Can Millennials Revive Call Center Commerce?

Millennials have long borne the blame for a variety of problems in commerce, including the decline in popularity of diamonds and certain fast casual restaurants. Now that segment of young consumers — who are not so young anymore, and are approaching peak earning years — are finally getting credit for something. Millennials could be helping to bring new life to call center commerce.

That’s reportedly the case when it comes to luxury retail brand Gucci. According to a new report in the Financial Times, Gucci plans to open six call centers, including in such cities as Florence and Shanghai, as the retailer chases consumer demand for smartphone-enabled commerce, especially among millennials in the hunt for luxury goods. The call centers are meant to “resemble Gucci shops,” and are designed to cater to “shoppers wanting to discuss a $2,200 GG handbag or a $1,590 pair of trainers by phone, email or live chat.”

Larger Changes

The Gucci call center effort comes at a time of change for luxury retail and call center commerce. Millennials are increasingly seeking access to luxury goods — including relatively affordable items. Indeed, millennials and Generation Z were expected to make up 45 percent of the high-end purchasing group in the coming years, according to a previous report in PYMNTS.

While younger consumers had not been previously drawn to luxury, they’re now buying individual items such as a T-shirt as opposed to an entire collection. The change in behavior is due, in part, to social media sites such as Instagram. These platforms bring urgency to fashion and serve as a newsfeed for brands.

Meanwhile, as documented by PYMNTS research and news coverage, call center commerce is undergoing its own changes, and via some forces that have little to with millennial consumers. For instance, artificial intelligence (AI) is among the main trends in call center development and growth, and PYMNTS research has found that for companies that have deployed AI, revenues have increased 9.2 percent year over year. That compares to 3.8 percent for companies that have not deployed AI.

Gucci Operation

Back in Florence, where Gucci operates one of its new call centers — they are reportedly called Gucci 9 — employees work in an office with 2,300 square meters of space (nearly 25,000 square feet), where “rows of smartly dressed young people sit at desks chatting on phones or tapping at emails,” according to the FT report. “Call center staff are encouraged to strike up personal relationships online with high-spending callers, just as the traditional shop assistant would.”

Some 150 employees were answering calls on the Friday morning the newspaper visited, handling inquiries from 26 countries, from callers “who want to buy, return or chat about Gucci — invariably from their smartphones,” the report said.

China Growth

Many of the millennial consumers that Gucci hopes to reach via its new call centers are located in China (hence plans for the Shanghai center, scheduled to open in 2020, along with similar operations in New York City, Seoul and Tokyo). That’s because sales of luxury goods in China are skyrocketing — up around 20 percent from 2016 — in its sharpest growth since 2011, as Chinese millennials seek products like handbags and cosmetics.

Within China, sales of brands from Gucci to Chanel, which had been sluggish for years, rose at the fastest pace in five years in 2016 and are positioned to consolidate those gains in 2018. Sales of luxury goods in China reached 142 billion yuan ($22.07 billion) in 2016, a 20 percent increase from the prior year.

In fact, the popularity of luxury brands with Chinese consumers has also impacted the payment industry in the U.S., with Alipay, the digital payment arm of Alibaba, announcing last year that it had entered into a partnership with French apparel brand Lacoste that will enable Alipay acceptance in select U.S. stores.

Call center commerce is being reinvented for the digital age, and assuming the new Gucci effort pays significant dividends, you can thank millennials and their mobile-focused shopping habits for at least part of that.