Will eCommerce Be Luxury's Undoing?

Prada is one of the many luxury brands that still do not totally embrace ecommerce for selling their merchandise now that Yoox and Net-a-Porter are merging their online fashion stores. Companies that hesitate with online marketing include well-known brands like LVMH's Christian Dior, Prada, Chanel, Hermes, and LVMH's Louis Vuitton. Why are these brands so reluctant to make use of the Internet when other retailers sell millions of dollars’ worth of goods online?

Prada's head of marketing, Stefano Cantino, feels that the quality of his company's brand demands the physical, in-store shopping experience to protect Prada's reputation of quality and sophistication. He does not feel that the company can replicate this online since people cannot try on the clothing or avail themselves of exclusive service only a boutique provides to customers. Prada's website for this reason sells only shoes and accessories such as bags, but not apparel.

A view such as this may become increasingly indefensible as more shoppers decide to turn to websites for their luxury goods, in place of visiting stores on New Bond Street, Rodeo Drive or other prestigious locations. As this happens, high-end brands that still resist online selling could lose customers to their competitors, which are perceptive enough to explore the benefits of online marketing.

Luxury-brand, executive recruiters and company executives know that internet participation is crucial for sales with the customers ages 15 to 35, who grew up with online shopping experiences for all sorts of products. Anant Sharma from Matter of Form says, "Many luxury brands have not figured out yet how to be innovative and creative online."

His thinking may not be too far off as many of the luxury brands are investing in their products, redesigning stores using famous designers, and expanding the number of stores worldwide. When they do venture online, they seem to copy other ones already selling online. Something they would not dream of doing with a physical store. While these brands flounder around with their attempts to sell online, other high-end stores already have great success in this arena.

Neiman Marcus is one such company that is making it work on the Internet and 24% of its sales are online, which is an increase of 9% from about 2009. Harrods in London is also successfully selling online with 3 million shoppers visiting its website each month to buy such luxury offerings as LVMH's Givenchy and Valentino creations. The company is even increasing its investment in online marketing to stay up with customer demand. Richemont's Cartier is yet another luxury brand that has sold jewelry online for the last 5 years and is third behind the two primary flagships with its sales.

Euromonitor International predicts that 40% of all luxury-brand purchases will be through online portals. Fflur Roberts, a luxury-products analyst with this market-research provider, feels the merger between Net-a-Porter and Yoox broadcasts that fact that companies will lose sales if they are not online with their merchandise.

Is it time for luxury brands to embrace ecommerce? In our estimation, it is long overdue. Of course, you will still see holdouts such as Patek Philippe that will not sell its timepieces worth over 10,000+ Euros online. Time will show whether or not this is a wise decision with all of today's online offerings.


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Photo: Telegraph