Marketing Ecommerce Luxury

Luxury fashion brands slow to embrace e-commerce must act now, and fast

By Natalie Howard | E-commerce manager

August 23, 2018 | 6 min read

Farfetch, the UK-based global e-commerce marketplace for luxury and high-end fashion brands, this week confirmed plans to go public with a NYSE listing. The move is to capitalise on the rapidly expanding e-commerce industry. And it is an important reminder for the many luxury fashion brands still grappling with digital transformation that the time to embrace e-commerce is now.

Luxury fashion brands slow to embrace e-commerce must act now, and fast

Luxury fashion brands slow to embrace e-commerce must act now, and fast

For all the talk of e-commerce killing the high street, luxury brands’ online retailing remains in its infancy.

Traditionally sold through and interacted with via physical bricks and mortar stores, luxury brands sorely lag behind other retail brands with just 9% of all luxury goods sales made online. To set this in context, 18.2% of all UK retail sales were conducted online over the past year, according to ONS.

There are a number of reasons for this

Luxury brands’ bricks and mortar legacy is closely aligned with a traditional mindset in many organisations that do not see e-commerce as especially important – a misconception reinforced by the current low level of online luxury goods sales.

The cost, time and complexity of the digital transformation within an organisation required to optimise e-commerce is another factor. On top of this, although experience has long been recognised as integral to luxury retail, many companies have struggled to see how best to replicate the luxury experience online.

Despite these reasons, change they must

As the ONS figures show, almost one in five pounds spent with UK retailers is now bought online. Even more important for luxury brands is the statistic that collectively millennials and Generation Z are now expected to represent more than 40% of the overall luxury goods market by 2025.

Arguably, the greatest challenge luxury fashion brands now face is to decide how best to accommodate a younger, more diverse, tech-loving clientele. To answer this, they must understand not only how consumer expectations have changed but how the rapidly evolving luxury consumer’s wants and demands sit within this.

Generally, online consumers want greater convenience, cost-effective delivery and a quick and easy purchase process. Luxury consumers, however, are less hung up on the speed of delivery and instead expect a premium experience as standard – for which they are willing to pay.

To satisfy luxury consumers’ expectations, a luxury brand must ensure its online experience is superior – for example, by being personalised or bespoke with interactive chat or technical assistance. It must be uninterrupted and frictionless. And it must be an immersive component within the full brand experience.

Burberry is a powerful example of a luxury brand achieving this. After declining performance in the mid-2000s, the British luxury brand pivoted its business around true digital transformation and online retail with astonishing effect. Between 2011 and 2015, the brand posted revenue growth of 68.1% proving the need for luxury brands to re-evaluate and future-proof their business by thinking digital first.

A luxury brand must also be prepared to allocate specialist resources to e-commerce as setting up and managing a successful e-commerce channel is extremely cost and time-intensive. Because of this, the emergence of online marketplaces, such as Farfetch - which have built bespoke luxury fashion e-commerce propositions for brands to leverage - has been an important development.

Farfetch and its rivals, including Yoox Net-A-Porter, have allowed brands such as Saint Laurent and Manolo Blahnik to operate successful online retail propositions through white labelling of their platforms and exploiting their resources.

Employing such white label services enables brands to keep up with the pace of change without the need to restructure and overhaul their long-standing business operations. Also, by having a brand presence on these marketplaces’ websites, an existing consumer base can be tapped into before they invest in building their own large-scale direct to e-commerce proposition.

Furthermore, a luxury brand must approach e-commerce as more than ‘just’ a sales channel. The role a luxury brand’s website plays in the awareness and consideration stage of the luxury consumer’s purchase journey should not be overlooked.

Recently, Chanel’s fashion division in the UK launched its first functioning e-commerce website, starting with eyewear. This coincided with the re-opening of the brand’s central London Burlington Arcade boutique dedicated solely to eyewear – demonstrating the website’s impactful role beyond driving sales.

The eyewear e-commerce site includes an edited range of Chanel sunglasses, editorial content to inspire customers and convey the brand message, and services - such as complimentary delivery, click&collect and in-store reservations. In this way, it both facilitates online sales and encourages boutique visits.

The foundation of luxury has always been based on experiences. Now, the online experience must acknowledge and curate all of the touchpoints and nuanced experiences that make the world of luxury tick. And this can only be achieved with deep consumer understanding and a cohesive, omnichannel strategy that spans technology, service, content and – critically - the implementation and operational expertise to sustain and grow the digital business.

A luxury brand’s online presence should complement the traditional luxury consumer experience without replacing it. Brands must understand how they can provide a digital experience that will protect the value of the brand and provide consumers with the sophisticated elegance that defines luxury.

In the light of all this, defining the level of digitisation and implementation of e-commerce is not just more important than ever for luxury fashion brands - it’s now critical to the successful future-proofing of any luxury fashion business.

Natalie Howard is e-commerce Manager at Wavemaker.

Marketing Ecommerce Luxury

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