When was the last time you felt truly inspired by a luxury brand’s website? Regardless of the cute little illustrations or achingly cool ad campaign flipping past, mono-luxury e-tail hasn’t really moved on over the past decade. It’s as though they still feel the brand is enough.
People don’t dress like this, and just to replicate the physical store online is to create a glorified warehouse or catalogue, which doesn’t take into account the element of personality, pampering and leisure which makes physical shopping a pleasure for many and the reason most people desire these brands in the first place. It’s not seductive.
Left - Celine.com - Have mono-luxury sites moved on in the last decade?
During this same time period, multi-brand luxury retailers such as matchesfashion.com, Far Fetch and Net-A-Porter have grown their turnovers into the hundreds of millions of dollars thanks to their ability to tap into people’s desires for newness and vast amounts of choice. These retailers are basically online fashion department stores just minus the fridges and toasters. People like to skip between brands and cherry pick items across them in the most efficient use of their time. Going onto individual, mono-brand websites, especially if you don’t know what you want, feels like a blinkered process and like you’re not getting a full view of the fashion landscape. It also feels, on the majority of sites, as though there isn’t much on there. It is just isn’t very satisfying.
Last week, Farfetch Chief Executive, Jose Neves, predicted that brands would pull out of multi-brand retailers online and operate as e-concessions on marketplaces instead, much as they have done in bricks-and-mortar department stores. And, last year, Kering announced it would take some of its biggest e-commerce websites in house, by the first half of 2020, putting an end to a seven-year joint venture with Yoox Net-a-Porter (YNAP).
Kering’s online sales made up just 6% - this is against 18% of UK retail as a whole - of its 6.4 billion euro turnover in the first half of 2018, but it did grow by 80 percent in the third quarter, faster than revenue growth in department stores or its own shops. If these brands want to reflect general online retail sales they will need to double or triple the percentage of sales coming from online.
Taking back control of the Alexander McQueen, Bottega Veneta and Balenciaga websites will allow Kering full access to information such as client data.While this is great for the brands and the back-end, tech side, customers will notice little difference unless they have a radical rethink of how they present their brands on the front-end. Consumers are used to scrolling and discount incentives to drive sales which many of these brands, outside of sales season, won’t offer. It can also feel very clinical.
According to a report by Deloitte “Big data may help luxury brands to provide personalized and superior customer service through consumer segmentation, behaviour and sentiment analysis, and predictive analytics. Several luxury brands, such as Louis Vuitton, Burberry, Tommy Hilfiger, Dior and Estée Lauder, have already started to take advantage of these technologies, using AI-powered technologies, such as machine learning and analytics, to offer more personalized and timely customer services. They implemented their own AI-powered chatbots and now can sell products using targeted marketing, personalization, and timely automation.”
In November 2018, Kering created a data science team at group level to improve the service and shopping experience of its clients. Kering intends to get real-time 360-degree view of its customers to deliver rich and personalised experiences and meet their specific needs. LVMH, doesn’t break out separate online sales information, but they did reveal that the group's online sales rose by more than 30 percent in 2018. Ian Rogers, the first ever chief digital officer of the LVMH group, told Wired, last year, that he doesn’t like the word "digital" and he has the very tricky job of matching the luxury online customer journey with the pampered, indulgent experience IRL.
“It’s not the case that luxury shopping becomes self-serve on the internet: if I do buy something I expect a high level of service, even if I’m remote.” he said “You can see it's definitely strategic for us to invest in remote customer support, and it's directly downstream of our Internet strategy. There's this nonsense land of digital transformation where people wave their hands and they talk in impractical terms. Keep drilling until you have something practical that works and then rinse and repeat. Lose these nonsense words like "digital", like "data", like "social media". You have to get rid of this digital umbrella because it's just too broad. When somebody says, "We're really behind on digital", my response is, "You're behind in every aspect of your business?” he said.
Right - Spot the difference - YSL.com
According to Kering’s Chief Client & Digital Officer, Grégory Boutté, “Digital can be many different things at once - a distribution channel; a platform for offering seamless omni-channel services to clients; a driver of brand image and visibility; and a tool for engaging with customers in a personalized way. Digital technology, data science and innovation provide a way of offering our customers the best possible experience – on every touchpoint” he said.
Online and off-line isn’t separate, most brands now offer services such as check availability, reserve in-store, make store appointment, pick-up in-store, return in-store, exchange in-store, and buy online in-store. Kering said it will continue to develop partnerships with third-party e-commerce platforms "when relevant", but we’re seeing the beginnings of a power struggle between brands and retailers. They both need each other.
Now these luxury groups are focusing on their websites they need to rethink the entire thing. Their rigid ‘aesthetics’ and branding doesn’t allow for personality. Mono-brand luxury sites are restricted by the volume of product and while it changes, it doesn’t change often enough to the levels today’s customers have become used to.
Brands, such as Prada, Saint Laurent and Celine, also sell a lot of black, which doesn’t shoot well and doesn’t make the most inspiring of online images. Add in ‘collab. fatigue’ and these brands really need to develop a new idea for websites if they want to increase sales and move away from multi-brand sites.
Luxury brands have built themselves a boring digital straight-jacket and need to start thinking differently. They could offer FaceTime with sales associates in people’s local stores, or offer a live view way of browsing in-store and matching to items online. It’s going to be about making the virtual real and vice versa. There are many possibilities, but they need to unthink the “brand”.
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The idea of paying to have something made, passing it on to someone else to sell, who will then pay you in a few month’s time, sounds like the cashflow diagram from hell. Unless the profit margins are huge, and even then it’s not ideal, wholesaling in fashion is difficult. Small brands, especially, need the constant stream of cash, traditionally have tighter margins, and need the crucial feedback of information with regards to successful products that can inform future decisions and where to put their limited resources.
The fashion wholesale model is broken and, now, even the big boys are deciding to step back. Luxury brands are also realising, finally, that the true value of selling directly to consumers is growing a database of customers and understanding exactly what they want in a shorter amount of time and being more reactive to those needs. Realising something is or isn’t selling in 3 to 6 month’s time is pointless and is what will suffocate even the biggest of brands.
Many luxury brands sat back and twiddled their thumbs over the past two decades while huge fashion corporations like YOOX/Net-A-Porter and MatchesFashion.com have grown with enviable customer lists and used huge amounts of information to improve their offer and grow further.
Now, the wholesale middle man is being pushed back to a point where brands want more control, know they will make more money directly and won’t be at the whims of a fashion buyer every season as to whether they’ve made the cut or not.
Prada announced last month that is would reduce its wholesale network in Italy and Europe in a push to have uniform prices for its products across different outlets and reduce markdowns. Before that, in March, the Milan-based company said it also would stop offering end-of-season promotions at its own shops in a bid to boost margins and protect its brand. They’ve obviously been watching the success of Gucci’s no-sale model and product that continues over seasons and doesn’t seem to quickly date.
In a short filing with the Hong Kong stock exchange, where the company is listed, the company's chairman Carlo Mazzi stated, “The Prada Group considers it essential to ensure greater consistency in pricing policies across retail and digital channels. This strategic review is intended to further strengthen the Prada Group brands with the aim of supporting sustainable long-term growth.”
Prada said it would end relations with some Italian and European wholesale partners and gradually replace them with new digital and e-commerce players.
While they’ve tried to improve their website, added a broader selection and launched onto sites like Mr Porter, Prada is doing it at a time when the brand has lost momentum and isn’t quite as in demand as it once was. It said the leather goods category will be the most impacted with the changes and this is their biggest segment with the greatest margins.
This DTC (Direct To Consumer) approach is something born from the internet and social media. The brand owns the customer and has a direct relationship. It knows their e-mail and address. It also knows what they have bought before and, most likely, things that may interest them in the future. As personalisation increasingly becomes more sophisticated, this will also help to offer more choices and brands can follow their customers through their actions.
Physical retail third party wholesale accounts allow you less control and inject potential disruption in your cherished luxury supply chain to the customer and, as Prada says, you can keep the prices constant and consistent (probably higher) throughout one geographical region.
Kering, owner of Gucci, Saint Laurent and Balenciaga, has announced it will take back control of its e-commerce operations, focusing on own branded sites where it can control its image and client data. Excluding Gucci, the YOOX/Net-A-Porter group operated e-commerce websites for most of the brands within the Kering group. The joint venture will now end in the second quarter of 2020. While not completely cutting off their nose to spite their face, Kering wants to turn more of its collaborations with third-party, multi-brand retailers such as Farfetch or Matchesfashion.com into what it calls ‘online concessions’, where it controls everything from the product assortment to their presentation. "Each time we move from wholesale to a concession we see our top line increase in a material way,” said Grégory Boutté, Kering’s Chief Client & Digital Officer, and former vice President of eBay. Kering has stated it was ‘not against wholesale,’ and did not plan to end its relationships with third parties altogether.
This is will be a play of power and something that I think will be difficult especially with the complexities of something like FarFetch coming from multiple retailers in different locations. This sounds like wanting your cake and eating it; we want your database, but in our own way. I’m not sure that many retailers will relinquish that amount of control, especially when you consider how many brands they sell and also the loyalty they now instil in these hard won customers.
Kering's total online sales — when including the business done through third party platforms, calculated at retail and not at lower wholesale prices — came to 9.4 percent of the group's 2018 revenue. Web sales through its own brand websites and online concessions made up 4.7 percent of revenue. This has huge room to grow.
Boutté has built up his digital team from 4 people upon his arrival at Kering in 2017 to over 80 people, today. He has realised the power of data. “The more data we have, the more precise our algorithm is and the better the experience is. The other thing is that it should lead us to excellence in terms of our operations.” he said.
Across the luxury goods industry as a whole, e-commerce accounts for around 10 percent of business today and should reach 25 percent of sales by 2025, consultancy Bain estimates.
This is about information and control. Controlling discount, controlling points of sale and controlling presentation. You can control more online, even with third parties. You can see it from anywhere. It's those pockets of physical wholesale boutiques or department stores in small towns that are harder to police and often unsold stock disappears into the grey market and ends up on discount sites and with other retailers.
Where once luxury retailers didn’t want to get their hands dirty, they are now rolling up their sleeves and have their eyes on the online prize; higher prices, more full price sell-throughs and control of that all important ‘data’. This will get more ferocious as the market becomes more saturated, growth slows and customers get increasingly more expensive to acquire.
I predict many brands will try to be exclusive to their mono-brand websites if they don’t get what they want with their third party partners, or possibly try the LVMH 24 Sèvres, now rebranded as 24S, route, but it will be hard. And expensive.
Retailers like FarFetch and MatchesFashion.com are decades ahead and thrive on new and small designers adding that colour and point of difference online. Luxury mono-brand websites often look boring, sterile and empty. People don’t shop in single brands, particularly when they are browsing. While the idea is logical and makes sense to reduce wholesale and take back more control, it will be far more complicated than that and add multiple costs to their business models.
This article isn’t a discussion on the pros and cons of real fur and offers no moral viewpoint on its use. I acknowledge that this contentious issue/material is divisive and has passion on both sides.
The real ‘fur’ industry has seen massive growth, since the beginning of this century, driven by international consumers and trims on accessories and coats. It is now a $40 billion industry. It was inevitable that it would have a backlash and there would be a reaction to it, most notably from younger consumers.
I put ‘fur’ into speech marks because it’s a very broad term and while some brands may no longer use mink they continue to use the skins of other animals and there’s no definitive reason for the choice of some animals making the used list and not the others. Read more here - ChicGeek Comment Fur Debate: You Either Use Animals Or You Don’t
Brands such as Gucci, Versace and Martin Margiela have decided to announce they will no longer use real fur. Donatella Versace recently said, “Fur? I am out of that,” she said. “I don’t want to kill animals to make fashion. It doesn’t feel right.”
“Naturally we were disappointed to hear that Versace has said it won’t use real fur in collections. However, the majority of top designers will continue to work with fur as they know it is a natural product that is produced responsibly. When Donatella Versace says ‘I don’t want to kill animals to make fashion.’ presumably her company will soon stop using silk and leather?” says Andrea Martin from the British Fur Trade Association.
“It is disingenuous to claim that leather is a by-product of the meat industry, a cow still had to die to provide the product. Silk cocoons are placed in boiling water to help unravel the thread with the silk worm inside,” says Martin.
Italian accessories brand Furla has formally declared that it will be banning fur from its collections from November of this year, which would coincide with the launch of its Cruise ’19 collections. This follows decisions by Michael Kors and Yoox Net-A-Porter, which has declared that all its stores and websites would be real fur-free zones.
“I think some of the brands have gone fur free under pressure from anti-fur trends, and some are genuinely concerned. If brands don’t want to use animals for fashion then they need to consider leather, exotic skins, silk, sheepskin, makeup and products, all of which use animals. I also think human welfare is important to consider when producing fashion, and this often gets forgotten.” says Rebecca Bradley, a London based fur designer.
So, why are luxury brands really dropping the use of real fur?
I think it is pure economics and the high margin greed of today’s luxury industry. It’s the same reason many restaurants are pushing vegetarian and vegan options: the margins are higher and therefore the profit. By charging slightly lower prices for something which is much cheaper to make, the margins increase. There are only so many €25,000 full-fur coats a brand will sell and the ceiling price is sensitive, so you can’t factor in the same margins you would on your other products. If you make it in faux-fur you'll get a higher margin and a bigger percentage of profit. You’ll also sell more and probably generate more money overall.
The irony is, the reason a real fur coat is so expensive is because of the high welfare standards of the European producers. Luxury brands wouldn’t be able to use cheaper real-fur from other sources witout criticism and scrutiny.
“Fur coats may seem expensive, however the price of a fur coat should reflect a high standard of animal welfare, and therefore with a beautiful, high quality fur, many skilled people are involved with production, including a furrier, and finisher to create a fur coat that will last for many generations, ” says Bradley.
Fur, for the majority of brands, is a very small part of their businesses and therefore it’s not difficult to heroically declare you’re no longer going to use it. It’s also easily replaced by a cheaper, synthetic alternative while not altering the price very much or at all. You can paint the use of a fake fur trim as an ethical choice rather than a cost saver to the consumer. It’s cynical I know, but it’s working.
PETA’s Director, Elisa Allen, says, “Fur is dead, dead, dead. As well as making sense for designers' conscience, ditching fur makes business sense, as today's consumers are demanding animal and eco-friendly clothing for which no animal has been electrocuted, strangled, or caught in a steel-jaw trap. From Armani to Versace, the list of fur-free designers is growing every day, and innovative vegan fashion is on the rise. The tide has turned irrevocably, and there's no going back.”
Many brands used the word ‘sustainable’ when announcing their decision to no longer use real-fur, but again, this is another term in fashion that is very broad and has little full meaning until you see the detail. I’m not sure a fake fur coat is particularly sustainable, but then again it does depend on the material.
But, you also have to acknowledge that nobody needs to wear a real fur coat. We could easily survive without real fur, but it’s interesting how, out of all the animal products we use, this is one of the most offensive to some and creates the biggest reactions and protests.
The real fur industry continues to grow in China and with other newly rich consumers and markets. It is now a US$17 billion-a-year industry in China and Haining, near Shanghai, is its hub.. Fur companies will be a bit like tobacco companies: the falling sales in established markets will be replaced by growing sales in new and even bigger markets in Asia.
Chinese animal welfare standards are very different from European standards. European producers have very strict regulations and it’s an industry which has to be transparent in order to ward off criticism.
“We respect the fashion industry’s attempts to become more responsible for the products they produce. Animal welfare is of critical importance and the fur produced is farmed to the highest welfare standards.” says Martin.
“With growing concern about the environment and plastics we believe it is more responsible to move back to the use of natural, biodegradable materials. Fur is the natural and responsible choice for designers and consumers.” says Martin.
Ditching fur is quite a lazy way for luxury brands to try to be more ‘sustainable’ and look like they care about the environment.
“I think that companies and consumers becoming educated and aware of origins of products and materials is a fantastic thing, but the focus needs to be across the board, ensuring standards of human, or animal welfare and environmental impact.” says Bradley.
Many brands are seeing real fur as something they live without and it’s more hassle than it’s worth if the profit and quantities aren’t there. You can pick holes into both sides of the fur debate. While a positive move for many, the decision to no longer use real fur is really a cleverly spun business decision and driven by their continued obsession for huge margins.
Read more expert ChicGeek Comments - here
News in that Gucci is going “Fur Free” starting from SS18. President and chief executive, Marco Bizzarri, announced the move at a talk at the London College of Fashion, yesterday.
Mr Bizzarri said: “Being socially responsible is one of Gucci’s core values, and we will continue to strive to do better for the environment and animals.” The brand will no longer use any type of animal fur including, coyote, mink, fox, rabbit or karakul - aborted lamb foetuses.
The fashion house’s remaining fur clothing will be sold in an auction with the money donated to the animal rights organisation "Humane Society International” and “LAV”, an organisation that initiates legal actions to assert animal rights.
Left - Gucci Intarsia Mink - £28,340 from Mytheresa
Gucci will also join the Fur-Free alliance. This is a group of international organisations that campaigns for animal welfare and encourages that alternatives to fur are used by the fashion industry.
I respect Gucci’s decision and being the world’s second largest luxury goods company this will make an impact. It will also influence people and other brands. Any company wishing to be more “sustainable” should be encouraged. (Just how sustainable a business selling US$ 4.3 billion (2016) worth of product is debatable BTW).
But, what I never understand is the double standards on animals. You either use animals or you don’t. Gucci will no doubt still be using snakes, alligators, crocodiles, goats, lizards, ostriches, the list goes on, to make accessorises and clothes.
I’ve seen this many times before. I’ve been at Ralph Lauren where they proclaim to be “fur free” yet I’m standing next to a large crocodile “Ricky” bag. If brands really want to minimise their footprint then they should go completely vegan. Department stores stating they don’t sell fur, yet you look into a felt hat and it’s made from rabbit.
The fur industry doesn’t have to be “cruel” in the same way the meat industry doesn’t. Skins such as sable are shot in the wild and don’t live in cruel conditions. Coyotes are shot as pests in North America. You regulate for welfare standards and promote compassion in farming and every animal regardless of the product should be respected and cared for.
The fur industry can be sustainable and faux-fur, usually made from synthetics, is also detrimental to the environment and doesn't negate the desire.
Net-a-Porter group recently announced it was going fur free too. Admittedly, due to the prices, fur is only bought in small quantities and by very wealthy people. It’s interesting that Italian companies - Yoox/Net-a-Porter and Gucci are going “Fur Free” as we know those Italians like their furs, so this is definitely a shift in attitudes.
These things usually go in two ways - fur trims start to sneak in and the thing gets quietly shelved or companies continue to be "environmentally friendly" and really try and do something about the wasteful fashion cycle that currently exists. Banning "fur" isn't really touching on the real environmental impact of the fashion industry.
Read ChicGeek Comment - The Real Reason Brands Are Dropping 'Fur'
Since its inception, e-commerce has been a difficult nut to crack. When it was growing fast and taking market share, from offline, it was easy to justify spending vast sums laying the foundations for something that you will reap the benefit of later on.
Today, the luxury market is contracting, so trying to grow, whether offline or online, is particular hard, at this moment in time, especially when you're not in control of the choice of products.
Luxury fashion was slow to get fully behind e-commerce and only now are the brands giving it the attention and respect it deserves. The reasons for the change being companies like Net-a-porter and matchesfashion.com having pioneered this area and shown the riches to be made and also being able to communicate with a future consumer and grow a direct database.
Publishing house, Condé Nast, has just launched its e-commerce offering in the form of style.com This has been coming for the past couple of years and has been put back and put back and then, it surprised me, two weeks ago, by appearing on my Twitter timeline. A reported £75 million has been spent - The Times - and with over 100 employees - The FT - this is a big commitment.
There’s always room for something different/good or both, in any form of retail and the idea to combine trusted editorial with shopping is a good one, especially in a tastemaker environment like this. It makes sense.
Unfortunately, the launch site looks nothing different from a luxury site from 10 years ago. The choice is limited and being run on affiliates - which means they earn a commission on each sale - all the items are distributed from various sellers at different costs in different locations. It’s going to be a nightmare for Condé Nast to deal with returns. They want the money, but don’t want to get their hands dirty. Don't we all?!
The biggest surprise is, where is all the editorial? People have tried shoppable magazines before, they don’t work. That’s fine. But, use the budget and teams of Vogue and GQ and give me the best of the season’s images and shoots and if there’s only one shoppable product, then so be it. It’s the magic that people buy into. It’s the world that these magazines live in.
It feels as though the editors aren’t playing ball and have washed their hands of it. It probably doesn't help that style.com is based in Camden and the magazines are over in Hanover Square.
After the delayed launch, the launch now feels rushed. I think they would have been better off keeping style.com as it was - runway reports and party pictures - to keep the traffic up and instead, now, they have to cannibalise digital advertising, which is hard to generate money from at the best of times, in order to push shoppers over to the site from the magazines' individual websites.
It launched with free shipping on orders over £350, very generous! Now, it’s free shipping and returns on all orders. Clearly taking some feedback. (Mr Porter had the same issue when it launched). It has only launched in the UK, atm, and there is nothing on there you can’t get anywhere else. It's interesting too that Condé Nast invested in FarFetch.com, another high-fashion portal, and is, now, technically a competitor. Maybe the two will merge?
I think style.com is too little, too late. They’ll spend the next 18 months finding out that this business model is particularly hard to make money from, while blowing millions and millions of pounds. They'll be lucky is they ever make a profit. This could be the Ocado of fashion! In hindsight, it would have been better to have had a chat with Natalie Massenet about 15 years ago.