eCommerce: the Future of Luxury Retail?
“The latest eCommerce growth forecast from eMarketer suggests that globally eCommerce sales will increase to 16% of all sales in 2020. This is an increase of 19%.” (Via)
It is no wonder that with the rise of digitalisation and the decline of physical, in-store shopping, both high street and high end brands are turning to eCommerce in order to boost sales amongst millennials and Gen Z. Following MyTheresa’s (a multi brand, online luxury retailer) filing for public listing in the NYSE, I got to thinking about the future of shopping. Since ordering staples like groceries, or items we deem basics, already feels like seconds nature, where do luxury houses stand? Those special occasion purchases… how important is the in-store experience? Can it stand up against the online sales revolution? in particular when it comes to luxury retail? New tab, and off I was, scrolling around MATCHESFASHION and Farfetch.
“Luxury brands have been slow to embrace eCommerce and digital innovation” (via), presumably because much of their consumers’ buying satisfaction comes from the physical, in-store experience I mentioned above. Traditionally, customers visiting the store expect a special treatment given the special nature of the purchase; From being greeted by a sales associate, referred to cordially by prefix and surname, topped with a tailored and unique one-on-one retail procedure. These distinct connotations of luxury retail are known to have strong-armed the most renown fashion houses with incredible customer loyalty. Yet, having said this, new statistics suggest that there is a driving force pushing established names like Louis Vuitton and Chanel towards eCommerce, greatly due to a change consumer expectation. Millennials and Get Z no longer crave the human interaction between buyer and seller, but a different sense of uniqueness to the experience. Interestingly, the outperforming luxury brands of 2019 where fully eCommerce powered, making a dent in the market though rare, one-off pop-ups and limited in-store supply. Think Supreme or Off-White. This is where multi-brand luxury retailers like my open tabs MATCHESFASHION and Farfetch are tapping into, bridging the newly emerging bumps in luxury retail.
As noted by Forbes: “Founded in 2008 as a online luxury fashion platform, Farfetch is seamlessly blending in-store access to fashions across the globe with internet convenience. With offices in 11 fashion hubs, from which it offers same-day express delivery, it lists products from over 700 boutiques and fashion brands. It carries a multitude of heritage and emerging designer brands, including Dolce & Gabbana, Givenchy and Chloé.” (Via)
In order to ride the wave, high end brands are getting creative, launching the luring consumers with the exclusiveness “available only online” items. As expected, the also work closely with aforementioned multi-brand retailers, key to assuring mutual survival going into the future. It appears that the partnership has been a good deal for both parties, with luxury retailers securing younger internet-age customers, and eCommerce platforms growing steadily. Let us remember that MyTheresa is to list in the New York Stock Exchange in April at a valuation of half a billion dollars, after sales revenues topped $272 million in 2019.
I personally find the shifting dynamic in the luxury retail market very intriguing. Not that long ago, there was a special excitement that came with going to the stores, more so with these occasional festive purchases. Has our generation’s beloved “your order is out for delivery” finally overshadowed the traditional retail experience? Do physical stores have a future in the coming years? Perhaps this is where the greatest differences between high street and high end will come to shine. With the latter gripping firmly onto their praised store experience differentiator, will eCommerce multi-brand retailers be the answer to their future existence?
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