and is even taken to the fitting room but no one ends up buying it, it might be the wrong fit for that location and should be transferred to a store where it is projected to sell. 


But to get those valuable insights, you need to ensure a steady flow of data from each and every item in your stores. You need tools to measure merchandise performance. And you need actions to apply your insights to merchandise on a large scale. 

Connected Merchandise

Connected merchandise refers to merchandise that can transmit data on merchandise behavior in real-time. This data will take merchandisers from gut-based decisions to algorithm-based decisions about pricing, assortments, and allocation.


Today, NanoBT (Nano Bluetooth) solutions are poised to reinvent what physical stores can do, offering new use cases for everyone from sales leaders to merchandisers, buyers, and store operations.

RFID vs NanotBT

Reinvent your stores

While creativity and the brand aesthetic are paramount to store layouts, what if data and artificial intelligence could enhance this creativity?


AI-based tracking solutions like those used by Nexite can tell you how customers move within your store, and which ‘zones’ have the greatest impact on sales – and potential sales – within each store location.

By studying how your customers shop, you can optimize merchandise placement, test new visual merchandising strategies, and monetize every square meter to its full potential.

Using real-time retail analytics and AI-based recommendations as part of your visual merchandising strategy will help you plan out your store in a format that matches how your local customers want to shop. You can ensure that the most captivating and highly converting pieces are showcased in high-traffic areas, and each store is planned to monetize your collections, while still adhering to the brand’s artistic vision. 

Using AI to Balance Inventory, Localize Assortments and Perfect Buying

Ensuring that the right product is available in the right place is always important in retail – but in luxury, where each SKU is a substantial investment and store real estate comes at a premium, the stakes are higher.


When layered with retail AI analytics, real-time customer behavior data unlocks the answers to key questions:


  • why a particular style may be selling well in one location and not in another, or
  • why one store is outperforming another store in the same region
  • why one region outperforms another

These insights will help you plan your inventory balance to ensure growth across your retail footprint with each new season and collection. 

Maximize Sell-Through

Real-time customer behavior data is your secret weapon. It’s like having a backstage view into the minds of your customers.


With real-time data, you can quickly understand why a product is flying off the shelves in one location but collecting dust in another.


This insight helps you balance your inventory and personalize your assortments to cater to the unique demands of each region.

Optimize Buying with Predictive Analytics

The most innovative brands are forward thinkers – and AI is going to help more luxury brands look ahead. Customer engagement metrics combined with predictive analytics tools let retailers quickly identify trends and buy smarter for the next season, down to the style and color level. And that means less future waste and lower manufacturing or buying costs. 

Security and Authenticity: Getting Ahead of Theft

Traditionally, retailers have employed Electronic Article Surveillance (EAS) tags for loss prevention. However, these security measures can compromise the sense of luxury that luxury brands aim to provide. Clunky security tags, products walled off behind glass displays, and other visible security measures can detract from the hands-on, personalized experience your customers expect. 


Real-time, item-level tracking solutions like NanoBT (Nano Bluetooth) offer a more discreet and proactive solution. NanobT tracks item location and movement every few seconds. When that data is sent to the cloud and connected with retail applications for store staff, it can be used to trigger alerts that prevent a theft before it even happens: 


For example, store associates can get alerts whenever

  • high-value merchandise is moving on the sales floor
  • merchandise moves to the back room at the wrong time of day or otherwise suspiciously
  • multiple items of the same style or category are taken to the fitting room


Your store staff can promptly engage the shopper, potentially preventing a theft while preserving a pleasant, personalized shopping for your customers. When an item is moved or handled suspiciously, store personnel can intervene promptly.


The same technology also supports authentifying your branded products across the world – once anyone with a smartphone or other Bluetooth-enabled device can scan an item with a NanoBT tag, and immediately receive product information including authentication down to the manufacturing number.

Support Employee and Customer Experiences

Your store staff know their job; what they need are tools to do it more effectively. Connect your cloud-based data to a staff-facing application like Nexite’s Store App, and store staff can more easily locate styles, and even see every size in stock without ever leaving the customer’s side. Clienteling becomes more personalized when store staff receive recommendations for what to suggest to customers, based on which garments or accessories ‘convert’ the most after being held or tried on.

6 Ways to Get Value from Real-Time Data:

1. Identify potential sales.  Use real-time engagement data to predict which products have the potential to sell more – or which won’t sell – then balance inventory and buy for next season accordingly accordingly.


2. Be Agile. Is a particular collection not resonating with your clientele? Use real-time data to more quickly adapt to customer preferences, including through your visual merchandising and marketing strategies.


3. Prevent Physical and IP Theft. Enable product authentication wherever shoppers meet your brand, and enhance the security of high-value products without compromising the luxury shopping experience.


4. Generate Global Success. Understand differences in store performance, and use this knowledge to localize and balance inventory across the chain.


5. Monetize Your Sales Floor. Optimize every square foot of store space based on local customer behavior to maximize sales potential.


6. Customer Experience. Free up store staff from manual inventory tasks, and give them tools to optimize clienteling.

Making customer behavior data part of your brand identity

Luxury retail is primed for a transformation in how decisions are made. Going from a linear, product-centric merchandising or retailing strategy to a circular, customer-centric one will start with smarter, faster decisions based on real-time feedback into how customers are engaging with merchandise. And that demands innovation.


Using Connected Merchandise and applying intelligent automation and AI algorithms to your stores will provide new levels of insights that will help increase revenue, reduce waste and empower global growth across your brand.

Tech Trends Report CTA