Luxury Brands Are Stupid to Snub the Internet
Photograph by David Brandon Geeting for Bloomberg Businessweek
Imagine, if you can, the following Champagne tragedy: You’re wealthy and stylish and have decided to buy a handbag after a tough day at the office. You pour yourself a glass of red wine, flip open your laptop, and head to chanel.com. After clicking around for a few minutes, you’re annoyed to discover that cosmetics are the only thing for sale. Next you visit dior.com, where you can enjoy runway footage, browse product images, and even learn that some of its shoes embody, as the French couture house puts it, “all the modernity of Dior (CDI:FP).” Except you can’t actually buy them using modern technology.
The rich aren’t “all ladies of leisure with infinite time to shop”
These and dozens of other labels illustrate luxury’s dumbest paradox. Brands are happy to run their own Twitter(TWTR) accounts and live-stream their runway shows, but how dare they be so base as to sell their wares online? “We don’t like [e-commerce]. I don’t care,” Miuccia Prada told a reporter in 2013. “We think that, for luxury, it’s not right. … Personally, I’m not interested.” With the exception of a few companies, such as Saint Laurent,Gucci (KER:FP), and Burberry (BRBY:LN), the last of which takes online orders directly after its seasonal presentations, she’s pretty much speaking for the entire industry. Some brands are so snobby about the Internet—like the thriving, LVMH(MC:FP)-owned Céline—that not even Barneys New York, a top account in terms of sales, is permitted to put the line on its e-commerce site.
Ninety percent of luxury purchases, which some analysts say is a $300 billion industry, still happen in stores, according to Forrester Research (FORR), but that’s skewed by the limits of acquisition placed on most high-end shoppers. The real business failing, says Forrester analyst Sucharita Mulpuru, is that “there are a lot of affluent people who are intimidated or annoyed by shopping at luxury retail stores.” And who can blame them? Mulpuru recently advised a brand whose executives admitted that one way they interact with shoppers is by writing down descriptions of the outfits they wear into the boutique. A computer would never side-eye your ratty T-shirt like that. “A lot of rich people are also busy,” Mulpuru goes on. “They’re not all ladies of leisure with infinite time to shop.”
By staying offline, these labels are losing a percentage of sales to successful multibrand sites such as Net-A-Porter (CFR:VX), where $11,500 Valentino coats quickly sell out. Sales at the site rose 55 percent, to £368 million ($613 million), in 2013, according to the Daily Mail. And it competes with department-store sites like Bergdorf Goodman and Barneys, which feature $6,990 Oscar de la Renta dresses and $7,250 Givenchy sweatshirts for men. Credit card encryption and online fulfillment are thoroughly explored territories at this point; they wouldn’t be tough for smaller brick-and-mortar retailers to navigate.
Just ask Tom Ford. On March 24, after years of forbidding photographers at his runway shows for fear that images would land online, the outlandish designer decided luxury need not be so analog. At his new website you’ll find a $2,990 messenger bag clutched against a naked model’s breasts and a $3,080 briefcase covering her bare bum. The only thing the model’s actually wearing is a pair of $1,790 ankle booties. Everything’s for sale.
Unlike other designers who have caved to digital pressure by sacrificially offering up accessories and beauty items online, Ford plans to sell ready-to-wear clothing on the site soon. “We now have 98 retail locations worldwide, and the online store is an extension of them,” the designer said in a statement. His company has “grown to become an almost billion-dollar brand in terms of retail sales,” he added, “and the online store will add a major new avenue for our future growth.” Much of that may be from sales of Web-exclusive perfume which, in another surprise twist, Ford didn’t make the naked girl hold.
Source: Bloomberg Businessweek
http://www.businessweek.com/articles/2014-04-03/luxury-brands-should-sell-their-products-online
Source: Bloomberg Businessweek
http://www.businessweek.com/articles/2014-04-03/luxury-brands-should-sell-their-products-online
