Luxury brands are lagging behind online

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., 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 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.