Unlocking Growth in Luxury Fashion Retail

Connected Merchandise

This post was modified on May 19, 2024.


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 combining real-time customer behavior data and AI-based analytic solutions become a powerful tool for luxury brands, empowering you with the visibility and insights to take control of everything happening in your stores: from tracking visual merchandising compliance and what’s on display or isn’t on display right now in your flagship store, all the way to upselling and ensuring staff following guidelines on how to help customers find exactly what they want.

Unlocking Growth in Luxury Fashion Retail

The Cost of Carrying Goods: A Luxury Dilemma

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 untouched in the back room, the store margins get tighter. It’s more than a missed sales opportunity; it’s money – a lot of it – in limbo. And there’s a huge risk that product inventory will be left over at the end of the season.



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 the optimal styles displayed on the sales floor of each store? 


Which styles were presented to the customer by store staff? Are store staffs missing opportunities to sell a ‘total look’ rather than a single product? Are the price points of products offered being pushed downwards rather than upwards? 


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.

Sales data won’t tell you why a style didn’t sell, or which styles or accessories had the potential to sell more, had they been put on display or recommended to customers by store associates. 

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, 35% of style options are zero sellers. In luxury, 50% or more of options never sell at all. 


In other words, most weeks 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?
  • WHICH stores comply with visual merchandising rules?
  • HOW should employees build a look to suggest to customers?
  • WHICH merchandise will net the highest conversion per display area?


Today, AI-based solutions like Nexite use new real-time data to help you answer those questions as they come up, giving you a bird’s eye view of what’s happening in each store, each customer journey, and each personal appointment. 


 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 which styles are engaged with but never sold – 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

Take Control of Your Store Sales

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 AI-based recommended actions, you and your teams can take decisions to increase sell-through on the merchandise level – like recommending a belt instead of a scarf, or placing one bag on display instead of another, to increase conversion in season. 


At the same time, you gain insights that will help your chain increase sales, like

  • Optimizing visual merchandising, displays and upselling recommendations based on performances across stores
  • localizing assortments reduce overstocking and understocking across your chain.


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 Retail

Connected Retail refers to physical spaces that have been turned into dynamic sources of data and insights. Using AI analytics to translate the movement of merchandise in a store into customer behavior insights, retailers move from gut-based decisions to algorithm-based choices about assortments, visual merchandising and clienteling.  


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 with AI

Much of visual merchandising strategy is based on intuition. AI-based tracking solutions like those used by Nexite can turn VM strategy from art into a science by telling you  how customers move within your store, which styles and accessories are presented to them, 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 Boost Sell-Through, Reduce Waste

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: 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 inventory and localize assortments to cater to the unique demands of each region.

Reduce Waste

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.

Support Employee Excellence and Higher Conversion

Do you know what your employees are recommending to customers in each store, or what they select to show in personal appointments? 

When you have visibility into not only what sells, but what customers have or haven’t engaged with, you can take control of store operations and generate more revenue from physical retail.

Automated recommendations for what to suggest to customers and what to show as part of a look, based on which garments or accessories ‘convert’’ the most after being held or tried on, gives your store teams the tools to meet their sales targets. 


Similarly, you can increase the price points from personal appointments and clienteling sessions by using AI analytics to generate recommendations for what to upsell, and where.

6 Ways to Drive Value from Real-Time Data and AI:

1.Take control of your store operations. Identify reasons for high performance and apply best practices across all your stores to optimize store performance and sales.


2.Create consistency across your chain. Track visual merchandising compliance and identify potential risks before they impact sales, ensuring a smooth customer experience.

3.Localize assortments for higher conversion. Match products to each local audience and use money maps to identify high-converting zones in stores to increase sales per sqm.


4.Turn Clienteling from an art into a science. Equip your team with the tools and knowledge to excel in their roles and drive exceptional results.


5. Maximizing sales per square meter. using money maps to identify the best-converting zones and optimize displays for conversion.

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.

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.

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