May 12, 2017
E-tail revenue soars for leading luxury labels
May 12, 2017
Online sales for the Kering group are booming, and luxury supremo LVMH has launched a global website: the luxury heavyweights have long lagged behind other brands in the field of e-tailing, but they are now moving full speed ahead into digital technology, to better serve the increasingly connected customers their future depends on.
As reported by FashionNetwork.com, in early June LVMH will launch 24Sevres.com, the digital shop-window of Parisian department store Le Bon Marché, which is owned by the world's leading luxury goods group. LVMH will "for the first time offer Louis Vuitton and Christian Dior products in a multi-brand web environment," said the website's General Manager and founder Eric Goguey. Both luxury labels' products are for the time being available only on their own websites.
24Sevres.com will gradually broaden its range in the course of the summer, to eventually showcase 170 brands endowed with a "Parisian fashion vision", 16 of which belong to Bernard Arnault's group. The website promises a "high-end service level", featuring delivery to 70 countries, video-conference access to tailored advice by stylists, and highly curated packaging. The group has not disclosed any figures on the worth of its online business.
LVMH's close competitor Kering has instead celebrated a 60% rise in online sales for its luxury products in the first quarter, in the wake of a 12% increase in 2016. The growth rate is markedly higher than that of in-store sales.
In the first part of the year, Kering's Italian label Gucci did even better, posting an 86% rise, though the value of these sales, and their share of the overall business, was not disclosed. The group is happy about the "gradual deployment of the new gucci.com website across all regions." The site combines "narrative content" and commercial features.
This kind of innovation is a must, according to Olivier Abtan, in charge of the luxury sector for the Boston Consulting Group in Paris, who recently published an article entitled "Go Digital or Die".
"The [luxury] sector is lagging behind" he wrote, as only 7% of luxury brands' sales (clothing, jewellery, perfumes, cosmetics, leather goods and accessories) are generated online, though he forecast the industry will catch up, the share growing three-fold by 2025.
According to Abtan, digital tools were neglected for a long time by the luxury industry's long-standing names, because the market was buoyant, notably driven by Chinese demand and the opening of stores in emerging countries. Luxury labels simply "didn't need them."
But now growth "will be reduced from 8-10% per year on average to 2-5% at best in the next few years," and luxury goods consumption habits have been upended by the digital revolution, especially with the younger generations.
"Luxury goods consumers are more connected than the average consumer. They are inspired by the web, by social media, by private sites and those run by bloggers and brands. They compare products and prices, then they buy," said Olivier Abtan.
The widespread, conservative opinion, according to which the luxury experience is solely the preserve of in-store retail and is not suited to the internet, where the brand image of luxury labels risks becoming watered down, belongs definitely to the past. "35% of our customers browse the internet before visiting our stores," said Kering.
However, the big names being relatively slow on the digital uptake has allowed a series of start-ups to sneak ahead in the game. The signature example is that of Net-A-Porter, set up in London in 2000 and now the world leader in online fashion sales, with a revenue of over €1 billion. In 2015, Net-A-Porter merged with Italian e-tailer Yoox, and Swiss luxury group Richemont is its key shareholder. Another leading international player, also from the UK, is Farfetch, created about ten years ago.
When compared with these new, digital-savvy pure players, the well-established luxury groups can play a major trump card: products. Yet, though Kering has developed the Gucci website internally, it chose to join forces with the Yoox Group in 2012 in order to create a joint venture for the online promotion of many of its labels, notably Alexander McQueen, Balenciaga and Saint Laurent.
As for LVMH, it currently prefers to go the internal development route, after it hired former Apple executive Ian Rogers in 2015, who has given a boost to the group's digital projects.
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