Luxury brands are lagging behind online

E-commerce technology and data analytics can lure in lovers of luxury fashion, despite a desire to remain exclusive 

What high street fashion brands might lack in red carpet glamour and sparkle, they are evidently making up for with online sales. Many luxury fashion brands currently lag way behind their mainstream counterparts when it comes to the proportion of their revenue generated by online sales.

While John Lewis attributes 34.5 per cent of its sales online, luxury conglomerate LVMH, which owns Louis Vuitton, Givenchy and Fendi, musters only 4 per cent, according to Reuters.

In addition, a disparity is apparent between a brand’s levels of luxury and its percentage of online sales, according to a recent McKinsey report. It claims absolute luxury, such as Dior, generates under 4 per cent of online sales, while for aspirational luxury, such as Burberry, the figure is 7.5 per cent and for affordable luxury 8.5 per cent. Burberry, the global luxury leader in digital communications, which has 45 million followers across 20 global social media platforms, has seen mobile sales triple in the last year.

The world’s biggest names in luxury routinely cite attention to detail and innovation as claims of their commitment to excellence. Surely though, these criteria provide the motivation to leverage data analytics to offer a more personalised service. Why then the apparently slow adoption of personalisation technologies, which include providing tailored recommendations, e-mail offers and promotions based on knowledge gathered about the customer, and sending abandoned basket e-mails when visitors leave a site before completing a purchase?

Reasons for falling behind

Hesitation from the luxury world towards e-commerce is not without reason. Rarity and exclusivity often lie at the heart of the luxury business model, while digital communications are all about global access.

“Luxury brands including Barbour and Belstaff see their websites as an aspirational showcase, at the expense of making it easier to buy from. By contrast, men’s high street retailer Burton uses weather data and the user’s location to suggest, say, winter jumpers rather than summer shirts,” says Dan Croxen-John, chief executive of online consultancy AWA and co-author of E-Commerce Website Optimisation: Why 95% of Your Website Visitors Don’t Buy and What You Can Do About It. He cites Net-a-Porter, ASOS and Shop Direct as top performers in online luxury.

Euromonitor’s top ten global consumer trends for 2017 include personalisation and speed – concerns which luxury fashion brands on top of their game, such as Gucci, Ralph Lauren and Hermès, are now tackling head on.

“Retailers often concentrate on increasing website visitor numbers, while undervaluing the importance of converting visitors to purchasers,” says Mr Croxen-John, who believes personalisation is now a priority.

Rarity and exclusivity often lie at the heart of the luxury business model, while digital communications are all about global access

Zalando’s image recognition app lets users photograph outfits they like and receive recommendations for similar or the same products. The Harvey Nichols loyalty app rewards customers with experiential treats such as hair and beauty treatments or VIP shopping experiences.

77Diamonds.com, Europe’s largest online seller of diamond jewellery, keeps its communications integrated across live chat, phone, e-mail and personal meetings. “Our in-depth analytics enable us to suggest jewellery for specific occasions and anniversaries, and where relevant offer invitations to our Mayfair showroom for special events or offer free same-day delivery,” says Tobias Kormind, 77 Diamonds managing director.

“On average, customers take three months to buy a luxury watch,” says Paul Souber, head of central-London retail at Colliers International. “Visitors to WatchGallery.com live chat with experts from the company’s Covent Garden store, so they are talking to the same people in the physical space they met in the digital.”

Supply chain and delivery management experts JDA and Centiro are now stemming the tide in costly deliveries which are returned by customers, enabling companies to offer only specific customers free delivery, in some cases using locations captured from mobiles to deliver straight into the customer’s hands.

Online expert Mr Croxen-John’s top tip to brands is to keep websites simple to navigate. “Brands need to focus on meeting customer needs, rather than putting in place the latest technology just because they can,” he advises.

Fast-growing sub-sectors of e-commerce

Fastest growing ecommerce sub-sectors

GROCERIES

E-commerce consultancy Salmon, whose clients include Selfridges and Ted Baker, says the future of supermarket shopping looks bright, with Amazon at the forefront. Sainsbury’s offers one-hour delivery in parts of London. Salmon predicts the proliferation of fridge and coffee machine sensors, automatically placing orders via a supermarket app based on a customer’s ordering preferences. While 55 per cent of shoppers use the same shopping list repeatedly, online grocery shoppers spend three times more per shop than offline shoppers, says data consultancy Kantar.

BABY CARE

Baby care is being primed for a “programmatic revolution”, according to e-commerce experts Salmon. The Boots Parenting Club allows parents to sign up from pregnancy through to when their child is three years old. It offers parents ten points for every £1 spent, personalised offers and gifts, plus a free magazine. In return, Boots captures data about parents and their children, and grows sales via targeted offerings. Streetlike.com installs touchscreens in-store to deliver personalised, seasonal and instantaneous offers or promotions without the need for an app.

TRAINERS

Sports shoes are proving what personalisation is capable of, says Euromonitor. The adidas app lets users order trainers with pictures taken from Instagram accounts. Australian fitness guru Emily Skye is launching a crowdsourced training shoe this year, promising to incorporate preferences from some of her 12 million Facebook and Instagram followers. Augmented reality experts Holition, using artificial intelligence to capture social media trends and personal preferences to give styling advice, are talking to luxury sneaker customisation brand MySwear about creating visualisations of bespoke products.