Online retail landscape looks bright:

And this trend is set not just to continue but to grow. Bain & Co. forecast that by 2020, 95% of music and 75% of books will be sold online. And even luxury goods, reticient at first to embrace the internet given the lack of advice from trained sales staff they could give to customers, are now enjoying significant sales growth derived from online transactions. A greater proportion of luxury fashion is sold over the internet than mass-market clothing, which is testament to just how much mindsets in the luxury goods industry have shifted.

Multichannel results in greater value transactions:

This is all achieved without mentioning m-commerce. Mobile phones are increasingly being used to research purchases before consumers hand over cash in stores or online. About 20% of sales in 2010 were classed as multichannel, meaning that orders were picked up in store or goods were ordered online after research in a traditional shop or showroom. Deloitte recently published research showing that multichannel customers spent an average £143 per transaction compared with £57 for traditional store customers.

So for those retailers vulnerable to online competition, the future does not look particularly bright. Moreover, research has shown that the more consumers shop online, the harder it is to sell at a healthy premium. This explains much of the trouble for the likes of HMV, and retailers of electrical goods such as Comet and BestBuy.

Stickiness is always key

The article states that over 3 billion hours a week are devoted to the most popular games such as Angry Birds, Grand Theft Auto and Farmville. 3 billion hours! And these hours are not spent passively. Users are fanatical about these games. Completely absorbed in what they are doing. Stickiness at its stickiest!

So, clearly gaming offers great opportunities for brands to engage their target market. Social media requires innovation. Taking risks and trying things.

Luxury brands using Social Media

Dunhill experimented with a game during the football World Cup last year. The end result was a tie that rapidly became a bestseller. Consumers could play the game through Dunhill’s web site in Japan, or on a mobile phone or tablet.

Customers are not always after special offers or free items. Sometimes, they want exclusivity or privileged access. If we think we are being treated as highly valued customers, that appeals to us.

Budget is not a constraint in social media

Social media is about raising awareness of the product and generating more sales through innovative and engaging ways. You don’t need to be a luxury brand to achieve this either. Budget is not as much of a constraint as it would be in a traditional marketing campaign.

So have a think about who your customers are? What can you do for them to put a smile on their face and to engage with you? Provide some content that they can share with their friends and feel good about doing so. Games work. If you don’t have the answer, then try this for starters…ASK your customers..LISTEN to their responses, and act accordingly.

We think this fusion of loyalty rewards programs with location-aware social networking is smart – and an idea that is worth considering for brands with loyalty or CRM programs.  By ‘checking in’ to hotels, bars, stores and other destinations on location-aware social networks such Foursquare, Gowalla, Brightkite, Whrrl, TriOut, Loopt, Yelp and now Twitter, Google and Facebook, customers could earn reward points, bringing them to stores selling your wares, whether online or traditional.

For TopGuest, who are looking to become middleware between location-based services (LBS) and travel/loyalty rewards programs, their service is in preview mode, with a partnership with luxury hotel chain, Standard Hotels (reviews on TechCrunch, ReadWriteWeb and Cnet).  What’s appealing about the TopGuest service is it’s simplicity, there are no apps to download, you can just ‘check-in’ with your social networking site and start getting rewards.  Whilst there is a natural fit between an emergent category of location-aware loyalty rewards programs and travel, we think non-travel brands could develop similar services.

Imagine, for example, if Sony ran a contest during the World Cup in which people checking in to bars screening matches on Bravia TVs won reward points for the SonyStore (if they posted images of the match to TwitPic). Or if every time you checked in and picked up a car at Avis, points were added to your Avis First rewards program. Or, whilst following the travel tips of luxury brands on Foursquare such as Louis Vuitton, Marc Jacobs and Coach, you won loyalty points for following the tips and visiting stores.

Many luxury groups have opted out of e-commerce altogether, believing the risks of selling online – such as brand degradation and counterfeiting – outweigh any benefits.

This whole notion of the web being a channel of discounting went against the very aesthetic of these brands.  But recent innovation has reshaped e-commerce. Luxury brands are discovering ways to reach customers without sacrificing brand integrity.

Applications on smartphones and the iPad have delivered a powerful interface for users to search, browse and buy goods. Ralph Lauren’s Rugby brand and Gap, among others, have developed their own sophisticated apps.

Indeed shopping is proving one of the most popular activities on touch devices. Sales through eBay’s iPhone app last year topped $500m. Purchases included a Lamborghini, and a Bentley.

All this shows that people are rapidly becoming used to the convenience of getting what they want, when they want it. Buyers are used to finding very expensive goods online. People are also confident enough to make big purchases without having to talk to a sales representative.

Luxury goods are among the most popular things consumers search for online, and a lot of it is their desire to know what’s going on with them, and their desire to own them. Yet meeting the demand and maintaining the luxury brand’s image was a perennial challenge.

Most high-end brands have established online sales through traditional channels, such as resellers and their own sites, and now they are gaining the confidence to venture out.

In addition to new applications, and private sales sites such as Gilt Groupe and Haute Look, one can also point to local deal sites such as Groupon and Living Social, and a new wave of companies that are bringing together location awareness, real-time inventory and deals, and social media.

It’s a huge period of innovation for consumer facing e-commerce. Customers are looking for curation, and social and mobile media are enabling real innovation and entrepreneurship today.