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Luxury retailers find new ways to woo the well-heeled

The Hermès store in Toronto

Fred Lum

The Hermès store on Toronto's famed mink mile did something in December it had never done before: It brought in an engraver to personalize fragrance bottles with a customer's initials, flowers or hearts.

It was a free service for customers at the upscale retailer, one that the well-heeled appreciated. Not bad for business either, as overall sales at the store almost doubled from a year earlier.

"Now was not the time to shrink on customer service," says Jennifer Carter, chief executive officer of Hermès Canada, which runs four luxury stores. "Every sale counts."

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The move by Hermes is emblematic of how the carriage trade is more aggressively courting consumers after the downturn as the business model changes. Retailers are finding they need to be more attentive - provide random acts of kindness, as it's known at Holt Renfrew - or risk losing customers spooked by the recession.

Holt Renfrew, Canada's premier upscale retailer, has formalized its "random acts of kindness" program, sending flowers or theatre tickets to its top customers. Hermès has extended to as much as a week the 24-hour period that the stores will normally hold an item for a customer. And jewellery chain Tiffany & Co. sends snail-mail notes, personalized e-mails and Facebook messages to its customers.

Early results show that luxury retailers are starting to see better times.

Yesterday, Tiffany said that its sales at stores open a year or more rose 8 per cent in November and December, compared to a dramatic plunge a year ago. Saks Inc. and Nordstrom also reported better same-store sales in December: 10 per cent and 7.4 per cent, respectively.

Montreal-based Birks & Mayors Inc. saw a 6 per cent increase in same-store sales in November and December at its Canadian stores, although overall same-store sales were flat because U.S. sales fell 6 per cent, an improvement over the 2008 decline of 7 per cent.

Discerning customers are seeking service more than ever as a big differentiator in choosing their stores, says Milton Pedraza, CEO of the Luxury Institute consultancy in New York.

For Holt Renfrew's new president, Mark Derbyshire, improving customer service is a top priority. Sales at the privately held chain exceeded targets, he adds, helped by its "random acts of kindness" initiative. "Clearly we're on the right track," he says. "But I encourage our employees to take more risks with that … go deeper and find ways of truly anticipating the needs of customers."

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He is empowering sales employees to find out so much about their customers that they can "go out on a limb and have what the customers wants," he says. "It's not easily done."

But ensuring better customer service also requires new ways to reward employees. Mr. Pedraza says staff compensation has to be based on more than sales generation. And customer feedback has to be constantly monitored through surveys.

Mr. Derbyshire says he will review employee rewards to try to make them reflect better how customers are served.

Other retailers, including Tiffany, are reinforcing a tradition of catering to customers. Tiffany, started in 1837 as a stationery store, has kept true to its heritage and continues to send written notes to its new customers. The message also includes suggestions for future purchases.

"There's nothing as personal as a handwritten note," says Edward Gerard, a group vice-president at Tiffany.

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About the Author
Retailing Reporter

Marina Strauss covers retailing for The Globe and Mail's Report on Business. She follows a wide range of topics in the sector, from the fallout of foreign retailers invading Canada to how a merchant such as the Swedish Ikea gets its mojo. She has probed the rise and fall (and revival efforts) of Loblaw Cos., Hudson's Bay and others. More

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