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Is a Luxury Still a Luxury if it Can be Bought Over the Internet?
Thursday, Nov 25, 2010, 1:51 PM
Not a week goes by without a new story on the debate over whether luxury brands should sell their goods online. Is a luxury still a luxury if it can be bought over the internet? How can a retailer of luxury goods embrace e-commerce without degrading it’s brand essence, which is traditionally linked to exclusivity and “a human touch”?
Obviously, these tough times have forced the hand of nearly every high-end firm, causing major overhauls of marketing and design strategies. You’d think that in the era of austerity economics, recession and unemployment, even pondering whether or not to embrace e-commerce is in itself a luxury. Nonetheless, the majority of luxury brands continue to cling to the belief that it’s better to steer clear of e-commerce and lose truckloads of cash, rather than risk cheapening their image by selling online to anyone with a credit card, which might include (gasp!) consumers in China or the Middle East– or the Jersey Shore.
To quote the Wall St. Journal’s April story on the end of couture culture, entitled Survival Of The Finest, “Gone are the high-class tastes of old-world American society, the blue-blooded ladies who lunched and hosted benefits and social events in couture daywear having been replaced by new-world billionaires—from the Middle East and Russia.” Indeed, a large portion of the high-end market’s potential consumers do not look like what they used to (i.e. western Europeans and North Americans).
In addition, executives resistant to new ideas about selling luxury online might consider that the convenience of shopping online is also itself a luxury. Research suggests that many consumers of luxury items will readily forgo a person-to-person experience when presented with the convenience of online shopping. This may be the case especially for consumers in emerging markets who can’t make the trip to a fashion capital, but who can spend thousands on designer clothes.
Take China, for example. To quote Imran Amed, “China is the biggest opportunity for luxury brands in a generation.” Yet according to the most recent findings of the The Digital IQ Index, the Luxury Lab study that ranked the digital competence of 109 “prestige” brands in China, the majority of these brands are failing miserably to connect to the “fastest growing market in the world”, the success of which “is inextricably linked to digital competence.” However, brands that have embraced e-commerce are finding themselves happily surprised by the success of their online sales.
A July 22nd article in the Economist discusses the success of Oscar de la Renta’s online store. According to the article, the firm initially expected that people would use the site to buy less weighty items such as belts and perfume, yet the firm has been doing a brisk online trade in de la Renta signature cocktail dresses, which sell for around 4,000 USD. Even more surprising was an order for a 80,000 USD fur coat last spring, whose purchaser just couldn’t make the trip from rural New Hampshire to New York City. As Alex Bolen, the fashion house’s CEO, told The Economist “We could not have been more wrong in our expectations of the internet.” Wherever de la Renta’s core consumers are located, it’s clear that people are willing to make all manner of high-end purchases online.
While the success of Oscar de la Renta Online may have been a surprise to its executives, Burberry is a well-known example of finely engineered deliberate digital strategy. Along with it’s more than 1 million Facebook admirers and approximately 7 million unique visitors, Burberry.com is an interactive experience that sells much more than trench coats. They’ve been streaming their catwalks live since 2009 and along with each new collection comes a new 360-degree concept which, in the case of A/W 2010, comes complete with its own indie-rock soundtrack. Burberry.com also offers some very concrete perks, including the added value of ordering from the new collection immediately, rather than the usual 3-6 months after the catwalk debut. Consequently, New York Magazine reported that Burberry’s March earnings showed a 27% increase from the previous year, much of which was gained in emerging markets in Asia. With finesse and creative thinking, Burberry has managed to maximize the benefits of e-commerce without cheapening its image. Burberry’s success also suggests that affluent consumers are less attached to hands-on boutique shopping than to a great brand story and instant gratification.
Oscar de la Renta and Burberry are but only two success stories. However, in light of the demonstrable power of emerging consumer bases, luxury houses’ resistance to embrace “other” markets seems to be a complete failure of imagination, if not a function of narrow-mindedness.
To quote Imran Amed again, “Fashion companies are now less able to control the conversation about their brands. Smart brands have realized they have no choice but to be part of the conversation because it will continue with or without them.”
Catherine Levy | TribaSpace
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